AsianOil: Russian LPG exports to Asia surge in 2024

Russia’s exports of LPG to Asian countries including Turkey grew by 45% year on year in the first nine months of 2024, reaching 1.2mn tonnes, according to data from research group Petromarket, cited by Moscow-based newspaper Vedomosti on December 11.

The most significant increase was in shipments to China, which rose by 80% to 307,200 tonnes. Exports to Afghanistan climbed by 39% to 215,500 tonnes, while shipments to other Central Asian countries grew 17% to 150,600 tonnes, and exports to Mongolia edged up 3% to 32,000 tonnes. Deliveries to Turkey surged 45% to 515,500 tonnes.

Conversely, exports to the EU and other European countries fell by 25% to 1.3mn tonnes over the same period. Petromarket did not provide detailed statistics on European shipments but noted that the overall rise in LPG exports to Asia has not fully offset the decline in Europe. Total Russian LPG exports in January-September fell by 2% year on year to 2.5mn tonnes, with Europe’s share dropping from 68% to 52%, while Asia’s share rose from 32% to 48%.

The decline in exports to Europe comes amid EU restrictions on Russian LPG imports. As part of its 12th sanctions package, the EU imposed a ban on Russian LPG supplies in December 2023. While the sanctions took effect on December 19, they included a one-year transition period allowing deliveries under long-term contracts signed before the ban was announced.

According to pricing agency Argus, most traders hold such contracts and have continued shipments this year, including to Poland, Russia’s largest LPG export market. Although the EU had not previously restricted LPG imports, some European countries began independently reducing purchases in 2022-2023.

In 2023, Russian companies exported 3.58mn tonnes of LPG, a 3% increase from 2022. Exports to Asia, including Turkey, rose 80% to 1.26mn tonnes, while shipments to Europe fell by 16.5% to 2.32mn tonnes. Europe’s share of Russian LPG exports dropped from 80% in 2022 to 65% in 2023, while Asia’s share rose from 20% to 35%.

The pivot to Asia is part of a broader reorientation of Russian exports away from Europe, driven by sanctions, Dmitry Gusev, deputy chairman of the Reliable Partner Association, told Vedomosti. He noted that while Europe traditionally offered premium markets for Russian exporters, price considerations are now secondary to securing new buyers.

Gusev highlighted that exports previously destined for Europe are being rerouted, primarily by sea, to Turkey and China. He added that Turkish imports would likely increase if Russian LPG remains priced slightly below competing supplies from the United States and other producers.

Maxim Khudalov, chief strategist at investment firm Vector Capital, attributed the growth in Russian LPG exports to Turkey to the possibility of re-export to Europe. He noted that LPG prices in Turkey are higher than in China and other Asian markets.

Looking ahead, Alexandra Zubacheva, senior consultant at Petromarket, sees significant potential for increasing exports to Central Asia, China and Turkey in 2025. She suggested that the shift to Asia would have occurred even without the EU sanctions, albeit at a slower pace.

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