The push to diversify LPG supply in Eastern Europe
The scramble to diversify the LPG supply chain in eastern Europe continues as another wave of sanctions against Russia takes hold.
The impact of the 12th round of sanctions aimed at scuppering Russia’s profits from oil and gas sales will be felt in northwest and eastern Europe’s LPG market throughout 2025, and beyond.
The sanctions, imposed by the European Union, include a ban on Russian-origin LPG, including LPG imported via Russia. The 12-month grace period for previously-signed – or ‘grandfathered’ - term contracts concluded on December 19 2024.
The full impact on the LPG market could take months, or even years, to fully develop. But while it is aimed at depriving Russia of around 1bn euros of profit, there are immediate concerns that the sanctions could also create a permanent change in LPG demand habits in eastern Europe, and push up prices across the Amsterdam-Rotterdam-Antwerp (ARA) trading region.
According to the European Commission 6% of total LPG imports into the EU in 2023 came from Russia. But in certain countries, reliance on Russia has historically been a much higher percentage and, as a result, the impact will be more severe – particularly in LPG-hungry Poland.
Poland consumes more Autogas than any other country in Europe, with significant residential use for cooking and heating. Now, as Russian supply is cut off, Poland is turning to northwest Europe and beyond to fill the gap.
In theory, there are plenty of supply opportunities, but in the short term, fears remain that Poland’s increased demand could create shortages elsewhere in Europe, pushing up prices.
Poland's plight: a major challenge for the LPG industry
Poland’s LPG Association (POGP) has called these sanctions “the most serious challenge facing the Polish LPG industry in recent years.”
If LPG prices in Poland rise due to higher import costs, it could weaken Autogas’s appeal as a low-cost fuel, potentially harming the country’s entire LPG industry.
Poland's LPG consumption stands at 2.5 million tonnes annually, with just under 500,000 tonnes produced domestically. Autogas plays a dominant role, fueling around 3 million vehicles—over 13% of all cars in Poland.
The break-even point for Polish LPG prices compared to gasoline is around 60%—pushed to 70% under some conditions. In 2023, Autogas averaged 46.1% of EU95 gasoline prices. So far in 2025, prices have risen slightly but remain manageable, hovering around 52% of EU95 gasoline prices as of mid-February.
However, the disruption leaves Polish conversion kit manufacturers uneasy as any price fluctuations immediately affect the decision by car owners about whether to convert to LPG from gasoline.
Restructured trade flows: where will Poland source LPG?
By 2023, Russia's share of Polish LPG imports had dropped to just under 46%, down from 65% in 2020.
Poland’s local production coupled with Polish oil giant Orlen’s refineries in Lithuania and the Czech Republic are expected to helpmeet the demand gap left by the absence of Russian imports. Russian giant Novatek, once the biggest supplier of LPG to Poland, has not sold LPG to Poland since April 26 2022, said the POGP. Product from and via Belarus was halted not long afterwards, which means neighbouring Kazakhstan also cannot easily supply Poland as the supply chain goes through Belarus.
Sweden remains the next biggest importer after Russia, at more than 580,000t in 2023, or 22.3% of imported product. In the same year theUK exported 120,000t to Poland, the US 104,000 and Norway 91,000t.
US imports could help bridge the gap, as 65% of US LPG imported to Poland in 2023 came directly by sea.
Overall, the US already supplies more than 40% of seaborne LPG imports into the EU. By 2026 further LPG export capacity is due to become operational on the US east coast, with even higher volumes of LPG carriers expected to head to Europe.
Pain points: higher costs and market uncertainty
A sticking point for Poland will be the price. According to customs declarations in 2023 the annual average price for LPG imported from Russia was 453 euros per tonne – between 100 and 150 euros lower than the other big importers: Sweden, US, UK and Norway.
Whether Poland would be able to afford the higher import costs, what effect will this have on the Autogas market, and how will the demand surge from eastern Europe affect the rest of northwest Europe remains to be seen.
Poland continues to support Ukraine despite supply squeeze
Unfortunately, because of the expected squeeze on supply, re-exports to Ukraine fell by 40% in 2024 compared with 2023, following a 30% rise in 2023 as war-torn Ukraine turned to their neighbours for help. According to the POGP, Romania has stepped up as a key LPG import source for Ukraine.
Finally, it is worth mentioning that butane and propane have divergent supply demands and are likely to react slightly differently to the shake-up. For example, certain Polish companies are taking advantage of the loophole created by a small group of butanes being left out of the sanctions ie isobutane and 95% purity butane. These companies have bought licences to blend unsanctioned Russian butane (in purple below) with Polish propane to make Autogas. In fact imports from Russia of these butanes grew from 6-8,000t/month in 2023/24 to 18,000t in December 2024, and over 20,000t in January 2025. If this continues the Polish Government may be compelled to request an amendment of the embargo to close this loophole. In the meantime, this situation serves to cushion the butane market in northwest Europe somewhat, if only for the time being.
Overall, the LPG market in northwest Europe is poised to weather some potentially dramatic changes as Poland turns to them for help.
“There’s a storm coming,” said one northwest Europe LPG trader. “We are expecting a demand squeeze: we just don’t know when, or how hard, it’s going to hit.”
