The future of LPG at Forum Paliw Gazowych

Forum Paliw Gazowych (the Gaseous Fuels Forum) proved to be the largest and most important conference event for the liquefied gas sector so far in 2023. It comprised an opening banquet and 4 sessions:

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

In the first session, the international climate for LPG was discussed by Przemysław Bryksa, Director of the Department of Oil and Transport Fuels at the Ministry of Climate and Environment, James Rockall, Managing Director of the World LPG Association, David Appleton, Vice President for LPG at Argus Media, Ewa Abramiuk-Lété, Managing Director of Liquid Gas Europe, and Stanisław Jabłoński, CEO 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 substitutes for LPG in Poland’s energy transition. He considered the creation of a market for renewable fuels to be very important for preserving the role of liquefied gas in the coming decades, since renewable fuels - especially those produced locally - would ensure security of supply while at the same time delivering emission reduction targets. Bryksa also referred to the question of imposing an embargo on LPG from Russia, saying that the Polish position on this matter emphasizes the need for solidarity in action at European Union level, since the imposition of unilateral restrictive measures would be ineffective. He identified the need to diversify sources of supply and to optimize the system of mandatory stockholding as the main challenges.

James Rockall then presented the applications of liquefied gas in the context of the global energy crisis - including the outlook for renewable liquefied gas (bioLPG and dimethyl ether), as well as for hybrid systems based on the combined use of liquefied gas and heat pumps. Liquefied gas is currently an option that is available, affordable and acceptable to all users, as it is based on proven technology that does not require deep technological change. Rockall assured the audience that in the future, too, LPG will remain present in the global energy mix.

David Appleton focused on the LPG market in 2023. He noted that the relatively low prices of liquefied gas compared with other fuels in 2022 and 2023 result largely from weaker demand from the Chinese economy. Chinese polypropylene producers in particular have cut consumption because of the low demand for their products - probably still linked to pandemic restrictions. Over the same period, high supply of American LPG kept prices at a low level. David Appleton stressed that Russia is not, on a global scale, a large producer that would determine world prices for the commodity. For Forum Paliw Gazowych, Argus prepared a special report devoted to the Polish market.

In her presentation, Ewa Abramiuk-Lété focused on the legislative challenges that the European Union poses for the liquefied gas market. The greatest of these are the breach of the principle of technology neutrality and the push for electrification of the economy as an instrument of decarbonization - illustrated by the ban on the sale of combustion-engine cars after 2035 and by calls for a ban on the sale of heating boilers from 2029 - and the need to secure an adequate supply of renewable liquefied gas to meet the needs of the European economy while respecting the goal of EU climate neutrality by 2050. This subject was discussed in greater depth during the POGP webinar in February.

Stanisław Jabłoński presented EkoBenz’s experience in producing bioLPG, a renewable substitute for gas of fossil origin, from bioethanol obtained through the fermentation of organic waste. He stressed the very high potential of renewable liquefied gas in decarbonizing the Polish economy, at capital expenditure disproportionately lower than in a full electrification scenario - particularly in the transport sector. He called for support mechanisms for bioLPG production to be created in Poland, which would make it possible to realize the available potential in full.

In the second part of Forum Paliw Gazowych, the 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 grew to 2,495 thousand tons, that is by 2.5% compared with 2021. The POGP Annual Report for 2022 is available for download in the POGP Reports section.

Demand for LPG in Poland is met by supplies from abroad – domestic production covers 1/5 of the requirement. Import volumes rose in 2022 by 305 thousand tons, and at the same time the volume of the commodity leaving Poland is growing – by more than 104%. The difference went to Ukraine: its share in total LPG exports from Poland exceeded 51% and reached 236 thousand tons, against just 10 thousand tons a year earlier.

Liquefied gas reaches Poland primarily from Russia (47.1%, against 58.2% in 2021) and Sweden (30.3%, against 20.3% in 2021). Russia’s share of imports has been falling steadily since 2019 in favor of seaborne deliveries from Sweden, and this process accelerated after 24 February 2022. Kazakhstan returned to the top three suppliers after 3 years (4.3%), and for the first time the United States appeared in this group on a significant scale (2.8%).

Poland’s LPG market stands out in Europe for the role of autogas – an unparalleled ¾ of the liquefied gas consumed in the country fuels cars, and sales in this segment recorded another year of growth (3.6% year on year). Poland is the largest autogas market in the European Union. According to Statistics Poland (GUS) data, 3.4 million passenger cars (13.6% of all registrations) run on this fuel. In some provinces the share of autogas-fueled cars is higher – the leaders are Łódzkie (19.2%), Lubelskie (18.7%) and Podkarpackie (16%).

In 2022 around 65 thousand new LPG conversion systems were installed in Poland, and a large group of Ukrainian cars running on LPG also appeared on the country’s roads. Interest in autogas is not fading, thanks to its favorable price relative to gasoline: in 2022 the price of a liter of LPG at the pump was 48.9% of the price of gasoline. The warm winter, in turn, contributed to a 5.9% fall in sales in the residential sector.  Households using LPG were not covered by the Anti-Inflation Shield, but in 2022 they gained the option of applying for one-off direct payments of PLN 500.

The presentation of the Report was followed by a discussion panel devoted to changes in LPG supply chains serving the Polish market, moderated by Dr. Andrzej Sikora of the Energy Studies Institute, with the participation of Paweł 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 at VTG Rail Europe GmbH, and Robert Stępień, Supply Chain Manager at Primagaz Central Europe GmbH. Robert Stępień delivered an introductory presentation setting out the current mechanism for supplying the Polish market with LPG, with the growing role of seaborne terminals. Paweł Bakun discussed the delivery of what is currently the largest investment project in Poland, a polypropylene production plant together with a marine terminal, which will be expanded in the future so that it can potentially also supply the wholesale market with propane brought in by sea. The project will increase domestic LPG consumption by around 20%. Przemysław Podgórski discussed the market outlook and the investments of the Unimot SA group, including the acquisition of part of the logistics assets of Orlen and Lotos, while Ernest Piotrowski addressed the key constraints of rail infrastructure for the carriage of liquefied gas - including the availability of rail tank cars. Russia’s invasion of Ukraine in 2022 also had a negative impact on the rail market - Ukrainian plants such as Azovstal were important suppliers of components for it. The panel was commented on by Stanisław Batraczenko, President of the Ukrainian Liquefied Gas Association, who thanked the Polish industry for the support given to Ukraine during the ongoing war, particularly important in the face of the systematic destruction of energy infrastructure by the Russians.

The third session of the Forum was 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 at the Energy Regulatory Office, Michał Faliszewski, legal counsel at Gaspol SA, and Piotr Siudej, representative of Chemet GLI SAS, with Bartosz Kwiatkowski acting as moderator. Jan Urbanowicz discussed the experience of TDT in the technical inspection of steel LPG cylinders not certified in line with the TPED directive, since it took over responsibility for inspection activities in October 2022, and encouraged businesses to continue the dialogue in order to improve the statistics - according to Urbanowicz, within 6 months the share of cylinders rejected in the technical inspection process fell from close to 30% to about 8%. Lesław Żarski spoke about the rationale for the legislative initiative on regulating the cylinder market in the Act of 10 April 1997 - the Energy Law, and signaled that in his view the cylinder market should be covered by uniform, comprehensive regulation. URE supports making liquefied gas bottling plants subject to a licensing requirement, given the numerous observed cases of the practice of placing LPG in cylinders on the market by small, unlicensed businesses outside the requirements of the law, creating a grey area of significant scale. Michał Faliszewski discussed the most important demands submitted by businesses to TDT and URE regarding the proposed and implemented changes for the cylinder market, paying particular attention to the problem of equal treatment of businesses and to the systemic gap represented by unreliable operators making unfair use of cylinders certified by other entities. He agreed with Director Żarski on the absence of a single legal act regulating trade in LPG cylinders. Piotr Siudej, in turn, presented the French market’s perspective on the technical inspection of cylinders, carried out by notified bodies selected by the business itself. 2023 promises a continuation of the discussion on the future of the cylinder market.

After a panel dominated by the theme of steel cylinders, Edyta Filipowska-Raś and Geir Vethe of Hexagon-Ragasco introduced participants to their alternative, that is composite cylinders. The Norwegian product is still little known in Poland, so the speakers focused on safety and ease of use.

The fourth session, closing the Forum, was devoted to the digitalization of reporting in the liquefied gas trading industry. Grzegorz Stępniak, Project Manager of the Fuel Platform at the Government Strategic Reserves Agency, discussed the system being launched by RARS, while Robert Michalski, Deputy Director of the Department for Combating Economic Crime at the Ministry of Finance, presented the Connect+ package, a set of solutions covering changes to the SENT act, the Energy Law, the excise duty act and the act on the National Revenue Administration. The Fuel Platform is intended to introduce a uniform system of reporting arising from the act on stocks, the act on monitoring and controlling fuel quality, the act on biocomponents and liquid biofuels, and the Energy Law. Businesses would use a single interface for reporting to RARS, the Energy Regulatory Office, the Ministry of Climate and Environment and the National Revenue Administration. The Fuel Platform will become a mandatory data reporting tool from 1 July this year. The Central Register of Excise Goods provided for in the Connect+ package would enter into force on 1 February 2024, with an 18-month transition period. The act implementing the Connect+ package is currently at the stage of analysis of the comments submitted in the public consultation process, in which the Polish Liquefied Gas Organization filed extensive comments.

‍Forum Paliw Gazowych brought together around 220 participants at the Mercure Centrum hotel in Warsaw, about 1/3 of them guests from abroad. This proves the market’s demand for the initiative of the Polish Liquefied Gas Organization, held every two years before the COVID pandemic and revived in April 2023 in a new format of cooperation with Information Market SA. In the editions to come we will take up further key strategic issues for the LPG market and will seek to broaden the community that the Forum brings together, both with domestic delegates and with new foreign partners.

We thank the sponsors for supporting the Forum Paliw Gazowych project - the event took place thanks to the support of our member companies: Gaspol SA, AmeriGas Polska Sp. z o.o. and Hexagon Ragasco.

We invite everyone interested in the initiatives undertaken by the Polish Liquefied Gas Organization to read the monthly POGP newsletter!

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