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08-10-2018

New crude supplies for ORLEN

PKN ORLEN’s refinery in PĹ‚ock will soon receive approximately 130,000 tonnes of crude oil from Nigeria. The shipment originating from West Africa marks another step in the Company’s efforts towards greater diversification of supplies. The New Vision tanker is due to arrive at GdaĹ„sk in mid-October.
 
“We are consistently pursuing our announced strategy, looking for new markets and expanding the Group’s portfolio of suppliers and crude slate. After new regulations to curb the grey market were implemented by Prime Minister Mateusz Morawiecki, demand for diesel oil in Poland rose 30%. To meet it, we need to increase the throughput of oil other than REBCO. By securing crude types with different properties, we will increase yields and refining margin. That’s why we decided to buy oil from that new source. If the Nigerian crude proves efficient in processing, we may consider opening more to that direction of supplies,” said Daniel Obajtek, CEO and President of the Management Board of PKN ORLEN S.A.
 
The Nigerian Bonny Light oil will supplement PKN ORLEN’s purchases made on the spot market, which currently cover 50% of the Group’s demand. Decisions on supplies are always weighed against economic considerations to combine secure deliveries with commercial viability. The ORLEN Group refineries have already processed oil from Iran, Iraq, Azerbaijan, Kazakhstan, and Norway. PKN ORLEN also has binding forward contracts with producers from countries east of Poland and the Persian Gulf, under which it has secured supplies to its refineries in Poland, the Czech Republic and Lithuania.
 
The diversification of oil supplies is also PKN ORLEN’s response to rising demand for fuels, especially diesel oil, currently seen in Poland in the wake of regulatory measures to curb the grey market. A shift in the crude slate towards oil types with properties other than those of REBCO will increase the yield of middle distillates, especially diesel oil. According to official data from the Energy Market Agency, consumption of diesel oil is projected to grow approximately 43% between 2015 and 2018, with GDP growth of some 13%. The economic growth aside, PKN ORLEN estimates that the effective fight against illicit trade has expanded the legal market in diesel oil by about 30% over the period.
 
As a result of its diversification efforts, approximately 30% of all crude oil processed at the ORLEN Group is now sourced from alternative directions. The Group is looking to strengthen purchases from the Persian Gulf, including through long-term relations with Saudi Aramco. In April this year, the two companies signed an annex to increase the volume of Saudi oil sold to PKN ORLEN by 50%, to 300,000 tonnes per month. Appreciating the potential of supplies from the Persian Gulf, PKN ORLEN remains open to cooperation with producers from that region in the near future.
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