Conference: Russia’s LPG Market 2020

Date: December 03–04, 2020

LPG market trends and development forecast discussed at conference in St. Petersburg

 St. Petersburg hosted the XI annual international conference «Russia’s LPG Market 2020», which was held in a mixed online-offline format. Gazprom gazonefteproducts Holding and Gazprom gazonefteproducts sales were the conference’s partners.

Traditionally, the conference began with an overview of the international LPG markets: assessment of supply and demand, import and export of the product. The discussion was launched by NGLStrategy with a presentation containing deep analysis of world LPG market. The company's expert noted the impact of the pandemic on the development of the market, slowing the growth of production and consumption of LPG in some parts of the world. At the same time, the analyst emphasized the increase in demand from China and the Asia-Pacific countries. The topic of the development of the Chinese LPG industry has been repeatedly raised at the conference by experts from the United States, Britain and Russia. They all agreed on the growing demand for the product from China and neighboring countries, where the rapid development of processing capacities is being witnessed.

A FGE representative, who spoke in an online format, highlighted the increase in demand for LPG for petrochemicals in the Asia-Pacific. In his opinion, LPG exports from the Middle East also continue to grow. According to FGE, LPG prices will be supported by the demand for the product from the petrochemical industry. Special attention was paid to the main «reference» points for Russia’s LPG in Europe, namely, the markets of Poland, Ukraine and Belarus. Experts from each country spoke in detail about the trends and expectations of exporters and transit countries. Ukraine spoke about the expected increase in sea born transportation. The speaker from Belarus focused on the development of BPPP capacities and diversification of raw material flows. Poland still relies on LPG use in the autogas market.

The uncertainty of the economic situation due to the epidemic has caused conflicting assessments of the price behavior in the LPG market both in Russia and around the world. A session was devoted to this topic, which was attended by representatives of Gazprom gazonefteprodukt holding, Russia’s energy ministry, Russia’s independent fuel union, Refinitiv and IHS Markit. The IHS Markit expert noted that, according to the company's forecasts, the main price benchmarks would recover.

Gazprom gazonefteprodukt sales, as one of the key distributors in Russia’s LPG the market, presented various tools for trading LPG in order to form a fair price: this is an electronic trading platform, trading on the SPIMEX, direct contracts, and delivery and settlement futures contracts. Since July, the company has launched a new basis in the section «petroleum Products» with a base pricing point at the Surgut station, which provides the liquidity of trading at one point, and actual shipments from any plant in Russia.

The energy ministry’s official, noting the volatility of LPG prices this year, said Russia’s LPG market is inert in general. The priority direction of the state is deep processing, so all the needs of the petrochemical industry in LPG, according to him, are covered by LPG exports. The official stressed that the government does not intend to return to LPG mandatory sales in the domestic market, and will also support the development of LPG for the needs of utilities. At the same time, the development of the automotive gas market will be focused on methane. The session devoted to the LPG retail market and the prospects for using LPG as a motor fuel was followed by an intense discussion. A representative of the Dagestan Association STS spoke about the usage of LPG as autofuel, analysis of the situation with gas stations was presented by an expert Agency OMT-KONSALT, who saw positive dynamics in recent years in the use of LPG as autofuel, especially in the southern regions of the country. At the same time, the analyst expressed confidence that the future is still for compressed natural gas, as a safer and more environmentally friendly fuel. His position does not seem to be shared by the representative of the largest Turkish company AYGAZ, one of the leaders in the use of LPG in Europe as a motor fuel. An important role, according to the representative of the Turkish side, is played by effective marketing policy tools that allow outline and reveal all the advantages of LPG as an alternative fuel to gasoline.

Despite the complex combined format of the event, the activity of participants did not decrease on the second day, where the focus was on the burning issues of using LPG in petrochemicals and the product transportation. A detailed analysis of the global market was prepared by IHS Markit, drawing the audience's attention to the fast-growing markets of China, India and Indonesia’ s markets. A detailed report on the state of petrochemicals in Russia and the projects of the domestic industry leader was presented by an expert from SIBUR. Presentations by Thomson Reuters and Vygon Consulting made valuable contributions to the discussion.

The «cherry on the cake» was the last session of the event, which focused on the problems of transportation and transshipment of LPG in the East of the country – a region bordering the main consumer of the product – China. An expert of Morstroytechnology told about the magnetism of the Chinese market for Russian LPG. Remstal company presented the features of product transshipment in the Soviet Harbor of Russia’s Far East Khabarovsk region. Their colleagues from PRIME company presented the LPG transshipment terminal in Russia’s Far East port of Vanino. One of the top managers of Blue Line International, which is actively developing business in China and Mongolia, summed up the advantages of LPG transport logistics in the Chinese direction.

MAXConference wholeheartedly thanks everyone who took part in the event and hopes to see them firsthand next year. All good health!