About the future of LPG at the Gas Fuels Forum

The Gas Fuels Forum turned out to be the largest and most important conference event for the liquefied gas industry so far in 2023. It consisted of an opening banquet and 4 sessions:

1. Liquefied gas in Poland, Europe and the world.
2. Changes in the supply chains of liquefied gas in Poland with the presentation of the POGP Annual Report for 2022
3. New challenges for the cylinder market in Poland.
4. Digitalization of turnover and reporting in the industry.

In the first session, Przemysław Bryksa, Director of the Department of Oil and Transport Fuels from the Ministry of Climate and Environment, James Rockall, Managing Director of the World LPG Association, David Appleton, Vice President of Argus Media for LPG, Ewa Abramiuk-Lété, Managing Director of Liquid Gas Europe and Stanisław Jabłoński, President of EkoBenz Sp. z o.o..

After discussing the advantages of LPG as a fuel, Przemysław Bryksa presented the risks related to security of supply and stressed the possible role of renewable LPG substitutes in the energy transition of Poland. He considered the creation of a renewable fuel market to be very important for preserving the role of liquefied gas in the coming decades, as renewable fuels - especially of local production - would ensure security of supply while achieving reduction targets. Bryksa also referred to the issue of introducing an embargo on LPG from Russia, saying that the Polish position on this issue emphasizes the need for solidarity action at the level of the European Union, since the imposition of unilateral restrictive measures would be ineffective. He identified as the main challenges the need to diversify the supply routes and to optimize the system for maintaining mandatory stocks.

James Rockall then presented the applications of liquefied gas in the context of the global energy crisis - including prospects for renewable liquefied gas (BioLPG and dimethyl ether), as well as hybrid solutions based on the use of liquefied gas and heat pumps. Liquefied gas is now an affordable, affordable and acceptable option for all users as based on proven technology that does not require major technological changes. Rockall assured that LPG will continue to be present in the global energy mix in the future.

David Appleton focused on the LPG market in 2023, noting that the relatively low prices of liquefied gas compared to other fuels in 2022 and 2023 were largely due to weakening demand from the Chinese economy. In particular, Chinese polypropylene producers have reduced consumption due to low demand for their products - probably still related to pandemic restrictions. During the same period, a high supply of American LPG kept prices low. David Appleton stressed that Russia is not a large producer on a global scale that would determine world prices for raw materials. Argus on the occasion of the Gas Fuel Forum prepared Special report on the Polish market.

In her speech, Ewa Abramiuk-Lété focused on the legislative challenges posed by the European Union to the liquefied gas market. The biggest of these are the violation of the principle of technological neutrality and the push for the electrification of the economy as an instrument of decarbonisation - examples of which are the ban on the sale of combustion cars after 2035 and the demand to ban the sale of heating boilers from 2029 - and the need to ensure an adequate supply of renewable liquefied gas in order to meet the demand of the European economy while respecting the objective of achieving EU climate neutrality by 2050, this topic was discussed more widely during February POGP Webinar.

Stanisław Jabłoński presented the experience of EkoBenz in the production of BioLPG, a renewable substitute for fossil gas, from bioethanol obtained from the fermentation of organic waste. He stressed the very great potential of renewable liquefied gas in the decarbonization of the Polish economy with investment expenditures disproportionately lower than in the scenario of full electrification - in particular in the transport sector. He called for the creation of support mechanisms for the production of BioLPG in Poland, which would allow to fully realize the available potential.

In the second part of the Gas Fuels Forum, President of the Polish Liquefied Gas Organization Ewa Gawryś-Osińska presented the latest Annual Report containing data for 2022. Despite the mild winter, the liquefied gas market in Poland increased to 2495 thousand tons, i.e. 2.5% compared to 2021. The 2022 POGP Annual Report is available for download in the POGP Reports section.

The demand for LPG in Poland is met by supplies from abroad — domestic production covers 1/5 of the demand. The volume of imports increased in 2022 by 305 thousand tons, while at the same time the amount of raw material leaving Poland is growing — by more than 104%. The difference went to Ukraine: its share in the total export of LPG from Poland exceeded 51% and reached 236 thousand tons compared to only 10 thousand tons in the previous year.

Liquefied gas comes to Poland primarily from Russia (47.1% versus 58.2% in 2021) and Sweden (30.3% versus 20.3% in 2021). Russia's share of the import structure has been steadily declining since 2019 in favour of deliveries by sea from Sweden, and this process accelerated after 24 February 2022. Kazakhstan returned to the top three suppliers after 3 years (4.3%), and the United States (2.8%) appeared on a significant scale for the first time in this group.

The Polish LPG market is distinguished from Europe by the role of autogas — an unprecedented ¾ of the liquefied gas consumed on the Vistula River powers cars, and sales in this segment recorded another year of growth (3.6% y/y). Poland is the largest autogas market in the European Union. According to the Central Statistical Office, 3.4 million passenger cars (13.6% of all registrations) use this fuel. In some provinces, the share of cars powered by autogas is higher — the leaders are Łódź (19.2%), Lublin (18.7%) and Podkarpackie (16%).

In 2022, about 65 thousand new gas installations were installed in Poland, and a large group of LPG powered Ukrainian cars appeared on the national roads. Interest in autogas does not pass due to the favorable price ratio for gasoline: in 2022, the price per liter of LPG at the distributor accounted for 48.9% of the price of gasoline. On the other hand, the warm winter contributed to a decrease in sales in the municipal sector by 5.9%. Households using LPG were not covered by the Anti-Inflation Shield, but gained the opportunity in 2022 to benefit from one-off direct subsidies in the amount of PLN 500.

The presentation of the Report was preceded by a panel discussion on changes in LPG supply chains for the Polish market, moderated by Dr. Andrzej Sikora from the Institute of Energy Studies, in which they participated Pavel Bakun, Vice President of the Management Board of Grupa Azoty Polyolefins S.A., Przemysław Podgórski, Vice President of the Management Board of Unimot Paliwa Sp. z o.o., Ernest Piotrowski, Sales Manager Market Poland VTG Rail Europe GmbH and Robert Stepien, Supply Chain Manager Primagaz Central Europe GmbH. Robert Stępièn gave an introductory presentation, presenting the current mechanism of supplying the Polish market with LPG with the growing role of marine terminals. Paweł Bakun discussed the implementation of the largest investment project in Poland today, a polypropylene production plant with a marine terminal, which in the future will be expanded to be able to potentially supply the wholesale market with propane imported by sea. The implementation of the project will increase the national consumption of LPG by about 20%. Przemysław Podgórski discussed the market outlook and investments of the Unimot SA group, including the acquisition of part of the logistics assets of Orlen and Lotos, and Ernest Piotrowski discussed the key limitations of railway infrastructure in terms of transport of liquefied gas - including the issue of tank availability. Russia's invasion of Ukraine in 2022 also had a negative impact on the railway market - Ukrainian plants, like Azovstal, were important suppliers of components for this market. The panel commented Stanislav Batraczenko, President of the Ukrainian Liquefied Gas Association, thanking the Polish industry for the support given to Ukraine during the ongoing war, important especially in the face of the systematic destruction of energy infrastructure by Russians.

The third session of the Forum consisted of a discussion panel devoted to changes in the cylinder market in Poland. It was attended by Jan Urbanowicz, Director of Transport Technical Supervision, Lesław Żarski, Director of the Liquid Fuels Department of the Energy Regulatory Office, Michał Faliszewski, legal advisor to Gaspol SA and Piotr Siudej, representative of Chemet GLI SAS, and Bartosz Kwiatkowski acted as moderator. Jan Urbanowicz discussed TDT's experience in technical testing of LPG steel cylinders not certified in accordance with the TPED directive, since taking over responsibility for inspection activities in October 2022 and encouraged entrepreneurs to continue the dialogue in order to improve statistics - according to Urbanowicz, in 6 months the percentage of cylinders rejected in the technical testing process decreased from close to 30% to about 8%. Lesław Żarski spoke about the premises of the legislative initiative in the field of regulation of the cylinder market in energy law and indicated that in his opinion the bottle market should be covered by a single, comprehensive regulation. The URE is in favour of placing liquefied gas bottling plants under the concession obligation due to the numerous cases observed of the marketing of bottled LPG by small, unlicensed operators outside the legal requirements, creating a grey area of significant scale. Patron Michał Faliszewski discussed the most important demands of entrepreneurs submitted to TDT and URE in the scope of proposed and implemented changes for the bottle market, paying special attention to the problem of equal treatment of economic entities and the systemic loophole in the form of unreliable entrepreneurs using cylinders legalized by other entities in an unfair way. At the same time, he agreed with Director Żarski on the absence of a single legal act regulating the circulation of LPG cylinders. On the other hand, Piotr Siudej presented the perspective of the French market for technical tests of cylinders, carried out by notified bodies chosen by the entrepreneur. 2023 promises to continue discussions on the future of the cylinder market.

After the panel, which dominated the thread of steel cylinders, Edyta Filipowska-Ras and Geir Vethe from Hexagon-Ragasco presented the participants with their alternative, i.e. composite cylinders. The Norwegian product is still little known in Poland, hence the speakers focused on the topics of safety and ease of use.

The fourth, closing session of the Forum, was devoted to the computerization of reporting in the liquefied gas trading industry. Grzegorz Stępniak, The Project Manager of the Fuel Platform of the Government of the Strategic Reserves Agency, discussed the system launched by RARS, and Robert Michalski, Deputy Director of the Department for Combating Economic Crime of the Ministry of Finance - Connect+ package, a package of solutions including changes in SENT Act, Energy Law, Excise Act and KAS Act. The Fuel Platform aims to introduce a unified reporting system resulting from the Inventories Act, the Fuel Quality Monitoring and Control Act, the Biocomponents and Liquid Biofuels Act and the Energy Law Act. Entrepreneurs should use a unified interface for reporting to RARS, the Energy Regulatory Office, the Ministry of Climate and Environment and the National Tax Administration. The Fuel Platform will become a mandatory data reporting tool from 1 July this year. The Central Register of Excise Products provided for in the Connect+ package would come into force from 1 February 2024 with an 18-month transition period. The Act implementing the Connect+ package is currently at the stage of analysing the comments submitted during the public consultation process, in which the Polish Liquefied Gas Organisation made a broad comment.

‍The Gas Fuel Forum gathered at the Mercure Centrum hotel in Warsaw about 220 participants, of which about 1/3 were guests from abroad. This proves the market demand for the initiative of the Polish Liquefied Gas Organization, implemented in a two-year cycle before the COVID pandemic and revived in April 2023 r. in a new formula of cooperation with Information Market SA. In subsequent editions, we will address other key strategic issues for the LPG market and we will strive to broaden the environment that integrates the Forum, both with national delegates and new foreign partners.

We thank the sponsors for their support of the Gas Fuel Forum project - the event was held thanks to the support of our member companies, Gaspol SA, AmeriGas Polska Sp. z o.o. and Hexagon Ragasco.

All interested in the initiatives undertaken by the Polish Liquefied Gas Organization are invited to reading the monthly POGP newsletter!

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