Poland is the largest national market for oil products in the CEE region and is one of few remaining growth markets in Europe. Most of the demand growth is from the road diesel segment, resulting in a widening middle distillate deficit and an increasing requirement for imports. The downstream sector is fully liberalised with oil product prices set according to free market forces. But the industry structure is characterised by the dominance of the two domestic refiners, PKN ORLEN and Grupa LOTOS. A proposed merger of these two companies could see the market become even more concentrated, as the new entity becomes a monopoly refiner with greater dominance over the fuels market. More stringent environmental regulations around service stations has led to continued consolidation of smaller independent fuel retailers in Poland. Unable to make the required investment to become compliant, many of these sites have either been acquired by larger players or shut down.