Liquefied Petroleum Gas (LPG) is a by-product from catalytic cracking and thermal cracking of crude oil in refinery, consisting of flammable hydrocarbons, as propane and butane, obtained as a by-product from the refining of petroleum. It is mainly used as a domestic fuel, especially in rual-areas, and also as an industrial and motor fuel.
The Group currently has 8 LPG terminals with storage facilities of over 300,000m3, 98 LPG distribution projects and 1000 retail points, covering in 10 provinces.
In 2013, the Group acquired the remaining 51% equity interest in Panva Gas. After the acquisition, the Group immediately integrated the business of Panva Gas with its own LPG retail business, and implemented its LPG development strategy under which midstream wholesale business forms the basis while downstream end-user business constitutes the core of the Group’s LPG profits.
With LPG becoming more popular in townships and villages and its long and stable utilization amongst industrial and commercial markets, China’s LPG industry meets a rare development opportunity, especially in the rapid growth of the petrochemical synthesis and processing sector where LPG is being used as a raw material. The Group will fully utilize its LPG terminals, storage facilities and fleets of vehicle and vessel to boost overseas and domestic purchases of LPG, and in turn gradually increase utilization rate of midstream LPG resources. In addition, the Group will capitalize the advantage of its integrated business chain by putting in place a central procurement system for its downstream retail business, so as to lay out a proper deployment over its gas source procurement, storage resources and market coverage and reach an effective?synergy?between?the?wholesale?segment?and retail segment, which will maximize the profit margin of the whole production chain.