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Poland Reduces Russian Oil Import Dependence, At A Cost

PKN orlen refinery

Poland reduced last year 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 published on Tuesday.

In 2017, the share of Russian oil in Polish imports dropped to 76 percent, compared to 96 percent back in 2012, according to the central bank report, as carried by Reuters.

Yet the bid for energy independence came at higher import costs for Poland, because Russian oil prices averaged $59.70 a barrel in December 2017, compared to $60.20 per barrel for oil from Kazakhstan and $65.60 per barrel for U.S. oil, the central bank’s report showed.

Refiners in Poland process mostly Russian oil via pipelines, but in 2017, every third barrel of oil that Poland imported was shipped, according to the report.

Poland’s state-run refiners PKN Orlen and Lotos boosted purchases of non-Russian oil last year.

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. The oil is processed by all PKN Orlen's refineries in Poland, the Czech Republic, and Lithuania.

Related: Trump Tears Up The Iran Deal

Two weeks ago, PKN Orlen said that it would increase purchases of Saudi Arabia’s Extra Light by 100,000 tons to 300,000 tons per month.

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.

“The contract will certainly contribute to building Poland’s energy independence and strengthening its energy security. Consistent diversification of energy supply sources is one of the priorities of the Ministry of Energy’s policy, and business decisions made by state-owned companies are a vital element of its implementation,” Energy Minister Krzysztof Tchórzewski said.

Every fifth barrel of oil processed by the Lotos refinery is imported from sources other than Russia, according to the company, which said that it had also processed oil from Iran, Saudi Arabia, Latin America, and North and West Africa.

By Tsvetana Paraskova for Oilprice.com

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  • Krzysztof on January 12 2019 said:
    If Poland will not stopped import of energy resources from Russia then will be always addicted and involved in Russia Soviet policy zone. Polish people had always loved independence especially from their neighbours.
  • yeah yeah on June 01 2018 said:
    Yeah yeah, but russian oil is bad quality so it produces less fuel.
  • Brains B4 Emotions on May 09 2018 said:
    If the Polish people actually like paying higher prices for energy etc than necessary, then I have a bridge in Brooklyn that I would like to sell to them. Obviously, a bunch of anti-Russian Polish bureaucrats and politicians made these decisions. Too bad for Polish consumers who will have to pay the bill and for the Polish economy as a whole.

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