Poland’s oil refiner PKN Orlen expects shipment of Nigerian oil

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Poland, which seeks to reduce its reliance on oil supplies from Russia, will receive its first ever shipment of Nigerian crude oil through PKN Orlen in October 2018. State-Owned PKN Orlen and Lotos, its smaller rival which it  is taking over, mostly rely on Russian oil delivered via pipelines built in the 1960s.

In an interview with Reuters, PKN Orlen’s CEO, Daniel Obajtek, said “Nigeria is our new source of supplies we are exploring. Currently, a batch of 130,000 tonnes of Nigerian oil is on its way to Poland. It is expected to arrive at Naftoport in mid-October. If tests confirm the assumed yields structure and margins, further oil supplies from Nigeria will be a viable option”.

Both PKN Orlen and Lotos have purchased oil from Iran and the United States. PKN Orlen also signed a long-term agreement on regular oil supplies with Saudi Aramco in 2016. Currently, oil supplies from Russia account for around 70 percent of all oil deliveries to PKN Orlen, down from 90 percent in 2015.

Obajtek revealed that “there are also tankers sailing to us from other new directions, but at this stage it is too early to talk about it. We are holding discussions on medium and long term oil supply contracts with a number of parties, including US partners”. He said that the deteriorating quality of Russain Urals crude prompted PKN to diversify its supplies.

Obajtek, who confirmed PKN’s takeover of Lotos as part of the company’s plan to improve its negotiating position in oil purchases, said he hoped to obtain clearance from the European Commission in mid 2019. Obajtek said “that we are in the pre-notification phase and we are preparing to submit a merger clearance application, with some guidance already in place. We intend to file a draft application by the end of the year, which will formally trigger the process of negotiations with the European Commission”.

PKN plans to purchase 32.99 percent of Lotos shares by the third or fourth quarter of 2019. By the end of 2019, PKN will most likely tender an offer for up to 66 percent of Lotos shares. However, Obajtek noted that “the greatest synergy opportunities will come after the consolidation is complete and we have taken full control of Lotos”.

 

 

 

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