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Saudi Arabia is expanding its downstream presence and crude customers in Eastern Europe, traditionally Russia’s backyard, by buying a stake in a Polish refinery.
Saudi oil giant Aramco has signed a deal with Polish refiner and fuel retailer PKN Orlen to buy 30 percent in a 210,000-bpd refinery in Gdansk, Poland, 100 percent in an associated wholesale business, and 50 percent in a jet fuel marketing joint venture with BP, the world’s largest oil company and top oil exporter said on Wednesday.
The acquisitions are subject to regulatory approvals, including one from the European Commission, the executive branch of the European Union, Aramco added.
“The investments will widen Aramco’s presence in the European downstream sector and further expand its crude imports into Poland, which aligns with PKN Orlen’s strategy of diversifying its energy supplies,” the Saudi oil giant said in a statement.
Aramco has also signed a memorandum of understanding (MoU) with PKN Orlen and SABIC, one of the world’s largest petrochemicals companies, to explore joint opportunities in Poland and elsewhere in Central and Eastern Europe.
“Such international partnerships are essential for building the largest multi-utility group in this part of Europe,” said Daniel Obajtek, President of the PKN Orlen Management Board.
Poland has been seeking for years to diversify its energy supplies away from Russia, and Polish energy firms have signed in recent years various deals for oil supply from Middle Eastern exporters and liquefied natural gas (LNG) cargoes from the United States.
Poland is also one of the most vocal opponents of the Russia-led Nord Stream 2 gas pipeline project from Russia to Germany, which is currently stuck in regulatory limbo in Germany.
Aramco’s refinery deal in Poland will help the Saudi oil giant to “strengthen its position in a region traditionally dominated by Russian crude,” Bloomberg Intelligence analysts Salih Yilmaz and Rob Barnett wrote in a note.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com