2nd edition of the Gas Fuel Forum: sanctions and Fit for 55

The Gas Fuels Forum attracted an even larger number of participants this year than last year, having already become a permanent fixture on the calendar of European meetings of the liquefied petroleum gas industry.

The first thematic session, What is the World of LPG?, was opened by Undersecretary of State at the Ministry of Climate and Environment, Minister Milosz Motyka, followed by talks on the industry's strategic challenges by Michael Kelly, Chief Advocacy Officer of the World Liquid Gas Association, Ewa Abramiuk-Lété, Managing Director of Liquid Gas Europe, and Dr. Rebecca Boudreaux, President of Oberon Fuels.

Minister Milosz Motyka emphasized the attention with which the Polish government is approaching the issue of the implementation of the embargo on liquefied petroleum gas from Russia, and its openness to cooperate with the LPG industry in ensuring the supply of the Polish market once the sanctions are in full force. Minister Motyka assured the industry of its willingness to jointly solve problems arising from the embargo and invited constructive dialogue on the issue. A meeting with the industry will be held in the first days of May to establish an action plan for the coming months.

Michael Kelly, representing the World Liquid Gas Association, outlined the context of the process that led to the organization's name change (formerly: World LPG Association) in 2023. Climate change and the political actions that have been taken in Europe and around the world to combat it are leading to a gradual shift away from fossil fuels and the adoption of their renewable counterparts. WLGA must take a leading role in promoting a new market for renewable liquefied petroleum gas as part of the solution to the global climate change problem. Michael Kelly pointed out what the organization believes are the most important challenges facing the industry: misconstrued regulatory solutions that send conflicting signals to the market, the global financial crisis, and political populism pointing to apparent simple solutions to complex problems.

Ewa Abramiuk-Lété presented a picture of the liquefied petroleum gas market from the perspective of Brussels at the unique moment in history in which we find ourselves. With the adoption of a whole package of legal solutions (the so-called Fit for 55) by the European institutions, the EU countries are facing the great challenge of implementing them into national law, and how they are implemented will determine the market's prospects over the next decade. Ewa Abramiuk-Lété also presented the prospects of a whole new group of products - renewable gaseous fuels - which are now entering European markets.

Finally, Ewa Abramiuk-Lété invited participants to the European LPG Congress, the largest industry event on the continent, which Liquid Gas Europe with the support of the Polish LPG Organization is organizing in Katowice in 2025.

Finally, Dr. Rebecca Boudreaux presented the history of Oberon Fuels, today a leading technology company in the renewable liquefied petroleum gas market, producing dimethyl ether (DME), a fuel with properties similar to a blend of propane and butane, whose industrial-scale production is not related to the production of liquid hydrocarbons. In a true tour de force , Dr. Boudreaux presented the experience of commercializing and scaling up production of the new fuel in the US in the context of work on its implementation in the European Union. She also answered a series of questions from the floor about the properties of DME compared to traditional LPG and the norms and standards for its use as a biocomponent.

Traditionally, the nail on the agenda of the Gas Fuels Forum was the presentation of the Annual Report of the Polish LPG Organization. In her speech, POGP Chairwoman Ewa Gawryś-Osińska presented data for the LPG market in Poland for 2023. The volume of LPG consumption remained at the level of the previous year (2,500 thousand tons, +0.2% y/y), but imports and re-exports of the raw material increased significantly. Shipments passing through Poland now go to Ukraine.

Demand for LPG in Poland is met with supplies from abroad - domestic production invariably covers 1/5 of demand. The volume of imports increased by 6.5% in 2023 compared to the previous year, reaching 2,625 thousand tons. Meanwhile, in the 2 years since the Russian invasion, LPG exports to Ukraine have increased from 10,000 tons in 2021 to 390,000 in 2023. Thanks to its ease of transportation and storage, LPG has become the preferred energy source there - along with fuel oil - for heating, cooking and powering generators.

Russia remained the main supplier of liquid gas to Poland in 2023. Gas supplies from this direction increased by 43 thousand tons in absolute terms, reaching 1,203 thousand tons, although the percentage share in the market supply fell y/y from 47.1% to 45.8%. Sweden remains an important supplier of LPG to Poland, from where we imported 585 thousand tons of the product last year (22.3% of the total volume of supplies). The diversification of supply directions is progressing - in 2022 ¾ of LPG imports to Poland came from Russia and Sweden, in 2023 this share dropped to ⅔. In 2023, we noted, among other things, an increase in supplies from the UK, the Netherlands and the US - more than 100,000 tons of LPG were imported from each of these countries. At the same time, the share of LPG imported by sea is growing - in 2023 it was already nearly 40% of total imports against 48% of deliveries by rail and about 9.5% by road tankers.

The Polish LPG market is distinguished from Europe primarily by the role of autogas - an unprecedented ¾ of the LPG consumed on the Vistula powers cars. In the European Union, the Polish autogas sector is the clear leader in terms of the number of cars (3,452 thousand according to the Central Statistical Office), the number of stations (7,370), as well as the volume of consumption (1,890 thousand tons). Poland (13% of total registrations) and Italy(9%) account for the current role of LPG in the road transport fuel mix in the Union - LPG remains the most common transportation alternative fuel in Europe, still ahead of electricity. LPG was a very attractively priced fuel in 2023. LPG retail prices remained consistently below the previous year's levels.

Note the steady growth in the use of LPG in the industrial sector. During the 2021-22 energy crisis, natural gas prices fluctuated wildly, and the European Union made it mandatory for member states to reduce their consumption of the resource. As a result, new industries like glassmaking and foundries joined the growing ranks of industrial LPG consumers in Poland, using LPG to reduce their natural gas intake. As a result, the segment recorded another year of growth (2.7% in 2023, 2.8% in 2022, 5.9% in 2021).

The full POGP Annual Report for 2023 is available for download in the POGP Reports section.

The second session of the day, Logistics Challenges from a Central European Perspective, was devoted to developing the threads of supplying the Polish market with liquefied petroleum gas after the liquid gas embargo from Russia took effect.

Dr. Szymon Araszkiewicz and Dr. Jakub Bogucki of Information Market presented scenarios related to the full entry into force of sanctions. The analysts presented a reassuring vision of a market where the price stabilizes at a higher level than before, reflecting the difference in the cost of imports from directions other than Russia. They noted that companies have had time to prepare for the embargo's entry into force, and the expected LPG price hike will not cause the fuel to lose its competitiveness. According to Information Market representatives, the entry into force of sanctions - unlike in the case of the coal market in 2022. - does not herald a collapse of the market, but rather a temporary disruption.

Robert Stepien of Primagaz Central Europe GmbH outlined a picture of the structure of LPG supplies to Central and Eastern Europe, pointing out the European Union's low level of dependence on LPG supplies from Russia - the exception historically being Poland and the Baltic States. Although historically the domestic market was supplied primarily from the Russian direction, data from recent years clearly indicate the role of sea transport and the Baltic, which is becoming a window to the world and, after the embargo came into force, the main gateway to the Polish LPG market. Robert Stępień noted at the same time that infrastructure investments in Poland are behind schedule, and as a result, logistics bottlenecks will remain a problem in the coming years.

Sare Zülfikar, a maritime freight expert from the Turkish company Negmar, presented a very detailed analysis of the LPG and LNG shipping market - including charter costs and the ongoing order book for new gas carriers. The 2021 energy crisis and Russia's invasion of Ukraine prompted a quick response from shipowners, but there is currently a wait of about four years to receive LPG carriers, so the fleet ordered at that time, which will increase LPG transport capacity, will enter service in 2025-2027. The role of LPG maritime transport will grow in the coming years.

At the end of session two, Argus Media Vice President David Appleton presented a picture of the global LPG market. The expert presented the mechanism of price formation on a global basis, which is mostly influenced by supply from the largest exporter - the US - and demand from the largest importer - China. Poland in past years was largely insulated from the effects of this mechanism due to the supply by rail from Russia, but as a consequence of the embargo coming into force, it is these factors that will shape prices in Poland to the greatest extent. David Appleton stressed that this process is already under way, as in 2020-2021 the average monthly volume of LPG imported to Poland by sea reached about 53 thousand tons, and for the next 2 years increased to an average of 89 thousand tons.

In the third session, speakers discussed the impact of new European regulations on the LPG market. An introduction to the issue was given by Bartosz Kwiatkowski, Director General of POGP, who outlined the complex nature of the European Green Deal, the contradictions between some of the instruments it covers, and the misunderstandings and misrepresentations it entails. He also stressed that while European regulations enter into force ex officio, directives require transposition into national law, i.e. proper implementation into Polish laws.

Janusz Starościk, president of the Association of Manufacturers and Importers of Heating Equipment (SPIUG), presented the enacted and yet-to-be-designed solutions for gas heating and explained the possibilities for using gas-fired boilers after the new European regulations come into force. SPIUG, together with POGP and the Chamber of Commerce of the Gas Industry, in March issued a study titled Gas fuels - the main pillar of the heating mix, to confront the misinformation on gas heating currently appearing in the media due to the unclear nomenclature of European regulations, as we recently wrote about on the POGP website.

Robert Jeszke, head of the Center for Climate and Energy Analysis, meanwhile presented price scenarios for the so-called ETS2, a Europe-wide_CO2 emissions trading system for the buildings and transport sectors. Once the new regulations come into force, liquefied petroleum gas distributors will be required to report and purchase emission allowances for the fuel they sell - and starting in 2024, they must register in the register of greenhouse gas emitters maintained by the National Center for Balancing and Emissions Management. For consumers of fossil gas, this will mean a price increase of several percent starting in 2027. - and probably much higher from 2030.

Westport Fuel Systems Vice President Marco Seimandi then presented the impact of the new regulations on the autogas market. The biggest challenge for the industry is a ban on the sale of new internal combustion-powered passenger cars in Europe from 2035 and a 90 percent reduction in carbon dioxide emissions from heavy-duty vehicles by 2040. The effects of these regulations will reinforce the price signal coming from the inclusion of road transportation in the ETS2 system, with the aim of administratively improving the competitiveness of electric cars and reducing the operation of passenger cars in favor of public transportation.

The need to commercialize renewable liquefied petroleum gas, which will gradually displace fossil fuels, emerges clearly from all the presentations in session three.

The Gas Fuels Forum closed with a presentation by Svyatoslav Kariuk of I-Maximum, who presented opportunities to develop the industrial segment of the liquefied petroleum gas market by using it as a backup or complementary solution to natural gas. We wrote about synthetic natural gas technology on POGP's Spring 2024 website. I-Maximum, one of the Forum's sponsors, also organized a side event to the conference - a visit for interested parties to its plant in Parzniew near Warsaw.

The Gas Fuels Forum hosted Nikki Brown, one of the leaders of the Women in LPG initiative, at 2024 . Nikki Brown hosted a breakfast format meeting for women leaders in the LPG industry - the contact person for the project is Aleksandra Kolakowska.

In 2024, for the first time, a component of the Gas Fuels Forum was an exhibition module, where entrepreneurs had the opportunity to present their offerings to industry partners. Joining us as exhibitors were the following companies: Chemet, ELGUM/MannTek, IPS System, Gazuno, GOK, Otodata Technologies Europe, STOKOTA, and Vending Robotics.

The 2024 Gas Fuels Forum once again proved the need for an international conference in Poland, where representatives of the domestic industry meet with their international partners in a substantive discussion. We would like to thank for the support of our sponsors - the companies Gaspol and I-Maximum, as well as the honorary patron: Energy Regulatory Office and our media partners: A95 Consulting Group, Argus Media, CIRE, e-petrol.pl, Gazeo, Market Monitor, DESCRIPTION: A Dow Jones Company and High Voltage.