LPG market

Production & Imports / Exports of liquefied petroleum gas

LPG production in Greece comes exclusively from oil refining. LPG production amounted to 640 thousand tonnes in 2015 from 630 thousand in 2014, showing an average annual increase of 1.6%. The production of LPG in Greece in 2015 accounted for 2.64% of total production in the European Union.

Production of LPG from petroleum refining

The country has four refineries – terminals located in Aspropyrgos, Elefsina, Thessaloniki, and Kalochori.

Elefsina refineries (100 kbp / d), Aspropyrgos (148 kbp / d) and Thessaloníki (93 kbp / d) are owned by HELLENIC PETROLEUM SA. (ELPE) in which the Greek state participates.

The company's activity currently accounts for about 65% of the Greek market. The fourth refinery in Kalochori belongs to Motor Oil.

A large portion of LPG is consumed on site, for the heating needs of the refinery's natural and chemical processes, as well as for the production of electricity. The rest is available in the Greek market or exported. In 2015, Greece exported LPG 209 thousand tons (from 242 thousand in 2014).

At the same time, LPG imports for the corresponding time periods amounted to 42 and 37 thousand tonnes respectively.

LPG consumption

The Greek LPG market remained stagnant until 2010. Since 2010, significant growth has been observed. This growth is mainly due to the increased use of fuel in the transport sector (AutoGas).

In particular, in 2016 there was an increase in final consumption of 4.54% – almost twice as high as the European Union of 28, which remained at 2.96%. This dynamic, if it continues in the future, leave prospects for the Greek market to become one of the most important in the European Union.

The Greek LPG market in Greece is significantly limited. This is due to a series of inhibitory factors, including mainly:

  • in consumer concerns

    to the consumer's concerns about the hazard of the fuel in question,

  • at its cost

    at its cost, especially in the islands (high transport costs),

  • in tax policy

    in tax policy,

  • to transport safety problems

    in security issues during transport and storage.

The share of LPG in the final energy consumption of the country is just 3.08% at the level of the European Union of 28 Member States with a total of 555 thousand tonnes of oil equivalent (ktoe).

TABLE 1: Final Energy Consumption – Average Annual Growth Rates

The position of LPG on the petroleum market

Thetotal consumption of petroleum products rose according to the data of the Association of Petroleum Companies 6,899,847 metric tons in 2017. Compared to the previous year it showed a slight decline of about 2%. This decrease is mainly due the reduced consumption of unleaded petrol and asphaltic products due to the current economic crisis.

By contrast, LPG consumption over the five years 2013-2017 shows positive growth rates, mainly due to the penetration of fuel in auto motion. LPG consumption increased by 1.65% between 2017 and 2017, rising from 493,828 to 501,999 metric tons.

The evolution of the consumption of petroleum products in Greece over the five years 2013-2017 is presented in the following graph:

Data source: Association of Petroleum Companies of Greece

The share of LPG consumption in the total consumption of petroleum products in the country's domestic market is steadily rising.

For 2017 this figure was 7.28%. This increase stems mainly from the movement of vehicle owners from the use of unleaded petrol to the use of LPG for economic reasons.

The graph below shows the participation in consumption of individual petroleum products by category.

Natural Gas Networks in Greece

The LPG market in Greece, despite its current limited size, has significant potential for growth in the near future. This is mainly based on the fact that the country has a large number of islands not connected to the gas networks.

Use of LPG for the production of electricity

The use of LPG to produce electricity as an alternative to diesel fuel on these islands is an important attractive option. Among the 83 inhabited Greek islands, only 28 are interconnected with the main national electricity grid.

These islands ensure their electricity mainly by using diesel. The cost of producing electricity in these areas is subsidized. It is worth noting that the amount of the subsidy amounted to these areas at around € 720 million for 2016.

Total electricity production in these areas reached 3,604 GWh in 2016. Current plans to connect most of these islands to the mainland by 2030 on the basis of national energy policy are likely too optimistic given the current economic situation in the country. This creates an important opportunity for LPG to further penetrate the Greek market.

In the country in general, natural gas plays an increasingly important role in meeting the country's electricity needsHowever, natural gas has to be imported from Russia, Turkey, and Algeria at significant cost. Greece is seeking to sign new gas supply contracts and to develop the transmission system (by updating the existing liquefied natural gas terminal, building a new pipeline and underground gas storage).

The need to meet the ever-increasing demand for gas is a major challenge for the country. LPG could provide part of the solution in the short term if Greece faces similar gas shortages in the near future. Natural gas producers are also required to maintain alternative fuel for reserve stocks (at least five days) – LPG could provide this alternative at least in part.

However, the current low natural gas prices in the country, as well as the planned expansion of its distribution network and infrastructure, create conditions in the Greek market that LPG is hard to gain a competitive position as an alternative fuel for electricity and/or heat generation.

Pricing policy for LPG

Liquefied gas prices are formed in the retail market exclusively by service stations. Trading Companies in no way define or recommend retail pump prices.

For price formation, LPG is categorized as follows:

  • (a) LPG used as motor fuel (autogas),
  • (b) LPG used as heating fuel; and
  • (c) LPG for industrial, craft and commercial use.

The final selling price includes:

Refinery price

It concerns the wholesale prices to the Trading Companies as well as the Retail Marketing Authorities (Independent Stores or Independent Stores Consortia). Crude oil – as well as finished petroleum products – is a commodity. They, therefore, follow international prices as defined by the Platts International Prices. Wholesale prices in Greece are affected by Platts International Prices of finished petroleum products (Eastern Mediterranean) rather than Platts prices of crude oil. Retail prices (gasoline, petroleum, liquefied petroleum gas, etc.) follow the prices of Refinery finished productsand not the prices of crude oil (eg Brent).

On the basis of the figures of POLAK and the Hellenic Petroleum Company, the price of liquefied petroleum gas from the refineries to the trading companies amounted to € 0.447481 / kg or € 0.52160 / lt excluding VAT on 19/04/2018. Considering VAT 24%, the respective financial figures are: 0.5887644 € / kg or € 0.646784 / ltrespectively. Taking into account that for the same day the average retail selling price of autogas in the country stood at 0.801 € / lt that the price of fuel disposal from refineries to trading companies represents about 81% of the cost of the price at the pump station.

It should be noted, however, that the price of fuel disposal to trading companies includes taxes, fees, and charges in accordance with the applicable legislation.

The following graph shows the evolution of fuel prices in the trading companies – EX-FACTORY prices excluding VAT – as well as the average final selling price in the country:

Duties, Fees and Charges

Duties, Fees and Tax Charges

Annual fee for RAE

It is imposed on companies operating in the energy sector, according to article 7 of the no. Prot. D5 / EL / B / Φ1 / ΟΙΚ.591 / 12.01.2001 Decision of the Ministers of Finance and Development.

The amount of the annual contributory fees is adjusted according to the percentage change in the Consumer Price Index. The Consumer Price Index for the year 2016 is –0.8% (minus zero and eight-tenths percent).

In the liquid fuel sector for the LPG market, the amount of the contributory fee is set at € 0.09941which is rounded to the amount of Ten Minutes (€ 0.10) per metric ton and relates to 2017.

Special Consumption Tax on LPG

Special Consumption Tax

The introduction of excise duty on fuel is theoretically based mainly on the external environmental burdens caused by fuel consumption. In particular, for fuel used in the transport sector (eg petrol, diesel) an additional argument for the imposition of a special tax is linked to the need for users to pay one-off compensation for the benefit they receive from the use of road user charges, as well as additional negative externalities (road accidents, noise, traffic congestion, etc.) 2. Fuel taxation is also considered an important and necessary policy tool for saving and more efficient use of energy.

The EU ‘s fiscal policy on energy products is based on a system of minimum tax rates applicable to the EU competitive energy products. The obligation to apply minimum rates of taxation allows the Member States to decide on the final tax rate according to the needs and policy objectives they pursue.

Under the Directive, energy products are only taxed when used as propellant or heating fuel and not when used as raw material, for chemical reduction or for electrolytic and metallurgical treatment.

The implementation of the Special Consumption Tax in Greece

In Greece, until 2009, the tax policy for petroleum products was focused on compliance with the minimum excise duty rates set by Directive 2003/96 / EC. The changes that took place in the period 2003-2009 were mainly the result of the implementation of the Directive, which provided for a transitional period for Greece for the gradual convergence of the tax regime towards the minimum rates of excise duty.

In 2010, with the imposition of urgent fiscal consolidation measures, there was a change in the logic of setting the NIP rates, which, after three consecutive increases, stood at a level above the minimum laid down in the Community directive to increase public revenue.

By Law No.4389 / 16 (Government Gazette 94 A / 27-05-2016) the Special Consumption Tax (EPC) is redefined in the energy products. The excise duty belongs to the category of indirect taxes.

Application of the Special Consumption Tax to the LPG market

In particular, for LPG used as motor fuel (autogas), the excise duty is set at € 430 / tonne (1000 kg). It is recalled that the Special Consumption Tax is regulated by Law 2960/2001 to which article 73 is amended. The entry into force of the Revised Excise Tax has been set on 01/01/2017 in accordance with the previous law. Finally, it is noted that the metric ton of LPG on the basis of its density amounts to approximately 1800 liters.

For LPG used as fuel for heating, the excise duty at 60 € / metric ton. For industrial LPG the corresponding tax is set at 120 € / metric ton.

The evolution of the excise tax on the LPG market in Greece is presented in the following graph:

Special LPG Consumption Tax in Greece

The dotted lines show the minimum excise duty rates for LPG according to the requirements of Directive 2003/96 / EC of the European Union. The symbols of the continuous lines show the country's tax policy.

It is worth noting that since 2010, the financial burden (excluding VAT) on LPG has increased:

  • by 361.54% for household LPG,
  • 244% for AutoGas
  • by 192.68% for industrial, craft and commercial liquefied petroleum gas.

Value Added Tax (VAT)

Value Added Tax (VAT)

Under the same law, Value Added Tax (VAT) increases to 24% on the basis of Article 52, 1.

In addition, these petroleum products are subject to a special levy to ensure an uninterrupted supply of problematic areas, with a special DETE fee and a contribution to RAE. These charges represent a small percentage of the final price, as opposed to indirect taxes, which significantly affect the final price level.

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