LPG conference in St. Petersburg completes its work highlighting vital issues of the market

The traditional MAXConference event, dedicated to the development of Russia’s LPG market, completed its work on December 2 in St. Petersburg having highlighted vital issues of the industry. The conference, which the company has been holding for many years in a team with Gazprom's subsidiary Gazprom GNP Holding, gathered a large number of participants both online and offline.

The interest in the topic is ascribed to current events in the industry, first of all, the high volatility of LPG prices, the ongoing pandemic, as well as the global trend involving decarbonization of fuel production. The latter is quite a challenge for Russian manufacturers who need to adapt the characteristics of the produced product to the requirements of consumers in Europe and the USA.

The main discussion of the conference in the first session, focused on the issues of LPG pricing, the dynamics and volume of LPG demand and supply in the market. Representatives of Federal Antimonopoly Service (FAS), Spimex, Refinitiv, Sibur and Gazprom GNP Holding played an active role in the discussion.

The participants argued about the role of the FAS in regulating the market, assessed the current situation with supplies to the domestic market and for export. Spimex, analyzing LPG exchange trading, presented a new price assessment basis — BTC Voynovka — which, according to the management of the exchange, will become an additional alternative to BTC Surgut for companies operating both in Western and Eastern Siberia.

Refinitiv presented a report on production collisions this year and price trends in the market, highlighting the factors which impact prices. The presentation made by Gazprom GNP Holding commercial director has become a colorful illustration of the processes on the market of petroleum products, in particular LPG: according to him, «black swans» accompanied the market all year, affecting the volume of production and prices. Gazprom GNP Holding sees futures contracts as a means to hedge risks in the future. The audience of the event, represented by companies operating and trading LPG in various parts of Russia, actively participated in the discussion, sharing experience and sometimes expressing doubts, concerns and bewilderment at some initiatives of governmental officials.

The second session was continued by «regional» companies: YUTA-AVTOGAZ, Smolenskaya gas filling station, Armavir gas filling station, KraisGaz. Representatives of the companies openly and directly talked about the problems they regularly face in their work, as a well as about the ambivalence of decisions of local administrations and difficulties with rolling stock.

Special focus was made on the problem of using LPG as an automobile fuel and its high competition not from «methane» engines, but from the increasingly popular electric vehicles, especially in the east of the country, given the proximity of the Japanese and Korean car markets. The director of Russian Automotive Market Research spoke about the prospects of electric vehicles.

The use of LPG is not limited to road transport. Traditionally, LPG is a raw material for petrochemicals. A global assessment of trends in this market was presented by an IHS analyst. A representative of Sibur, Russia's main petrochemical company, outlined global projects in the field, in particular, stressing China's leading role in this process. Krasnoyarsk Kraygaz told about other applications of LPG: the company sees prospects in using LPG as fuel in grain dryers. Hexagon Composites also noted that the demand for bottled gas from new segments is growing: gas grills, gas loaders, in the Horeca segment.

The interconnection of domestic and international LPG markets became the key topic of the second day of the conference. Experts on the global LPG market from FGE, NGL Strategy and SHV presented an in-depth analysis of global trends, spoke about trigger points for prices, the role of Russian LPG exports and the niche occupied by domestic companies in the European and Asian markets. The head of the Polish Unimot has completely captured the attention of the audience. Poland, as one of the main markets for Russia’s gas, receives LPG mainly by rail from Belarus. Taking into account the problems which currently exist in this region and the EU sanctions, supplies have proved difficult. The representative of the Ukrainian LPG market also focused on the current situation with the needs of the market in the region and cooperation with neighboring countries: Belarus, Russia and Poland.

The exports’ theme was continued by companies involved in the LPG transportation both within the country and abroad. At the beginning of the discussion, the Thomson Reuters expert described in detail the existing export directions for LPG supplies from Russia. A representative of the company Portenergo revealed the possibilities of a new hub in the Baltic for the transshipment of LPG. The presentation of Forwardis was devoted to the problem of gas transportation by railway to Europe.

Russia’s well-known transportation companies RPC UWC and SG-trans talked about transport solutions for the LPG deliveries and the safety of transportation, the availability of tanks and the use of rolling stock. Speaking about security, the SG-trans expert continued the topic that the representative of Rostechnadzor ( Russia’s government body in charge of safety issues in industry) raised in his speech on the first day. Thus, crystallizing another pressing problem of the industry: safety, state regulations and opportunities to follow them by market players.

MAXConference believes that December next year we will be able to discuss topical issues of the LPG market again.