PKN ORLEN signs a new contract for crude oil supplies until 2014
A new long-term contract providing for crude oil supplies to the Płock plant was signed today by PKN ORLEN with Souz Petrolium. The contract, which is to replace the agreement with Petraco due to expire at the end of this year, is worth c.a. PLN 19.4 billion.
Under today’s contract, the new supplier of crude oil to PKN ORLEN will be Souz Petrolium SA. The contract will allow PKN ORLEN to maintain the optimal structure of crude oil purchases under long-term contracts for the production plant in Płock. The Company will also continue to buy a part of total crude oil volume on the spot market, which enables PKN ORLEN to adjust the purchase volumes and crude types to its production requirements.
- This time, we have been able to negotiate better terms of business compared with those afforded by the previous agreement: a better price plus a number of other terms favourable to PKN ORLEN, such as a guarantee of alternative deliveries. If, for any reason, it becomes impossible to deliver any of the contracted volumes through the Druzhba pipeline, they will be shipped to Płock via the Naftoport terminal in Gdańsk at no additional cost - says Jacek Krawiec, CEO of PKN ORLEN.
- By complementing the existing agreements, the new contract will ensure full security of crude oil supplies to Poland - adds Mr Krawiec.
Under the contract, Geneva-based Souz Petrolium will deliver to Płock, via the Druzhba pipeline, 2.4 million tonnes of REBCO crude per year. The contract’s term runs from January 1st 2012 until December 31st 2014. The estimated value of the supplies during the term of the contract is approx. USD 5.7 billion (or approx. PLN 19.4 billion, translated at the mid-exchange rate quoted by the National Bank of Poland for December 22nd 2011).
For the last several months, PKN ORLEN has been engaged in talks with more than a dozen entities, including oil producers and leading intermediaries on the oil market. The final round of the negotiations was preceded by an in-depth analysis of the market, as well as an assessment of PKN ORLEN’s needs. The successful bidder was selected based on two criteria: the negotiated price and the guarantee of timely deliveries.
