Strategic design for imported liquefied petroleum gas distribution systems in East China

Abstract

Numerous foreign investors are entering the Chinese energy markets. In China more than 50% of energy is consumed in the form of coal. In order to improve the environment, the Chinese government encourages the usage of natural gas and liquefied petroleum gas. It takes long time and lots of money for China to build up its natural gas grids. However, liquefied petroleum gas has been widely applied to China in recently years. With so many over-invested facilities, the existing distribution systems are not efficient. The theme of this thesis emphasizes on building up a compact, simple, and powerful distribution system. The key principle is to minimize the total cost of a distribution system. This includes raising the efficiencies of the facilities, locating facilities on necessary spots, and make the system flexible. These principles represent the pillars that make a LPG company competitive. It was concluded that an effective logistic system as well as good risk management help a LPG company success in China. China has become a formal member of the World Trade Organization but China is still a communist country. An enterprise has to handle the situation. On the other hand, the price risk is huge for LPG. To hedge at least part of the purchase costs can help a LPG company stabilize its financial operation.