LPG REVOLUTION IN BANGLADESH

Mohammed Saidul IslamDirector & CEO LAUGFS Gas (Bangladesh) Ltd.

Table of Contents

- LAUGFS at a Glance in Bangladesh

- Country Facts

- Overview of Natural Gas in Bangladesh

- LPG Scenario of Bangladesh

- Developing LPG Market in Bangladesh: Opportunities & Challenges

- Recommendations

Content Table

LAUGFS in Bangladesh

LAUGFS Gas (Bangladesh) Limited

The company started with the Australian brand ‘Kleenheat Gas’ and then “Petregaz” in Bangladesh. Finally,Laugfs Gas took over the business from Petredec Elpiji Limited in 2015. Having entered the local LPGdownstream industry in 2001, LAUGFS has grown rapidly over the years, establishing an extensivedistribution network across the country.

LAUGFS operates a world-class LPG import, bottling and distribution facility in Mongla Port with a storagecapacity of 1,800 MT with additional 3,200 MT construction work ongoing. It distributes LPG for domestic,commercial and industrial customers with an extensive nationwide cylinder distribution network. Being thefirst to introduce Autogas to Bangladesh, LAUGFS also supplies LPG to eight automobile service stations inBangladesh. LAUGFS is also the first LPG operator in Bangladesh bringing in imported LPG directly from thesource on its own sea vessel, namely Gas Courage.

LAUGFS Gas (Bangladesh) Limited:

- Terminal Location: Mongla Port. - Sphere Capacity: Currently 1800 MT. and another 3200 MT. installing.- Only Laugfs owns three pressurized sea going LPG Vessels named Gas

Challenger, Gas Success & Gas Courage- 100% Imported Cylinders. - Carousel - 24 head Automated Stations

LAUGFS in Autogas sector of Bangladesh

Bangladesh: Country Statistics

Area: 147,570 sq kmPopulation: 168,957,745 (Estimated)Capital: DhakaPopulation in Urban Area: 55 MillionHousehold: 34 millionPopulation In Rural Area: 113 MillionPer capita income: USD 1,610Economy: 44

thlargest in the world

GDP Growth Rate: 7.2% per yearVillages: 87,316Rivers: 800Population Growth rate: 1.2%Literacy rate: 59%

Country Facts

Source: bangladesh.gov.bd

Bangladesh: At a Glance

Natural Gas in Bangladesh

Natural Gas Outlook:

Sector wise Consumption: 2015-2016

Natural Gas Outlook

SectorConsumption

(BCF) 2015-2016

Grid Power 399.60

Captive Power 160.80

Industry 156.00

Fertilizer 52.60

Domestic 141.50

CNG 46.50

Commercial & Tea 9.00

Source: Petrobangla Annual Report 2016

Natural Gas Outlook:

Price Change in Recent Years

Natural Gas Outlook

YearSingle

Burner/BDT%

IncreasedDouble

Burner/BDT%

IncreasedCNG/CM

(BDT)%

Increased

2014 400 - 450 - 30 -

2015 600 50% 650 55% 35 17%

2016 600 0% 650 0% 35 0%

2017 750 25% 800 23% 38 9%

2017 900 20% 950 19% 40 5%

1 USD = 83.50 BDT

Natural Gas Outlook: Supply & Demand

Natural Gas Outlook

Annual gas consumptionmay exceed 1.0 Tcf by 2020as per gas sector masterplan

The demand for gas willstand at 8,000 MMCFD in2041 according to anestimate of the energydivision.

-

1,000

2,000

3,000

4,000

5,000

6,000

NG Demand & Supply Forecast

Demand/MMCFD Supply/MMCFD

Source: JICA Project Team based on the data from “Data Collection Survey on Bangladesh NG Sector” 2012Published by: Power Division, 2015

Natural Gas Outlook: Govt. Future Plan

Natural Gas Outlook

35 million tonnes or 3,500 MMCFD of LNG supply in 2041 through using the an underconstruction floating and land based LNG terminals.

Another 1,300-2,300 MMCFD would be supplied from local sources.

Already stopped permitting new CNG stations in Bangladesh

According to the Energy Division of Bangladesh, Govt. wanted to completely stop the use ofCNG by 2021 through replacing those with adequate number of LPG Autogas stations acrossthe country.

48 LPG licensees and counting, 43 filling plants are to be constructed, 23 LPG terminals arebeing built plus 16 more to come.

Source: The Daily Star, Energy & Power Magazine

LPG Scenario of Bangladesh

LPG Outlook

Feb-18

Sl. No.Company

NameApprox. Storage Capacity (MT)

1 LAUGFS Gas 1,800

2 Bashundhara 9,400

3 Jamuna 3,100

4 TotalGaz 2,610

5 Omera 5,500

6 BM 3,150

7 SKS 3,000

8 BPC 1,540

9 Beximco 3,000

10 G Gas 3,000

11 Orion 3,000

12 Navana 5,000

13 Universal 80

14 Bin Habib 120

15 Padma 80

Approx. Total 44,380

0 2,000 4,000 6,000 8,000 10,000

LAUGFS Gas

Bashundhara

Jamuna

TotalGaz

Omera

BM

SKS

BPC

Beximco

G Gas

Orion

Navana

Universal

Bin Habib

Padma

Approx. Storage Capacity (MT)

Active LPG Players: Current Capacity

On Map: LPG Terminals

Year LPG Terminal (No)

2012 6

2013 6

2014 6

2015 8

2016 8

2017 12

2018 14

2019 18

2020 20

2021 22

2022 24

2023 26

2024 28

2025 30

On Map: Satellite Filling Stations

Company Name Satellite Capacity (MT)No. of Satellite

Stations

Bashundhara 4,400 3

Jamuna 300 1

TotalGaz 108 2

Omera 1,000 3

Universal 80 1

Bin Habib 120 2

Padma 80 1

BM Energy 150 1

Use of LPG in Different Sectors…

LPG Outlook

Domestic81%

Others3%

Industry14%

Transport (autogas) 1%

Large Industry1%

Domestic Industry Transport (autogas) Chemical

LPG Growth Forecast:

LPG Outlook

6

8

12

18

2224

26

28

30

0

5

10

15

20

25

30

35

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

MT

Year

LPG Import Forecast (MT)

LPG Import (MT) LPG Terminal (No)

LPG Outlook

Supply Chain of LPG

12 Companies is current market and more are coming.

650,000+ MT product flow through the channel per year.

20+ million LPG cylinders injected to the market till now.

LPG Outlook

LPG Suppliers/Traders:

Petredec

•Serving over 110 customers across six continents

•Trading over 10 million tonnes of LPG per year

•Owns over 50 LPG Vessels

Shell•Currently the 2nd largest supplier in BD

•Also operates from Maldives

Siam Gas•20 LPG Tanker Vessel with the combined loading capacity of

over 110,000 tons.

•3 VLGC with combined loading capacity of 106,000 tons.

Itochu Corporation •Trading based from Singapore. Active from last 2 years

LAUGFS Gas•Owns 3 LPG Vessel

•Hambantota, Sri Lanka pressurized terminal of 30kt to start from Jun 2018

Others •OTI, Petro Vietnam, Petronas Malaysia, BB Energy, Trafigura

Developing LPG Market in Bangladesh: Opportunities & Challenges

Opportunities

Demand for LPG is increasing, whereas

reserves of NG is depleting.

•Last few years showing 30 - 50% growth based on various segment on year to year basis

Around 2.5 million NG domestic user to be converted in LPG by

2025

•Government increased NG price across all user levels

•More than 1 million illegal NG connections

Autogas can replace CNG, Petrol/Octane

•CNG price increased in 2017. Provided government promoting Autogas – it can be the right substitute for CNG

GDP growth crossed 7%; per capita income

estimated USD 3,000 which is USD 1600+

now.

•Purchase power increase makes alternate fuel like LPG more attractive

Challenges

Safety throughout the value chain

International Price fluctuation of LPG

Insufficient infrastructure causing higher transport cost

Influence of Channel Partners

Government policy, bureaucracy

Sourcing of LPG, lesser draft in rivers

Unplanned expansion of city

Others….(cost of business, distribution etc.)

Challenge: Converting the NG domestic users

No of NG customers (approx.)

LPG use/month

(kg)

Additional Yearly LPG requirement

(MT)

Additional cylinders required (pcs) approx.

2,500,000

12 360,000 1 crore

18 540,000 1.25 crore

24 720,000 1.60 crore

- Another 1 million+ illegal connection of NG exists in the country- Total 3 million+ households using a mixture of NG, LPG, Kerosene, firewood,

electricity, bio-fuel etc.

Challenge: Decanting/Illegal Filling

Recommendations:

Favourable Government

Policy

• Minimum bureaucracy: Quick approvals, One point service

• Favourable import duties, initial VAT & Tax exemption

• Ensure quality investment (local and foreign) with higher value addition

• Pricing strategy of NG, Fuel Oil, other alternatives

Promote LPG

• Government and LPG Operators need to promote LPG as the best alternative fuel

• Change people’s perception positively on LPG as safe and efficient

• Brand awareness, safety campaign

Thank YouMohammed Saidul Islamsislam1999@yahoo.comsaidul.islam@laugfsgas.com.bd+8801730300370