Poland has long sought to reduce its dependence on Russian energy imports by striking deals with alternative suppliers, and its resolve has grown as relations have soured.
In recent months, Moscow and Warsaw have clashed over the Nord Stream 2 gas pipeline, which bypasses common neighbor Ukraine, as well as the migrant crisis https://www.reuters.com/world/europe/lukashenko- tells-migrants-belarus-poland-border-he-wont-make-them-go-home-2021-11-26, which involves another common neighbor, Belarus.
The mood between Poland and Russia had already darkened over oil supplies in early 2021, when Poland had to reduce its oil purchases from Russia due to a price dispute between Russia’s Rosneft and Polish PKN Orlen.
Last Wednesday, the Saudi oil giant said it had agreed to buy a 30% stake in Poland’s second-largest refinery and increase supplies of oil to the state’s main energy company, PKN Orlen. to reach 200,000 337,000 barrels per day (bpd).
The capacity of the Gdansk oil refinery is 210,000 bpd, which places it second in Poland behind the state oil refinery, Plock, with around 270,000 bpd.
“We value our business relationship with our Russian partners and with other crude oil suppliers to our refineries,” PKN Orlen said in an email response to questions from Reuters.
He added that he had no intention “to interrupt his activities with his Russian partners”, while refusing to divulge the details of his commercial contracts.
In response to an email request for comment, Saudi Aramco said it “could not provide further details of the deal”.
Russia’s energy ministry, Russian pipeline monopoly Transneft and Rosneft did not respond to Reuters requests for comment.
POLICY AGAINST ECONOMY
Poland is one of the largest consumers of oil in the Baltics and PKN Orlen has stakes in refineries in Lithuania and the Czech Republic, which are also buyers of Russian Urals crude oil.
If the deal is finalized, Aramco will triple its oil supply to Poland and could cover between 50 and 70 percent of Poland’s crude oil needs, according to Reuters calculations.
Medium-sour Saudi crude is technically well-suited to Polish refineries configured to process the Russian Urals, which is also sour, i.e. high in sulfur, but the logistics of shipping to the region could increase costs over importing Russian cargo from the Baltic, Viktor Katona of independent consultancy JBC Energy told Reuters.
“Poland’s goal of achieving independence from Russian supplies is driven primarily by political reasons,” Katona said, adding that any reduction in spot purchases and market outlets would hurt Russian oil exporters.
Saudi Arabia is already supplying about 90,000 bpd of seaborne crude to the Polish city of Gdansk, compared to about 142,000 bpd of Russian Urals shipped by the same route, Katona said.
Poland’s maritime imports, which also include products from the North Sea and West Africa, have increased as volumes transported by the former Soviet Druzhba pipeline line to Poland have fallen, reflecting the political and technical problems of recent years.
This month, Russia is expected to supply 120,000 bpd of oil through Druzhba, up from some 220,000 bpd in January 2021, according to two industry sources and Eikon data.
This figure compares to 500,000 bpd in the mid-2000s.
Two sources familiar with the Saudi deal said it was of considerable importance for Poland, but was unlikely to affect the internal politics of the OPEC+ group, which brings together the Organization of oil exporters (OPEC) and other major producers, notably Russia.
Although united on the need to support prices through production agreements, Russia and Saudi Arabia are used to competing for market share and could even teach the West a lesson in the pragmatic management of relations. based on rivalry, said one of the sources.
“Anyone can invest anywhere,” the source familiar with the deal said on condition of anonymity. The source cited Rosneft’s 2017 investment in Indian company Essar https://www.reuters.com/article/us-rosneft-essar-delays-exclusive-idUSKBN1871U5, in which Aramco had also had an interest.