Ewa Abramiuk-Lété, general manager of Liquid Gas Europe, commented to NaftoRynok on how the ban on Russian LPG, which is part of the 12-pack of EU sanctions against Russia, will affect the European market.

NaftoRynok: In December 2023, the EU announced a ban on imports of Russian LPG. Could you tell us from what date exactly traders will not be able to import LPG from Russia to the EU?

Ewa Abramiuk-Lété: On 18 December, the Council of the European Union adopted a twelfth package of restrictive measures in view of the continued Russian war of aggression against Ukraine. This new package includes a ban on new import ban on LPG, impacting annual imports worth over €1 billion, with grandfathering of existing contracts for a period of maximum 12 months.

NaftoRynok: What is the share of Russian LPG in the EU's LPG imports? Has there been a decrease in supplies from Russia in recent years or months?

According to a Statistical Report conducted by Argus Media titled European Liquid Gas Statistical Report 2023, LPG has a diversified global and regional supply chain: in 2022, 46% of LPG imports in the EU come from the US, 19% from North Africa, 18.4% from Norway and only 13.4% from Russia. To give a bit more context, while Russia is one of the world's most important commodity exporters, its role in LPG trade is relatively small at just 3% of global flows.

We have seen in recent years Russian imports to the EU steadily declining: Russian imports in 2021 were almost 40% down on pre-Covid levels, and LPG imports from Russia fell by an additional 10% in 2022. Some traditional European buyers of Russian LPG, such as Poland and the Czech Republic, voluntarily reduced their exposure to Russian imports – normally supplied by rail from Russia, Poland’s seaborne imports surged to an all-time high of 1 million tonnes in 2022.

NaftoRynok: When does the transitional period end, during which Russian LPG supplies are allowed under contracts signed before the sanctions were announced? What volumes of gas do you estimate can be imported under these contracts?

Article 1n(18a) of the 18 December 2023 sanctions package states that the ban of the purchase/import/transfer of Russian LPG “shall not apply to the execution until 20 December 2024 of contracts concluded before 19 December 2023, or of ancillary contracts necessary for the execution of such contracts”. This means that already existing import contracts can still be carried out until 20 December 2024.

As for the volume of LPG it includes, we do not have sufficient data to give an estimate.

NaftoRynok: How will the EU market be affected by the ban on Russian liquefied petroleum gas? In your opinion, is the EU able to completely stop using Russian LPG? Please name alternative sources of supply.

With its dual origins - gas drawn directly from the earth, and refined crude oil - LPG's supply is not contingent on the availability of any one source. Moreover, thanks to the existence of a highly fluid international trading market, Europe's LPG imports are geographically diversified.

The sudden drop in LPG imports coming from Russia in 2022 was compensated by readily available imports from the US, which status therefore changed from a back-up to a baseload supplier.

According to the Argus Media European Liquid Gas Statistical Report 2023, in 2022, 46% of LPG imports in the EU come from the US, 19% from North Africa, 18.4% from Norway and only 13.4% from Russia. This diversified supply chain has been one of the core strengths of the European LPG industry, and will remain so in the future.

NaftoRynok: How can the EU countries avoid buying LPG mixtures containing Russian gas if the product has documents of production issued by the terminal where the mixing took place?

The twelfth sanctions package introduces tighter compliance rules to clamp down on circumvention. The package also introduces a strengthened information sharing mechanism that will allow better identification of vessels and entities carrying out deceptive practices, such as ship-to-ship transfers used to conceal the origin or destination of cargo, and automatic identification system (AIS) manipulations while transporting Russian crude oil and petroleum products. AIS is an automatic tracking system that uses transceivers on ships and is used by vessel traffic services.

NaftoRynok: Belarus, who provided its territories for the Russian offensive on Kyiv and missile attacks on Ukrainian cities in February 2022 lately remains out of sight. Is Belarus currently selling its LPG to the EU? Which countries are buying belorussian products and in what volumes?

According to the Annual Report of the Polish LPG Organisation, in 2021, export from Belarus was around 880 thousand tonnes. However, Belarusian LPG, and to be more precise all oil products have been sanctioned since 2021, and hence there is no more LPG coming from Belarus to Europe since then according to Argus Media Statistical Report 2023.