Jakóbik: EU Embargo on LPG from Russia is a chance for Poland to drop its last hook

A Polish initiative may lead to the imposition of an embargo on the last Russian fuel on which we remain dependent – writes Wojciech Jakóbik, editor-in-chief at BiznesAlert.pl.

Beata Płomecka from the Radio News Agency (Informacyjna Agencja Radiowa) has obtained a draft of the twelfth package of EU sanctions against Russia for the invasion of Ukraine. It includes, among other things, an embargo on the supply of Russian LPG, for which Poland and Baltic States have been calling since the invasion had started.

So far, Poland has been a significant importer of this gas from Russia and has met about 50 percent of its demand from this direction, according to the Polish Organization of Liquid Gas. The Energy Forum estimates that in 2022 alone, Poles spent more than 700 million euros on this fuel from Russia. However, Poland is in the vanguard of efforts to put an embargo on LPG from Russia.

It did not give LPG up unilaterally for three reasons, which were officially announced by the Climate Ministry. First, a stand-alone LPG embargo in the spring of 2022 would make it difficult to switch the market to the available alternative directions, which the President of Gaspol talked about in an interview with BiznesAlert.pl. Secondly, unilateral action would anyway end with importing Russian LPG from neighboring markets without such an embargo, and would therefore be counterproductive and economically harmful to Poland. Thirdly, a significant part of LPG from the Polish market goes to Ukraine, so it is necessary to find a replacement for imports from Russia.

The industry of LPG importers from Russia admitted in 2023 in informal talks with BiznesAlert.pl that it was against imposing the embargo immediately because they needed time “until the end of the year” to find an alternative and prepare the infrastructure that has historically been adapted for collection across the country’s eastern border. Import terminals in the Baltic have spare capacity available to those interested, although LPG from outside Russia does not yield impressive margins. It’s the same situation as on the oil market.

The industry of importers of Russian LPG asked for time and got it due to the lack of decisions in Europe. Time goes on and the Russian invasion of Ukraine continues. Therefore, the Polish demand should be heard in Brussels, as EU countries can afford to cut off Russian LPG in solidarity, so that the costs of such a solution do not fall only on one of the member states. On April 13, 2022, the Prime Minister of the Republic of Poland spoke about abandoning raw materials from Russia within twelve months. Despite the delay with regard to oil and LPG, a joint EU initiative can lead to rectifying this so as to share this effort in Europe.

The decision on the 12th EU sanctions package is to be made by the end of 2023. It should be borne in mind that, as in the case of coal imports, a transition period may be introduced for the most resistant parties.