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LPG Market Chain
(*) Statistical Annual 2006 - Source: ANP - www.anp.gov.br
Gás Liquefeito de Petróleo - GLP
Liquefied Petroleum Gas, better known as LPG, is a fuel for domestic use, and is the most popular consumer petroleum product, used mainly for household cooking. That is why it is important for the consumer to know how this product's market works, from production to the end user, and learn how its price is formed.
Today this market is regulated by the regulatory National Petroleum Agency (ANP) rules and by Law 9478/97. This law flexibilized the monopoly of the oil and natural gas sector, until then held by Petrobras, and released the price of the LPG producer in January 2002.
LPG may be produced by Petrobras refineries, other refining companies installed in Brazil, private petrochemical plants, or imported by any company authorized by ANP. LPG market chain begins with the sale in bulk by the producer or importer to distribution companies.
Distribution companies, in turn, receive the fuel through pipelines and resell a smaller portion to the industrial segment, generally bulk, using tanker trucks. A larger portion is sold directly to customers in the commercial, residential and institutional segments, in bulk or cylinders.
These consumers also buy cylinders at thousands of retail points of purchase. These points are attended by the distribution companies operating in Brazil, and in which Petrobras, as producer, cannot interfere in fixing the price.
The most common form of retail sale is the 13 kg cylinder, designed solely for residential use, and responsible for around 70% of LPG sales in Brazil through the points of purchase.
As can be seen, there are situations in which Petrobras does not participate in the product's market chain, as in the case of LPG produced by the refineries and private petrochemical plants, and of the product that is imported directly by an agent other than Petrobras.
The Petrobras LPG selling price is divided in two: the value of the Petrobras product and taxation. This taxation is both state (ICMS1 VAT) and federal (CIDE, PIS/Cofins).
Included in the price of the cylinders paid by the consumers at the points of resale, in addition to the producer or importer's parcel, are also the costs and margins of the distribution companies and resale points.
As you can see, the price of the cylinder consists of several parcels and any alteration to at least one of them will reflect up or downward on the final consumer prices. We remind you that Petrobras can intervene only in part of the final consumer price formation: the price in its refineries, without tax and distribution and resale margins(see figure of price for 13 kg cylinder).
The prices at the resale points all over Brazil are monitored by ANP by weekly studies, whose results can be consulted on the Agency site (www.anp.gov.br).
Further information can be obtained from sac@petrobras.com.bror phone number 0800 78 9001.
(*) This link goes to an address outside the Petrobras system. Petrobras is not responsible for the content or policies/practices of privacy of the web sites that we indicate.
1 The ICMS Vat tax includes the portion referring to Tax Substitution, which is the amount collected by Petrobras referring to distribution company sales to retail points, and the latter to the end user.
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