Autogas at risk as EU pushes ahead with ICE phase out
The agreement to ban the sale of internal combustion engine vehicles spells trouble for the LPG industry's transition goals, writes Dafydd ab Iago
EU environment and climate ministers have agreed on phasing out the internal combustion engine (ICE) by 2035 and on including road transport and heating fuels in EU carbon trading at the same time as the LPG sector gathered at the European LPG Congress in Barcelona. Both measures threaten the use of autogas and LPG, and the industry's plans to transition to renewable forms of LPG or dimethyl ether (DME) in the coming three decades.
EU ministers on 29 June reached agreement on a set of legal files implementing EU climate policy, including an effective 2035 cutoff date for the sale of new ICE vehicles. It means the Council of the EU and the European Parliament now both support the end date for ICE vehicle sales, paving the way for the revised regulation to become EU law as early as the first half of next year. Ministers have also called for a 55pc greenhouse gas (GHG) emissions cut by 2030 for cars and 50pc for vans, and 100pc for both by 2035 based on tailpipe emissions.
The proposals threaten the European LPG industry's plan to replace LPG with bio-LPG and renewable DME, trade association Liquid Gas Europe's (LGE) general manager Ewa Abramiuk-Lete said before the ministers' decision. "They should recognise the positive role renewable liquid fuels can play in the decarbonisation of passenger vehicles," Abramiuk-Lete said. Setting a 100pc target reduction for tailpipe GHG emissions from 2035 is a "step in the wrong direction".
The EU needs to adopt "a patchwork of solutions" rather than banking solely on electrification of the transport and heating sectors, SHV Energy's Bram Graber said at LGE's Barcelona congress when news of the decision emerged. "For investment to be sustainable, we need first to convert conventional fossil LPG into sustainable transition fuels and renewable liquid gas to be accepted as a low-carbon molecule for the future," UGI International chief executive Laurence Broseta told delegates.
The feasibility of transitioning from fossil LPG to bio-LPG, renewable LPG and renewable DME depends much on political goodwill. The final law has not yet hit the bloc's official journal. "Given that today some 90pc of car buyers are still buying ICE vehicles, and over 95pc use liquid fuels, opening the regulation to recognise climate-neutral fuels simply makes sense," refiners' association FuelsEurope says. The industry promises to give "every assistance" to the European Commission in an assessment process due before the end of 2026.
Last-minute demands by countries, backed by major car manufacturer Germany, led to a compromise that if adopted into law would allow the registration of vehicles "running exclusively on CO2-neutral fuels in conformity with EU law", as well as 2050 climate neutrality goals, after 2035 — albeit following assessment by the commission. This assessment must consider the deployment of zero and low-emission vehicles, and analysis of the secondhand market, sustainable alternative fuels and impacts on consumers. And it must ensure a fair transition to zero-emission road transport — all key features of the LPG industry's talks with EU policy makers.
Emissions costs
The EU is also going to oblige LPG companies to cover their related GHG emissions by buying allowances from a parallel emissions trading system (ETS) for road transport and heating fuels. Among the changes that could end up in the final text is a provision whereby those same firms would only be able to pass a certain proportion of the ETS costs on to customers. Poland, which has the EU's largest autogas market, consuming nearly 2mn t/yr, was foremost among the countries resisting the transport and heating ETS plans. Warsaw held out to the very end as EU environment and climate ministers met. "Taking into account that the existing ETS is not functioning well, we cannot accept [an] extension of the system to transport and buildings," Polish climate minister Anna Moskwa said.
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LPG World editorial: Tight spot
LPG World editorial: Tight spot
Consumption growth could briefly outpace rising supply but an influx of Middle Eastern LPG should help to balance the market longer term London, 1 May (Argus) — Slowing US LPG production growth, the continuing increase in petrochemical feedstock use and a more recent jump in gasoline sector demand will push the global LPG market into deficit by 2025, according to ArgusConsulting's latest Short-term Quarterly Update . But any tightness is likely to ease again the following year as consumption slows and new production in the Middle East is brought on line. US output is still anticipated to climb in 2024 after yields from gas processing exceeded expectations in the fourth quarter of 2023. The country's natural gas liquids (NGL) output from gas processing surged to 6.7mn b/d in the fourth quarter from just under 6mn b/d a year earlier, and while it eased to 6.3mn b/d in January-February, that was up from 5.5mn b/d on the year, the latest EIA data show. Many US upstream and midstream companies operating in the NGLs area are upbeat on the continuation of rising US supplies and the corollary boost this will give to US LPG exports. But LPG production growth is nevertheless expected to begin to slow as the industry matures and as the natural gas market enters a more challenging period, the latest Short-term Quarterly Update finds. What should counterbalance this deceleration, if not by next year, will be a 3mn t/yr increase in Middle Eastern LPG supply over 2024-30. This is being driven by several projects intended to support the region's ambition to ramp up LNG exports. Notable projects include the Jafurah field in Saudi Arabia, the three North Field developments in Qatar, the Meram project in the UAE, and ongoing expansions in Iran, ArgusConsulting says. But over the next 1-2 years, consumption could overtake supply. China has been enthusiastically mopping up rising US LPG output since 2010 in line with its aggressive petrochemical expansion, in particular the country's growing fleet of propane dehydrogenation (PDH) plants. This too may slow over the long term, but several new PDH plants and LPG-fed ethylene crackers in China and Asia should keep consumption on an upward trajectory. US demand for cracking is also expected to rise to 17.3mn t by 2027 from 14.6mn t in 2023 as downstream economics improve, as will use in Europe after weak consumption in 2022 and 2023, the report finds. New PDH and cracker projects outside Asia, as well as raised flexibility at existing crackers, will further bolster demand. For LPG's use as an energy source, the global market "has probably already peaked" and is forecast to contract slowly, tied to expanding gas grid networks, rising temperatures and the energy transition. But renewed investment in LPG subsidies in India and market expansion to poorer rural areas should largely offset declining residential use in large markets such as China. Demand for energy use will decline by just 2pc by the end of this decade as a result, the report says. Gasoline pump Much of China's recent LPG demand growth has more specifically been for propane at PDH plants. Butane has found support from increasing cracker rates, largely in Asia, but not to the same degree, while growth in butane's traditional market as a fuel in the global south has slowed despite India's expansion and the huge potential for markets in sub-Saharan Africa. It is butane's use in gasoline that has increased significantly in the US and China, tightening global supply. A widening discount for butane against gasoline and strong premiums for high-octane components have compounded demand, as too has China's ramping up of MTBE exports. Yet Argus Consulting forecasts gasoline demand to peak soon in the US and China, meaning this support may be relatively short-lived. Where butane could find long-term growth is as a cooking fuel in sub-Saharan Africa where LPG expansion is being targeted under clean cooking directives. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Lyondell Houston refinery to run at 95pc in 2Q
Lyondell Houston refinery to run at 95pc in 2Q
Houston, 26 April (Argus) — LyondellBasell plans to run its 264,000 b/d Houston, Texas, refinery at average utilization rates of 95pc in the second quarter and may convert its hydrotreaters to petrochemical production when the plant shuts down in early 2025. The company's sole crude refinery ran at an average 79pc utilization rate in the first quarter due to planned maintenance on a coking unit , the company said in earnings released today . "We are evaluating options for the potential reuse of the hydrotreaters at our Houston refinery to purify recycled and renewable cracker feedstocks," chief executive Peter Vanacker said on a conference call today discussing earnings. Lyondell said last year a conversion would feed the company's two 930,000 metric tonnes (t)/yr steam crackers at its Channelview petrochemicals complex. The company today said it plans to make a final investment decision on the conversion in 2025. Hydrotreater conversions — such as one Chevron completed last year at its 269,000 b/d El Segundo, California, refinery — allow the unit to produce renewable diesel, which creates renewable naphtha as a byproduct. Renewable naphtha can be used as a gasoline blending component, steam cracker feed or feed for hydrogen producing units, according to engineering firm Topsoe. Lyondell last year said the Houston refinery will continue to run until early 2025, delaying a previously announced plan to stop crude processing by the end of 2023. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan’s Mol starts operating LPG-fuelled VLGC
Japan’s Mol starts operating LPG-fuelled VLGC
Tokyo, 26 April (Argus) — Japanese shipping firm Mitsui OSK Line's (Mol) Singapore-based subsidiary Aramo Shipping started operating today a new LPG-fuelled LPG and ammonia carrier for domestic importer Gyxis. The 87,119m³ very large gas carrier (VLGC) Aquamarine Progress 2 was built by Japanese shipbuilder Namura Shipbuilding at Namura's Imari shipyard in south Japan's Saga prefecture. The vessel is equipped with a dual-fuel engine, which can burn LPG and conventional marine fuel. Mol expects use of LPG to reduce carbon dioxide (CO2) and nitrogen oxide emissions by 20pc and sulphur oxide and particulate matter emissions by 90pc compared with a heavy oil-dedicated vessel. The VLGC is also designed to be able to carry ammonia, eyeing potential demand growth for decarbonisation. Japanese shipping firms and shipbuilders have boosted construction of LPG carriers that can also ship ammonia, as demand for the cleaner fuel is expected to increase in future. Japan plans to co-fire ammonia at coal-fired power plants to reduce CO2 emissions, while aiming to use ammonia as a hydrogen carrier. Shipbuilders Kawasaki Heavy Industries and Mitsubishi Heavy Industries each delivered a VLGC, which can carry LPG and liquefied ammonia. Mol, in partnership with shipbuilders Tsuneishi Shipbuilding and Mitsui E&S Shipbuilding, completed risk assessments to design a mid-size ammonia-fuelled ammonia and LPG carrier , targeting to finish construction by 2026. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Romania's growing autogas market boosts 2023 imports
Romania's growing autogas market boosts 2023 imports
Demand for autogas is expected to continue rising in the country as it maintains a discount to competing motor fuels Moscow, 16 April (Argus) — Romania's autogas consumption increased last year as more drivers were attracted by its lower price compared with gasoline and diesel, helping to lift imports to the country by over a quarter on the year. Autogas sales in the country rose by 10,000-30,000t on the year to 270,000-300,000t as a result of its lower price against other motor fuels. "The ratio of autogas to gasoline prices fell below 50pc last year from 60-65pc owing to rising global gasoline and diesel prices," a Romanian trader says. Romanian autogas prices stood at 3.27-3.35 lei/litre (71-73¢/l) last week, while gasoline prices were Lei7.12-7.15/l ($1.50/l), putting the former at 47pc of the latter . This compares with autogas' cost of Lei3.91-3.98/l in April 2023, and gasoline at Lei6.63-6.69/l, with a ratio of 59-60pc. The country's autogas demand could have been even stronger last year had it not been for a fire at the Flagas refuelling station in Crevedia, near Bucharest, in August. Immediately after the accident, a special commission consisting of firefighters, police, an environmental body and tax authorities was formed to carry out inspections at the country's autogas stations, resulting in many being closed. "The commission would close a fuelling station for a slightest non-compliance, so some retail operators shut down their fuelling stations before it arrived," a market participant says. Romania has more than 1,000 autogas refuelling sites. But around 300 stations are reported to have closed since September 2023 following the incident. This resulted in sales dropping in September-December last year compared with the same period in 2022, according to local market participants. The growth in autogas sales over the whole of last year boosted Romania's LPG imports to around 353,000t compared with 278,000t in 2022, Vortexa data show. All of the country's LPG deliveries were to its sea ports of Midia, Mangalia and Galati, as rail shipments from Russia transiting Ukraine, which had been 2,000-3,000 t/month, halted after the war in Ukraine began in late February 2022. Imports were also supported by cuts to domestic output and an increase in overland exports. Exports rose by about 5,000–10,000t to 330,000–340,000t in 2023, according to market participants, with most of this supported by rising shipments to Ukraine, growing by 45,600t to 235,600t. Romania's LPG imports from Egypt doubled to 104,200t, Vortexa data show, with most of this supplied by trading firms Naftomar and Evicor. Arrivals from Turkey grew by 51,300t to 69,600t, mostly delivered by Turkish distributors Aygaz and Milangaz. More Kazakh LPG arrived from Georgia's Batumi port, rising by 14,800t to 27,600t, to partially offset the loss of supply from Russia's Taman terminal after exports halted in May 2023. LPG arrivals from Algeria and the US also increased last year (see table). Gassing up Romania's autogas demand should be on course to continue expanding this year, with autogas prices at around an 80¢/l discount to gasoline at the beginning of April. The government raised autogas excise duty again from 1 January, to around Lei874/t ($191/t). But it also increased the duty on gasoline to Lei2.02/l and on diesel to Lei1.85/l, and will do so again from 1 July to Lei2.38/l and Lei2.18/l, respectively, while the rate on autogas is expected to remain unchanged. Autogas sales in the country are expected to increase to 280,000-320,000t this year from 270,000-300,000t in 2023 because of lower excise tax on LPG compared with gasoline and diesel, according to traders. Exports should stabilise while domestic output will increase as technical issues at the Rompetrol refinery are resolved, they say. Seaborne LPG imports to Romania '000t 2023 ±% 2022 Egypt 104.2 99.5 Turkey 69.5 35.7 Russia/Kazakhstan 54.5 -163.0 Georgia 27.6 86.8 US 27.1 49.0 Algeria 26.9 50.2 Tunisia 12.0 11.1 Greece 6.3 -235.4 Croatia 5.7 -456.2 Italy 3.7 183.2 Netherlands 3.4 247.4 Libya 1.1 -283.3 Other 11.6 11.6 Total 353.5 30.8 — Vortexa Romania LPG demand by sector 2022 Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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