Second Forum Paliw Gazowych: Sanctions and Fit for 55

This year Forum Paliw Gazowych (the Gaseous Fuels Forum) attracted an even larger number of participants than a year earlier, taking a permanent place in the calendar of European liquefied gas industry gatherings.

The first thematic session, What Is the LPG World Talking About?, was opened by the Undersecretary of State at the Ministry of Climate and Environment, Minister Miłosz Motyka, after which the industry’s strategic challenges were addressed 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, CEO of Oberon Fuels.

Minister Miłosz Motyka stressed the attention the Polish government pays to the implementation of the embargo on liquefied gas from Russia, and its openness to cooperation with the LPG industry in securing supply for the Polish market once the sanctions take full effect. Minister Motyka assured the industry of the will to solve the problems arising from the embargo together and invited it to a constructive dialogue on the matter. In the first days of May a meeting with the industry will be held to agree on a plan of action for the coming months.

Michael Kelly, representing the World Liquid Gas Association, outlined the context of the process that led to the organization’s change of name (previously: World LPG Association) in 2023. Climate change, and the political action taken in Europe and worldwide to counter it, are leading to a gradual move away from fossil fuels and to the adoption of their renewable counterparts. The WLGA must take a leading role in promoting the new market for renewable liquefied gas, which is part of the solution to the global problem of climate change. Michael Kelly pointed to what the organization regards as the industry’s most important challenges: badly designed legal solutions that send contradictory signals to the market, the global financial crisis, and political populism, which offers apparently simple solutions to complicated problems.

Ewa Abramiuk-Lété presented a picture of the liquefied gas market from the Brussels perspective at the exceptional historical moment in which we find ourselves. Now that the European institutions have adopted the entire package of legislation (the so-called Fit for 55) the countries of the Union face the great challenge of transposing it into national law, and the way it is transposed will determine the market’s prospects over the coming decade. Ewa Abramiuk-Lété also set out the outlook for a whole new group of products - renewable gaseous fuels - that are now entering European markets.

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

Dr. Rebecca Boudreaux closed the session with 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 the propane-butane mix, whose industrial-scale production is not tied to the production of liquid hydrocarbons. In a genuine tour de force Dr. Boudreaux described the experience of commercializing and scaling up production of the new fuel in the United States in the context of work on its introduction within the European Union. She also answered a series of questions from the floor on the properties of DME compared with conventional LPG and on the norms and standards governing its use as a biocomponent.

As is customary, the highlight of Forum Paliw Gazowych was the presentation of the Annual Report of the Polish Liquefied Gas Organization. In her address, POGP President Ewa Gawryś-Osińska set out the data on the Polish LPG market for 2023. Liquefied gas consumption held at the level of the previous year (2,500 thousand tons, +0.2% y/y), but imports and re-exports of the product rose significantly. The shipments passing through Poland now go to Ukraine.

Demand for LPG in Poland is met by supplies from abroad – domestic production covers, as ever, 1/5 of requirements. Imports grew in 2023 by 6.5% against the previous year, reaching 2,625 thousand tons. In the 2 years since the Russian invasion, by contrast, LPG exports to Ukraine rose from 10 thousand tons in 2021 to 390 thousand in 2023. Thanks to the ease of transport and storage, LPG has become the preferred energy source there - alongside heating oil - for heating, cooking and running generators.

Russia remained the main supplier of liquefied gas to Poland in 2023. In absolute terms, supplies from that direction rose by 43 thousand tons, reaching 1,203 thousand tons, although their percentage share in supplying the market fell y/y from 47.1% to 45.8%. Sweden remains an important supplier of LPG to Poland; last year we brought in 585 thousand tons of the product from there (22.3% of the total supply volume). The change in sources of supply is progressing – in 2022 ¾ of LPG imports reached Poland from Russia and Sweden, and in 2023 that share fell to ⅔. In 2023 we recorded, among other things, higher supplies from the United Kingdom, the Netherlands and the United States – more than 100 thousand tons of liquefied gas LPG was brought in from each of these countries. At the same time the share of liquefied gas brought in by sea is growing – in 2023 it was already close to 40% of total imports, against 48% of supplies carried by rail and around 9.5% by road tankers.

What sets the Polish LPG market apart in Europe is above all the role of autogas – an unmatched ¾ of the liquefied gas consumed on the Vistula fuels cars. Within the European Union the Polish autogas sector is the clear leader in terms of the number of cars (3,452 thousand according to Statistics Poland, GUS), the number of stations (7,370) and the volume of consumption (1,890 thousand tons). Poland (13% of all registrations) and Italy (9%) account for the current role of LPG in the fuel mix of road transport in the Union – liquefied gas remains the most widespread alternative transport fuel in Europe, still ahead of electricity. In 2023 LPG was a very attractively priced fuel. Retail prices of liquefied gas held consistently below the levels of the previous year.

A steady increase in the use of LPG in the industrial sector should be noted. During the energy crisis of 2021-22, natural gas prices were subject to violent swings and the European Union imposed on the Member States an obligation to reduce consumption of that commodity. As a result, new branches of the economy such as glassmaking and foundry work joined the growing group of industrial LPG customers in Poland, using liquefied gas in order to reduce their natural gas draw. The segment therefore 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 theme of supplying the Polish market with liquefied gas once the embargo on liquefied gas from Russia enters into force.

Dr. Szymon Araszkiewicz and Dr. Jakub Bogucki of Information Market presented the scenarios associated with the sanctions taking full effect. The analysts set out a reassuring vision of a market in which the price stabilizes at a higher level than hitherto, reflecting the difference in the cost of imports from directions other than Russia. They pointed out that companies had had time to prepare for the entry into force of the embargo, and that the expected rise in LPG prices will not cause the fuel to lose its competitive edge. According to the representatives of Information Market, the entry into force of the sanctions - unlike the case of the coal market in 2022 - does not portend a collapse of the market, but rather temporary disruption.

Robert Stępień of Primagaz Central Europe GmbH outlined the structure of LPG supply to Central and Eastern Europe, pointing to the low level of the European Union’s dependence on liquefied gas supplies from Russia - the historical exceptions being Poland and the Baltic states. Although the domestic market has historically been supplied above all from the Russian direction, the data of recent years clearly show the role of maritime transport and of the Baltic, which is becoming a window on the world and, once the embargo enters into force, the main gateway to the Polish liquefied gas market. Robert Stępień noted at the same time that infrastructure investment in Poland is behind schedule, and that logistics bottlenecks will as a result remain a problem in the years ahead.

Sare Zülfikar, an expert in maritime freight from the Turkish company Negmar, presented a highly detailed analysis of the market for the maritime transport of LPG and LNG - including charter costs and the order book being filled for new gas carriers. The energy crisis of 2021 and Russia’s invasion of Ukraine prompted a swift response from shipowners, but the wait for delivery of a gas carrier is currently around 4 years, so the fleet ordered at that time, which will increase liquefied gas transport capacity, will enter service in 2025-2027. The role of maritime LPG transport will grow in the coming years.

The second session closed with Argus Media Vice President David Appleton presenting a picture of the global LPG market. The expert set out the mechanism by which prices are formed globally, shaped above all by supply from the largest exporter - the United States - and demand from the largest importer - China. In past years Poland was largely insulated from the effects of this mechanism because of rail supplies from Russia, but as a consequence of the embargo entering into force it is precisely these factors that will shape prices in Poland to the greatest extent. David Appleton stressed that this process is already visibly under way, since in 2020-2021 the average monthly volume of LPG brought into Poland by sea was around 53 thousand tons, and over the following 2 years it rose to an average of 89 thousand tons.

In the third session the speakers discussed the impact of the new European regulations on the LPG market. The subject was introduced by Bartosz Kwiatkowski, Director General of POGP, who outlined the comprehensive nature of the European Green Deal, the contradictions between some of the instruments it comprises, and the misunderstandings and distortions that surround it. He also stressed that while European regulations enter into force automatically, directives require transposition into national law, that is to say appropriate implementation in Polish statutes.

Janusz Starościk, President of Stowarzyszenie Producentów i Importerów Urządzeń Grzewczych (SPIUG, the Association of Manufacturers and Importers of Heating Appliances), presented the solutions on gas heating that have been enacted and those still at the drafting stage, and explained the scope for using gas-fired boilers once the new European regulations enter into force. In March, SPIUG, together with POGP and Izba Gospodarcza Gazownictwa (the Chamber of Commerce of the Gas Industry), published a study entitled Gaseous Fuels - the Main Pillar of the Heating Mix, in order to confront the disinformation about gas heating that is now appearing in the media in connection with the unclear terminology of the European rules, as we wrote recently on the POGP website.

Robert Jeszke, head of Centrum Analiz Klimatyczno-Energetycznych (the Center for Climate and Energy Analyses), presented price scenarios for the so-called ETS2 system, the pan-European scheme for trading in CO₂ emission allowances for the buildings and transport sectors. Once the new rules enter into force, liquefied gas distributors will be covered by an obligation to report and to purchase emission allowances for the fuel they sell - and from 2024 they must already register in the greenhouse gas emitters register maintained by Krajowy Ośrodek Bilansowania i Zarządzania Emisjami (the National Center for Emissions Management). For consumers of gas of fossil origin this will mean a price increase of more than ten percent from 2027 - and probably a considerably higher one from 2030.

Westport Fuel Systems Vice President Marco Seimandi then presented the impact of the new regulations on the autogas market. The greatest challenge for the industry is the ban from 2035 on the sale in Europe of new passenger cars with internal combustion engines and the 90 percent reduction in carbon dioxide emissions from heavy goods vehicles by 2040. The effects of these regulations will reinforce the price signal flowing from bringing road transport under the ETS2 system, the aim of which is an administratively driven improvement in the competitiveness of electric cars and a reduction in the use of passenger cars in favor of public transport.

From all the presentations in the third session, the need to commercialize liquefied gas of renewable origin, which will gradually displace fossil fuels, emerges clearly.

Forum Paliw Gazowych was brought to a close by a presentation from Świętosław Kariuk of the company I-Maximum, who set out the growth opportunities for the industrial segment of the liquefied gas market through its use as a back-up or supplementary solution for natural gas. We wrote about synthetic natural gas technology on the POGP website in the spring of 2024. I-Maximum, one of the Forum’s sponsors, also organized an event accompanying the conference - a visit for those interested to its plant in Parzniew near Warsaw.

In 2024 Forum Paliw Gazowych hosted Nikki Brown, one of the leaders of the Women in LPG initiative. Nikki Brown chaired a breakfast-format meeting for women leaders of the LPG industry - the contact person for the project is Aleksandra Kołakowska.

In 2024, for the first time, Forum Paliw Gazowych included an exhibition module, in which companies had the chance to present their offering to partners from the industry. The following companies joined us as exhibitors: Chemet, ELGUM/MannTek, IPS System, Gazuno, GOK, Otodata Technologies Europe, STOKOTA and Vending Robotics.

Forum Paliw Gazowych in 2024 proved once again the need to hold an international conference in Poland at which representatives of the domestic industry meet their international partners for a substantive discussion. We thank our sponsors for their support - the companies Gaspol and I-Maximum, as well as our honorary patron: the Energy Regulatory Office and our media partners: A95 Consulting Group, Argus Media, CIRE, e-petrol.pl, Gazeo, Monitor Rynkowy, OPIS: A Dow Jones Company and Wysokie Napięcie.