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Indicators To Watch As Oil Stocks Flop

Indicators To Watch As Oil Stocks Flop

Stock markets derailed on Wednesday,…

Poland Buys Nigerian Oil In Latest Attempt To Cut Russia Oil Dependence

PKN Orlen

Poland’s largest oil refiner, state-run PKN Orlen, has bought its first ever Nigerian crude oil cargo expected to arrive in mid-October, the Polish company’s chief executive told Reuters amid Poland’s ongoing efforts to cut its reliance on Russian oil.

PKN Orlen is exploring Nigerian oil as its new source of supply, the company’s CEO, Daniel Obajtek, told Reuters in an interview published on Monday. A 130,000-ton cargo of Nigerian oil is currently traveling to Poland and is expected to arrive in the middle of this month, Obajtek said.

“If tests confirm the assumed yields structure and margins, further oil supplies from Nigeria will be a viable option,” the chief executive told Reuters.

In recent years, Poland has been trying to diversify its oil supplies to reduce its reliance on Russian oil imports. Last year, Poland reduced the share of its imports of Russian oil to the lowest level since 2005, but the diversification of oil supplies came at a higher cost for imports from other countries, according to a report by Poland’s central bank from May 2018.

In 2017, the share of Russian oil in Polish imports dropped to 76 percent, compared to 96 percent back in 2012.

PKN Orlen signed in 2016 a long-term supply contract with Saudi Aramco with provisions for automatic annual renewal, with which the Saudi oil giant entered the Baltic oil supply market.

Another Polish refiner, Lotos, signed in December 2017 a forward contract for the supply of U.S. oil to its refinery in Gdansk. Under the contract, at least five U.S. oil cargoes will be delivered by sea this year.

PKN Orlen plans to take over Lotos, and the larger refiner hopes to get clearance for the deal from the European Commission by the middle of 2019, Obajtek told Reuters.

PKN Orlen expects cargoes from other new destinations, and it is negotiating medium- and long-term supply deals with many parties, including from the United States, the manager said.

The deteriorating quality of Russia’s Urals also played a part in PKN seeking new suppliers, Obajtek told Reuters.

By Tsvetana Paraskova for Oilprice.com

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