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PKN Orlen inks deal with ExxonMobil on oil supplies

Polish oil refiner PKN Orlen has signed a contract with American ExxonMobil to import around 1 million tons of crude oil within a year to supply the ORLEN Group’s refineries in Poland, the Czech Republic and Lithuania. This is the first time that PKN Orlen has concluded a long-term contract for the supply of crude oil from the US.

PKN Orlen Chief Executive Daniel Obajtek said that the deal is in line with the Group’s strategy of diversifying supply sources and expanding its portfolio.

Currently, the refineries of the ORLEN Group are supplied with crude oil based on long-term contracts with suppliers from Russia and Saudi Arabia, as well as spot deliveries from the North Sea, Angola or Nigeria.

“Over the past three years, we have successfully strengthened relations with the world’s largest oil producers, including Saudi Aramco and secured new supply routes, for example from West Africa,” said Mr Obajtek adding that in this way, PKN Orlen also increased the energy security of the entire region, reducing dependence on only one supplier.

The announcement follows a price row between PKN Orlen and its major Russian Urals oil supplier Rosneft. In February, Reuters wrote that the two companies agreed on a new oil supply deal that would significantly decrease the imported volumes via the Druzhba pipeline due to the rise in the price of supplied oil. However, the deal was not signed yet and Rosneft suspended oil supplies to Poland in February as the previous agreement expired on 31 January. Reuters quoted a PKN Orlen representative confirming that talks with Rosneft on supplies continue.

Diversification of oil supplies is an important element of Poland’s energy security strategy as 97 per cent of oil consumption are imported, mostly from Russia (approximately 60 per cent in 2019) via the Druzhba pipeline. However, the role of the Naftoport oil terminal in Gdańsk in diversification efforts is continuously growing transhipping a total of 16.8 million tons of crude oil and liquid fuels in 2019. The annual capacity of the Naftoport is over 40 million tons.

The importance of Naftoport will further increase once the second line of the Pomeranian oil pipeline, connecting the Naftoport with the refinery in Płock will be completed. The investment is scheduled to be finished by 2023.

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