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Liquid fuel market

LIQUID FUELS, INCLUDING DIESEL OIL

Year 2019 was another year of growing consumption with regard to liquid fuels. This is confirmed by latest market data prepared by POPiHN. The observed in the current year increase in the sales of fuels has its basis in the economic growth and larger incomes of the citizens, but is also influenced an effective execution of legal regulations (fuel package and transport package), which control the grey market (source: POPiHN).

In 2019 the consumption of all fuels in Poland amounted in total to PLN 34.8 million and was higher by 4.0% than in 2018. The main part of the domestic demand (60.4%) fell to diesel oil (prevailing in the sales of the Group), whose sales grew from 20.3 million m3 in 2018 to 21.0 million m3 in 2019, which is up by 3.6% yoy (source: POPiHN after: Lotos S.A.).

In case of import, according to the latest publicly available data (for 3 quarters of 2019), import of all liquid fuels to Poland fell in the period Q1-3 2019 (7.68 million m3) by 2% compared to the period Q1-3 2018 (7.86 million m3).

Import of diesel oil (prevailing in the sales of the Group) in the period Q1-3 2019 amounted to 4.08 million m3 and was lower than in the corresponding period of the previous year by 3%. At the same time, it constituted as much as 26% of the domestic consumption (28% in Q1-3 2019) (source: POPiHN).

The balance of International turnover after 3 quarters of 2019 still indicate a clear surplus of import of all types of fuels over their export. This difference currently amounts to over 5.2 million m3 , while a year ago it was about 4.9 million m3 (up by 6.1% yoy). This result was achieved through an increased domestic production (source: POPiHN).

The balance of diesel turnover after 3 quarters of 2019, similarly to previous years, also indicates a distinct surplus of import over export. This difference currently amounts to over 4.05 million m3, while a year ago it was about 4.16 million m3. In both periods (similarly to previous years), this was a surplus of import over export of all types fo liquid fuels (source: POPiHN). Poland is a large net importer of diesel oil (domestic production is unable to satisfy the demand).

Since the beginning of 2019 emission fee is included into the price of each litre of petrol and diesel oil in the amount of 8 Polish grosz. This fee goes to the Fund of Low-emission Transport – the resources of this fund are supposed to support the development of the market and infrastructure of alternative fuels in transport and to the National Fund for Environmental Protection and Water Management. This fee is an element of fuel sale price.

BIO-FUELS

In 2019, similarly to previous years, pursuant to the provisions of the law on biocomponents and liquid biofuels all entities that produce fuels and import them from abroad were obliged to fulfil National Indicative target (NIT). The level of NIT for 2019 was 8.0% according to the calorific value, in 2018 the level was 7.5%, and in 2017 7.1% according to the calorific value.

Simultaneously, in 2019 a mechanism of so-called obligatory blending of biocomponents in liquid fuels was in force, which was defined as a minimum share of biocomponents in fuels settled quarterly. An entity fulfilling NIT was obliged to ensure in a given quarter the minimum share of biocomponents included in liquid fuels: in Q1 min. 50%, in Q2 min. 78%, in Q3 min. 78%, in Q4 min. 57% of the obligation to fulfil NIT through blending.

In 2019 also the mechanism of substitution fee was in force, which meant that an entity that was fulfilling NIT and documented fulfilment of this obligation at the defined minimum level of NIT established for the given calendar year, could pay the substitution fee. The substitution fee can be paid for the entities that fulfilled at least 85% of the obligation level resulting from the law.

Also, definition used in the law were clarified, including, among others, that the economic activity in scope of import or intra-community purchase of biocomponents can be performed independently or through another entity.

Following the introduction of various regulations, since 2017 one can observe a decrease in the amount of produced liquid bio-fuels (B100). However, within three first quarters of 2019 the production of methyl esters increased (the biocomponent that complies with the criterion of sustainable development, which does not give the right to its double inclusion into NIT fulfilment) – from 636.3 th. tonnes in the period Q1-3 2018 to 659.1 th. tonnes in the period Q1-3 2019 (source: KOWR).

PETROL STATIONS

At the end of 2019 there were over 7.6 thousand of petrol stations functioning on the domestic market, i.e. by 2% more than a year ago. As in the previous years, about a half of petrol stations were facilities of independent operators, 30.2% of petrol stations functioned in the chain of domestic concerns, and 20.2% of foreign ones. The development of concerns’ stations chains occurred through development of own as well as franchise stations (source: POPiHN after: Lotos S.A.).
In 2018 the number of stations in the chain of Orlen grew by 13 (to 1800). Also, the number of stations of LOTOS increased by 11 (to 506). Among the foreign concerns the largest growth was recorded by the stations of BP, the number of which increased by 23 (to 575).
Among the chains of independent stations the largest one belongs to Anwim (stations under the MOYA brand) – 244 facilities (source: POPiHN after: Lotos S.A.). The chain of AVIA stations manager by UNIMOT includes 50 facilities (up by 12 in 2019).

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