ORLEN – 50 per cent of crude oil imported to Poland comes from countries other than Russia
Nearly half of the crude oil imported to Poland by PKN ORLEN already comes from outside Russia. This is an effect of the company’s efforts to diversify oil supplies and steadily develop business cooperation with suppliers from outside Europe, including Saudi Aramco Oil Company. These efforts are reflected in a favourable crude slate, which allows PKN ORLEN to optimise production with a positive effect on the final quality and price of its products and on market stability. Every month, the refinery in Płock receives approximately 1.4 million tonnes of crude, of which an average of about 700 thousand tonnes comes from sources alternative to Russia, including Saudi Arabia.
The scope of PKN ORLEN’s cooperation with Saudi Aramco is growing, as evidenced by new contracts entered into with its subsidiaries, including the contract with Saudi Aramco Products Trading Company for additional supplies of Saudi crude to PKN ORLEN’s refinery, as well as the contract under which Saudi partners will purchase heavy fuel oil produced by ORLEN Lietuva. The chief executives of PKN ORLEN and Saudi Aramco, Daniel Obajtek and Amin Nasser, discussed opportunities to strengthen mutual relations between the two companies and new business areas where they could also collaborate. The summit meeting, attended by Abdulaziz Al-Judaimi, the senior first vice president responsible for Saudi Aramco’s downstream operations, was held on April 11th in Saudi Arabia.
“Good quality crude we can buy at favourable prices and the security of supplies are important for PKN ORLEN’s further growth. It is certainly in our interest to develop business relations with companies such as Saudi Aramco. I am greatly satisfied that we have taken a major step forward in expanding our cooperation. We are about to sign a ‘product for oil’ contract, the first such contract in PKN ORLEN’s history and one that will generate additional business for our refineries. I hope there will be more areas where our companies can do good business,” said Daniel Obajtek, President of the Management Board of PKN ORLEN.
During their stay in Saudi Arabia, PKN ORLEN’s representatives also held talks at the Exploration and Petroleum Engineering Centre and the Upstream Research and Development Centre. They met with representatives of Saudi Aramco Trading Products Company.
PKN ORLEN’s business relations with the Saudi company were established in 2016, when the partners signed their first long-term contract for crude oil supplies. As part of PKN ORLEN’s policy to diversify its supply sources, in April 2018 the companies signed an annex to the contract whereby the monthly volume of Saudi oil sold to PKN ORLEN was increased to 300 thousand tonnes. In 2018, the total volume of crude oil purchased by PKN ORLEN from Saudi Arabia was in excess of 3.5 million tonnes.
The recently signed contract will enable the ORLEN Group to purchase an additional 800 thousand tonnes of Saudi oil, which means that the monthly volume of oil imports from Saudi Arabia will increase to approximately 400 thousand tonnes. Under the contract, PKN ORLEN will be able to import six shipments of Saudi crude. The exact volume will be agreed with the producer individually for each shipment, and will depend on the Company’s current needs. Also depending on the needs, the crude will be delivered either to Naftoport in Gdańsk or to the Būtingė oil terminal. In a parallel effort, PKN ORLEN has secured a customer for the entire volume of heavy fuel oil available for sale by sea from its Mažeikiai refinery (up to 160,000 tonnes per month) under a long-term contract. This ensures the product will be physically sold in the initial period of market turbulence related to the entry into force, as of January 1st 2020, of new global regulations that cap sulfur content in bunker fuels (IMO 2020). The new regulations have an impact on demand for heavy fuel oil marketed by the ORLEN Group’s Lithuanian subsidiary.
Thanks to the Group’s policy to diversify crude supply directions, currently 30% of crude processed by all of its refineries (in Poland, Lithuania and the Czech Republic) comes from countries other than Russia. In the case of Poland alone, that percentage is much higher – having already come close to 50%. Besides Russian crude, the refinery in Płock processes also crudes imported from Norway, Angola, Nigeria and Saudi Arabia.