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, 92 LPG distribution projects and 1100 retail points, covering in 16 provinces.
With the popularity of LPG among residents in township and villages, the long-term and steady growth in LPG utilization in industrial and commercial markets, and especially the rapid development of LPG as a chemical raw material in petrochemical synthesis and deep-processing sector, LPG industry has confronted with a rare development opportunity since the end of 2014. The Group made full use of its existing LPG terminals, storage facilities and fleets of vessels and vehicles to boost international and domestic purchases of LPG, and in turn gradually increased the utilization rate of LPG assets. The Group capitalized the advantage of its vertical integrated business chain by putting in place a central procurement system of LPG resources for its downstream terminal business, so as to deploy its gas sources, storage resources and market coverage appropriately to reach an effective integration between the wholesale segment and retail terminal segment of LPG business, so as to maximize the overall profit of the supply chain. The Group also capitalized on its extensive urban natural gas network and resources across the country to assist in the expansion of the LPG distribution business from southern China to provinces and cities nationwide, thereby significantly raising the sales volume of LPG and realizing economies of scale. In addition, the Group’s logistics management of LPG business has also shown its initial effectiveness, with the sales management effectively enhanced through the optimization of sales management and control system and the construction of a sales information sharing platform to upgrade the level of sales management.