LPG is widely used across the region by households and is increasingly used in industry, with the Iran war driving uptake, writes Lucien Chauvin
South American countries expect a surge in LPG use as part of the energy transition and, more immediately, to mitigate price volatility of other fuels.
Some policies in the region to boost LPG use have gained more ground since the Iran war has roiled markets and could disrupt fuel supply chains long after fighting ends. LPG is cleaner than other options, available and easy to transport, Chilean LPG distributor Abastible's legal director, Paula Jervis, says. "We need to work with authorities to highlight the virtues of LPG in the energy transition," she adds. Chilean LPG demand from the industrial sector is increasing as a result of environmental regulations as part of the energy transition, according to Jervis.
LPG is widely used across the region by households for heating and cooking but has had an increasing role in industry and transportation as part of strategies to reduce greenhouse gas emissions. This is especially true in economically developing countries where it often replaces more contaminating fuels such as wood or fuel oil.
Colombian industries are switching to LPG usage, with a 17pc increase last year compared with 2024, chief executive of Colombia's Montagas El-Laythy Safa says. This is in part to meet environmental regulations but also because of declining natural gas supply in the country. Colombia can more easily import LPG than natural gas, given its limited LNG import terminals and international pipelines.
The Brazilian government last November launched a new subsidy programme for LPG, Gas de Povo, that will provide low-income families with free 13kg cylinders. The scheme is expected to reach 15mn households, increasing LPG demand as it is rolled out fully. Ricardo Tonietto, legal director at Brazil's Supergasbras, one of four companies in Brazil that collectively control 83pc of the market, estimates that the programme will initially increase demand by up to 8pc/yr. In addition to combatting poverty, the scheme is designed to help Brazil lower greenhouse gas emissions by reducing the number of households that use wood as fuel. Although Brazil is the largest LPG producer in South America, it also relies on imports to meet demand. Consumption stood at around 7.9mn t in 2025, of which 1.4mn t was imported, Argus data show.
Argentina, which produces around 3mn t/yr of LPG — a figure set to grow significantly— is the region's largest net exporter. It exported approximately 1.7mn t in 2025, with 60pc of that going to Brazil and 25pc to Chile. The Argentinian government forecasts production to rise to 3.4mn t in 2026. It expects two planned projects by production companies, one by Mega, the other by TGS, to double production by the end of the decade.The energy secretary has been working on new rules for LPG since last year with the goal of deregulating the sector to stimulate new domestic uses and boost exports.
On the right road
Buenos Aires is also working on new legislation, including a fiscal stability law, to convert vehicles to run on autogas as it eyes expansion of the sector (see p10). "The fiscal stability law, which would last 10 years, would encourage private investment to develop the autogas market," the government's LPG director Paula Pellegrini says. Argentina has around 10,000 vehicles that run on LPG. The regional autogas leader, Peru, has approximately 650,000 vehicles running on LPG with nearly 1,600 service stations dispensing vehicle LPG, government data show. LPG use could help reduce energy poverty as well as emissions, service station operator Primax Peru general manager Jovan Pastor says.
"LPG's use will continue to increase in the region as part of the energy transition and in programmes to reach people living in energy poverty," Pastor says. Some 77mn people in the region lack access to clean and reliable cooking fuels and 17mn lack access to electricity, according to the UN.
