China is likely to become more self sufficient in meeting its growing LPG demand as it increases domestic production, reducing its dependence on imports, FACTS Global Energy said in an August 20 research note.
     "We forecast that China's LPG output will exceed 700,000 barrels/day by 2010. In future years, domestic LPG will likely become the main supply in China's LPG market," the energy think tank said in its research note
     China's LPG output has steadily increased from 369,800 b/d in 2002 to 614,700 b/d in 2007. About 50% of total domestic output in 2007 came from Sinopec refineries, 30% from PetroChina refineries and 20% from other local independent refineries.
     Meanwhile, LPG imports into China, which account for one-third of the countries supply, have fallen since 2005. Import levels in 2005 declined 3.6% from 2004 to 195,200 b/d, while in 2006 imports fell 12.8% to 170,200 b/d.In 2007, imports fell 24.35% from the year before to 128,900 b/d.
     China's top LPG importing country in 2007 was Australia at 28,700 b/d or about 22.3% of total imports. Meanwhile, imports from the Middle East at 88,000 b/d accounted for 68.3%.
     For the first six months of 2008, LPG imports slumped 13.4% year on year as domestically produced LPG remained cheaper than the imported-grade, China's General Administration of Customs said.
     China imported 2.8 million mt of LPG and other hydrocarbon gases between January 1 and June 30, 13.4% less than in the same period last year, while the value of imports in H1 rose 5.1% to $1.48 billion as global oil prices spiked over this period, the administration added.

     CHINESE CONSUMPTION TO RISE STEADILY
     The main drivers of Chinese LPG consumption are the residential sector accounting for the bulk at 65% and the industrial sector at 25%. Vehicles account for 2% and the remaining 8% is for other uses.
     FACTS said demand was expected to climb steadily based on the government's pro-LPG plans. LPG consumption increased slightly from 567,000 b/d in 2002 to 720,100 b/d in 2006, while in 2007 demand was up 1.8% from the previous year at 732,800 b/d.
     "China's LPG vehicles are just in the beginning stages. Shanghai's municipal government plans to promote LPG vehicles in the taxi sector, with a target of 50% LPG vehicles and 50% LPG/gasoline vehicles by 2010," FACTS said.
     However, demand for LPG as a petrochemical feedstock in China was unlikely to increase in the future. "Less than 0.5% of LPG is used for ethylene production, in place of naphtha," FACTS SAID.
    
China's LPG output ('000 barrels/day)

2002  369.8
2003  419.4
2004  465.2
2005  511.9
2006  554.7
2007  614.7

China's LPG imports ('000 b/d)

2002  199
2003  202.4
2004  202.4
2005  195.2
2006  170.2
2007  128.9

China's LPG consumption ('000 b/d)

2002  567
2003  621.1
2004  666.6
2005  706.2
2006  720.1
2007  732.8

China's LPG imports by country in 2007

Middle East  68.35%
Australia    22.3%
Asia         7.7%
US           1%
Europe       0.6%

--Jonathan Nonis, jonathan_nonis@platts.com

(platts.com, Aug 26. 2008)