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Gas for households

- LPG for cooking as first step Ho Sook Wah

Secretary General

Malaysian Gas Association

© PETRONAS 2013 1

Before the 1970s, the main fuel for cooking were charcoal,

wood and kerosene

ABCD/CSP/PN © PETRONAS 2013 2

Charcoal Wood Kerosene

LPG is derived from oil and gas value chain

ABCD/CSP/PN © PETRONAS 2013 3

GAS

OIL

Processing

Liquefaction

Refining

Transportation Sector :

Gasoline

Jet Fuel

Diesel

Fuel Oil

Industrial Sector:

Ethylene

MTBE

Methanol

Polyethylene

Propylene

VCM / PVC

Export

Power Sector :

Methane

Diesel

Fuel Oil

Commercial &

Residential Sectors

Petroleum

Products

LPG

Sales Gas

LNG

Petrochemical

Downstream Products Upstream

Exploration,

Development &

Production

Condensates

LPG is a BYPRODUCT

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• LPG is produced as a byproduct of:

– Oil production (via the processing of

associated gas)

– Gas production (via the processing of

non-associated gas—including LNG)

– Refining

• Therefore, LPG is a supply-driven market in which demand must adjust to

match supplies.

• LPG production tends to increase quickly when one or more of the above

industries is expanding quickly.

Benefits of LPG

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• LPG is used to replace other traditional fuels such as wood, charcoal and

kerosene.

• It has complete burn of true blue flame that ensures the heat is spread

across the whole pan.

• Faster cooking reduces gas usage thus making it more economical,

environmentally friendlier and healthier for everyone.

• Burns with cleaner flame without burning pots and pans. Thus making

washing up a breeze.

Technical Specification of LPG

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• Composition of Propane-C3 dan Butane-C4: 30% Propane and 70% Butane

• Physical properties : Colourless and odorless

- (an odorant; ethyl mercaptan was introduced to create smell)

• Density (kg/l) : 0.4149 - 0.5952

• Calorific value (kcal/kg) : 11800

• Vapour Pressure : 6 – 7 bar

• Boiling point of LPG : Propane -42C and Butane -60C

Ethane

Pentane

Nitrogen

Sulphur

Water

PROPANE

29.5%

BUTANE

70%

0.5

%

LPG Cylinders are designed with maximum safety and

easy handling

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LPG comes with 12-14 kg cylinders for household use and 50 kg cylinders for

industries

Cylindrical shape offers easy handling, retrieval and storage

Offers maximum safety in case of leakage as LPG vaporize in the air

There are some potential dangers of LPG

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• LPG is heavier than air – possible explosion if mixture of LPG and air is within

explosive limit and there is an ignition source.

• Suffocation – LPG displacing air, thus lowering the level of oxygen. Use of an

odorant to detect leakage of LPG.

• Incorrect use of LPG can result in explosions, fires, lost of property and most

importantly, loss of lives.

• Do not neglect issues like leaking gas cylinders or tubes, damaged

regulators, incorrect method of storage of LPG cylinders, etc.

A Brief History of LPG in Malaysia

From “Fuel for the Elite” To “Fuel for the Masses”

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Prior to 1980s 1980s-1990s 2000s- current

Agricultural-based

economy with low

per capita income.

Cooking uses

traditional fuels-

charcoal, kerosene

etc.

LPG production

from refineries is

mainly for export

market; domestic

demand limited

IOCs (i.e. Shell and

Esso) dominates the

domestic market

Malaysia embarked on industrialization

programme to uplift the economy

PETRONAS entered the LPG business

to solve LPG shortages in Northern

Peninsula

Government introduced APM

mechanism to provide price stability

and ensure sufficient margin to players

PETRONAS embarked on PGU pipeline

and GPP projects to monetize the gas

resources offshore Peninsula

Improved infrastructure - North South

Highway project and enabled greater

transportation of LPG

LPG became the fuel of

choice because of

availability, affordability

and environmental

benefits

PETRONAS achieved 50%

market share

LPG demand took-off as a result of higher standards of

living

© PETRONAS 2013 11

-

20,0

40,0

60,0

80,0

100,0

120,0

0

5000

10000

15000

20000

25000

30000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

GDP Percapita LPG Demand (RHS)

RM Thousand ‘000 bpd

Per-capita GDP vs. LPG Demand

Source: FGE 2013, IMF

To ensure efficient supply, Malaysia has a developed

LPG supply infrastructure

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S A R A W A K

S A B A H

P E N I N S U L A R M A L A Y S I A

Kalimantan

(Indonesia)

Bintulu

South China Sea

Kuala Lumpur

B R U N E I

Pulau Langkawi

Bayan Lepas

Kerte

h

Kuantan

Pasir

Gudang

Melaka

Port Kelang

P. Dickson

Subang

Prai

Senai

Miri

Kuching

Kota Kinabalu

Sandakan

Tawau

Labuan

Sibu

Senai

5

Bottling Plants 9

3

21

Current Capacity (bpd) 557,300 314,300

Refinery

Kertih

LPG Extraction Facility 2

LPG price in Malaysia is heavily subsidized by the

Government for domestic consumers

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Actual price = RM 54.39

Consumer price

= RM 26.60

Subsidy

= RM 27.79

2,73

1,86 1,9

0

0,5

1

1,5

2

2,5

3

Thailand Indonesia Malaysia

Price Breakdown for LPG 14 kg

Regional Price Comparison for LPG RM/kg

Stiff domestic competition have seen the consolidation

of major players over the years

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Previous Current

In summary

Abundant

Supply

Improve standards of living

Infrastruc-

ture

Government

Support

• Availability of oil and gas reserves provide incentives to

utilize indigenous resources

• Rising affluence and living standards shift consumer

preference towards more cleaner fuels

• Well developed infrastructure to carry and transport LPG

to consumers

• LPG is heavily subsidized by the Government for

domestic use.

Key takeaways

The End

© PETRONAS 2013 16