Industry Overview  

China's transition to a market economy has been phenomenal, but while its blazing economic growth has increased average incomes, its environmental well-being has felt the strain of trying to satisfy a relentless desire for the fuel energy that propels the economy.

With coal providing up to 63.4% of the energy units consumed in the PRC in 2001, human health, air and water quality, agriculture and ultimately even the economy have not been able to avoid its damaging effects. This in turn has sparked government regulations curbing coal consumption, while setting alight the search for cleaner and more efficient fuels. The need for alternatives may be the definitive reason behind China’s phenomenal demand for LPG.

Between 1995 and 2005, analysts estimated that China and India’s LPG markets grew by a combined 10.3 percent, far more than any other regional LPG market in the world. Furthermore, according to the 11th Annual China LPG Conference 2006, provinces within China itself, such as Shanghai, Guangdong and Fujian, have increased their LPG imports from less than a million tonnes in 1993 to more than six million tonnes in 2005.

In-depth analysis reveals that South China, where all of the above provinces are located, had the largest LPG deficit in supply and demand (importing up to 4.5 million tonnes in 2005), as compared to the rest of China. Evidently, market demand is concentrated in southern and eastern China, and Ouhua’s strategic location of its facilities can greatly help it to fully capitalise on the crest of that demand.

At provincial levels, LPG’s popularity translates into a variety of substitute roles for coal. For example, in 1999, the municipal government ordered city vehicles to convert to liquefied petroleum gas (LPG) and natural gas, in order to reduce air pollution in Beijing. By 2002, Beijing had the largest fleet of natural gas buses in the world - a total of 1,630 vehicles. The conversion process was extended to the subway and light-rail systems.

There is no doubt that industrial, residential and commercial users alike increasingly recognise the value of LPG, thus presenting significant opportunities and strong potential development for the foreseeable future.