Growing investment in BIO-LPG to affect the price trend of LPG in Europe

Europe depends heavily on the crude oil and gas reserves to meet its energy needs and the ongoing war between Russia and Ukraine has put such pressure on the continent leading to high fuel prices and temporary shutting down of few petrochemical industries. The Asian suppliers have also reduced their number of cargoes exporting to Europe worsening the high price of LPG in Europe. The refined propane market has not been affected as the heavy refine products in Europe, since they diversified their sources for propane (demand elasticity). But propane is not used in most of the countries in Europe because they emit more carbon than the allowed emission limit set in European countries. Hence, the price of LPG is still on the rise in European countries despite the declining propane price. European industries have been wanting to stock any LPG, but it’s been very difficult as the US exports have been seeing good value in the Asia-Pacific region, very low production rates in inland European refineries and steadily declining LPG supply from Russia.

So European market has started investing in bio-LPG to meet their energy meets without having to depend on imports. Over 90% of bio-LPG is already marketed and produced in Europe and as European governments are becoming serious about their emission limits the shift to Bio-LPG seems like the only viable option. Even though the recovery rate of Bio-LPG is very low from Bio-oil when the advance process that converts mixed waste, cellulosic (The largest biological hydrocarbon) are commercialized it will be efficiently capable of replacing LPG. Biogas is a competitor for bio-LPG due to its low pressure and density, but its prices also depend on LPG, so it loses credibility as an LPG substitute.

As per ChemAnalyst, the LPG prices trend in Europe may continue to rise even if the supply improves from Russia due to very low inventory. But if the Bio-LPG industries step up their production and product efficiency it may serve as an alternative to LPG and eventually reduce the High LPG Prices in Europe.