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

This year, the Gas Fuels Forum attracted even more participants than a year ago, making it a permanent fixture in the calendar of European liquefied gas industry meetings.

The first thematic session, What is the LPG world?, was opened by the Undersecretary of State at the Ministry of Climate and Environment, Minister Miłosz Motyka, followed 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 Miłosz Motyka stressed the attention with which the Polish government approaches the issue of the implementation of the embargo on liquefied gas from Russia, and its openness to cooperation with the LPG industry in ensuring supply to the Polish market after the full entry into force of sanctions. Minister Motyka assured the industry of the will to jointly solve the problems arising from the embargo and invited a constructive dialogue on this issue. In the first days of May there will be a meeting with the industry 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 change of the name of the organization (formerly: World LPG Association) in 2023. Climate change and the policy actions that have been taken in Europe and the world to combat it are leading to a gradual move away from fossil fuels and the adoption of their renewable counterparts. WLGA must take a leading role in promoting the new renewable liquefied gas market as part of the solution to the global problem of climate change. Michael Kelly pointed to the most important challenges for the industry: improperly constructed legal solutions that send conflicting signals to the market, the global financial crisis and political populism, which points to seemingly simple solutions to complex problems.

Ewa Abramiuk-Summer presented a picture of the liquefied gas market from the perspective of Brussels at a unique historical moment in which we find ourselves. Following the adoption by the European institutions of a whole package of legal solutions (the so called Fit for 55) EU countries face the great challenge of implementing them into national law, and how they are implemented will determine the market outlook over the next decade. Ewa Abramiuk-Lété also presented the perspectives of a whole new group of products - renewable gas fuels - that are currently entering the European markets.

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

Dr. Rebecca Boudreaux finally presented the story of Oberon Fuels, today a leading technology company in the renewable liquefied gas market, producing dimethyl ether (DME) - a fuel with properties similar to a mixture of propane and butane, the production of which on an industrial scale is not related to the production of liquid hydrocarbons. In the real tour de force Dr. Boudreaux presented experiences related to commercialization and scaling up of new fuel production in the USA in the context of work on its implementation in the European Union. She also answered a series of questions from the room about the properties of DME compared to traditional LPG and the norms and standards for its use as a biocomponent.

Traditionally, the highlight of the Gas Fuel Forum program was the presentation of the Annual Report of the Polish Liquefied Gas Organization. In her speech, POGP President Ewa Gawryś-Osińska presented data for the LPG market in Poland for 2023. The volume of consumption of liquefied gas remained at the level of the previous year (2,500 thousand tons, +0.2% y/y), but the import and re-export of the raw material increased significantly. Transports passing through Poland now end up in Ukraine.

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

Russia remained the main supplier of liquefied gas to Poland in 2023. Gas supplies from this direction in absolute terms increased by 43 thousand tons, reaching the level of 1 203 thousand tons, although the percentage share in the market supply decreased from 47.1% to 45.8% year-on-year. Sweden remains an important supplier of LPG to Poland, from where last year we imported 585 thousand tons of product (22.3% of the total volume of deliveries). Diversification of supply directions is progressing — in 2022 ¾ of LPG imports went to Poland from Russia and Sweden, in 2023 this share fell to ⅔. In 2023, we saw an increase in supplies from the UK, the Netherlands and the USA — more than 100,000 tons of LPG were imported from each of these countries. At the same time, the share of liquefied gas imported by sea is growing — in 2023 it was already close to 40% of total imports compared to 48% of deliveries made by rail and about 9.5% by road tankers.

The Polish LPG market is distinguished from Europe above all by the role of autogas — an unprecedented ¾ of the liquefied gas consumed on the Vistula River powers cars. In the European Union, the Polish autogas sector is a clear leader in terms of the number of cars (3 452 thousand according to the Central Statistical Office), the number of stations (7 370) and the volume of consumption (1 890 thousand t). Poland (13% of total registrations) and Italy (9%) account for the current role of LPG in the EU's road transport fuel mix — liquefied gas remains the most common alternative transport fuel in Europe, still ahead of electricity. LPG was a very attractive fuel in 2023. Retail prices of liquefied gas have remained consistently below the levels of the previous year.

There should be a steady increase in the use of LPG in the industrial sector. During the 2021-22 energy crisis, natural gas prices fluctuated sharply, and the European Union imposed an obligation on Member States to reduce the consumption of natural gas. As a result, new branches of the economy such as glass metallurgy and foundry joined the growing group of industrial LPG customers in Poland, using liquefied gas to reduce the consumption of natural gas. As a result, this 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.

Second session of the day, Logistics challenges from the perspective of Central Europe was devoted to the development of the topics of supply of the Polish market with liquefied gas after the entry into force of the embargo on liquefied gas from Russia.

Dr. Szymon Araszkiewicz and Dr. Jakub Bogucki from Information Market presented scenarios related to the full entry into force of sanctions. Analysts presented a reassuring vision of a market in which 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 the companies had time to prepare for the entry into force of the embargo, and the expected increase in LPG prices will not cause this fuel to lose its competitiveness. According to representatives of the Information Market, the entry into force of sanctions - unlike in the case of the coal market in 2022 - does not foreshadow a collapse of the market, but rather a temporary disturbance.

Robert Stepien Primagaz Central Europe GmbH drew a picture of the structure of LPG supply to Central and Eastern Europe, pointing to the low level of dependence of the European Union on the supply of liquefied gas from Russia - the exceptions historically were Poland and the Baltic countries. Although historically the domestic market was supplied primarily from the Russian direction, the data of recent years clearly indicate the role of maritime transport and the Baltic Sea, which becomes a window to the world and, after the entry into force of the embargo, the main gateway to the Polish liquefied gas market. Robert Stępièn pointed out that infrastructure investments in Poland are delayed, and as a result logistics bottlenecks will remain a problem in the coming years.

Sare Zülfikar, an expert in the field of sea freight from the Turkish company Negmar, presented a very detailed analysis of the LPG and LNG maritime transport market - including charter costs and the realized portfolio of orders for new gas vessels. The energy crisis of 2021 and the Russian invasion of Ukraine caused a quick response from shipowners, but the gas carriers are currently waiting for about 4 years, so the fleet ordered at that time, which will increase the transport capacity of liquefied gas, will enter service in 2025-2027. The role of maritime transport of LPG will increase in the coming years.

At the end of the second session, Vice President of Argus Media David Appleton presented a picture of the global LPG market. The expert presented the mechanism of price formation in global terms, which is most influenced by supply from the largest exporter - the USA - and demand from the largest importer - China. Poland in the past years has been largely isolated from the effects of this mechanism due to rail deliveries from Russia, but as a consequence of the entry into force of the embargo, it is these factors that will shape prices in Poland to the greatest extent. David Appleton stressed that this process is already underway, because in 2020-2021 the average monthly volume of LPG imported to Poland by sea reached about 53 thousand tons, and over the next 2 years it increased on average to 89 thousand tons.

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

Janusz Starościk, President of the Association of Manufacturers and Importers of Heating Equipment (SPIUG), presented the adopted and planned solutions for gas heating and explained the possibilities of using gas-fired heating boilers after the entry into force of the new European regulations. SPIUG together with POGP and the Chamber of Commerce of Gas in March published a study entitled: Gas fuels - the main pillar of the heating mixto confront the misinformation about gas heating that is currently appearing in the media due to the vague nomenclature of European regulations, what we recently wrote about on the POGP website.

Robert Jeszke, Head of the Center for Climate and Energy Analysis, presented the price scenarios for the so-called ETS2 system, i.e. the pan-European trading system for CO emission allowances₂ for the buildings and transport sectors. After the new regulations come into force, distributors of liquefied gas will be obliged to report and purchase emission allowances for the fuel sold - and already from 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 from 2027 - and probably much higher from 2030.

Vice President of Westport Fuel Systems Marco Seimandi He 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 diesel passenger cars in Europe from 2035 and a 90% reduction in CO2 emissions from trucks by 2040. The effects of these regulations will reinforce the price signal from the inclusion of road transport in the ETS2 system, which aims to administratively improve the competitiveness of electric cars and reduce the use of passenger cars for public transport.

From all the presentations made during the third session, it is clear that there is a need to commercialize liquefied gas of renewable origin, which will gradually displace fossil fuels.

The Gas Fuels Forum closed the presentation Świętosław Kariuk from the company I-Maximum, which presented opportunities for the development of the industrial segment of the liquefied gas market by using it as a backup or complementary solution for natural gas. We wrote about synthetic natural gas technology on the POGP website in the spring of 2024. The company I-Maximum, one of the sponsors of the Forum, also organized an event accompanying the conference - a visit for interested parties to its plant in Parzniewo near Warsaw.

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

In 2024, for the first time, an element of the Gas Fuels Forum was an exhibition module, within which entrepreneurs had the opportunity to present their offer to industry partners. The following companies have joined us as exhibitors: Chemet, Elgum/Manntek, Sistema IPS, Gazuno, GOOF, Otodata Technologies Europe, STOKOTA and Vending Robotics.

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