Poland continues replacing Russian oil with Middle Eastern one
The oil trader Mercuria specializing in reselling Urals oil loses its share of Polish market. The stocks are replaced by Iranian oil, and this is another step in Poland's attempts to diversify energy supplies. Urals is still going through the Druzhba pipeline but by sea six oil tankers out of ten that were unloaded in the port of Gdansk in July had another oil brands.
One of the largest oil traders Mercuria is emptying its tanks located in the port of Gdansk, says Reuters. Over 250.000 tonnes of Urals were redirected to Asia by the same tanker Atlantas (VLCC) that brought 2 million barrels of Iranian oil to Poland.
Mercuria has been one of the largest players on the Polish oil market and the company is not planning to leave now. The company's spokesperson told Reuters that trader is 'still interested in the Polish market and will continue working and developing its business there in the coming years'. However, Mercuria's shore tanks leasing contract with PERN (Polish oil transportation and storage company) ended in August, and, probably, won't be extended, so they will be out of the market. It's worth noting that the company is a reseller one, and it started losing its positions several years ago when oil producers and refineries began signing direct contracts.
As for Urals' market share in Poland, it began decreasing in September, 2015 when Saudi Arabia started to supply oil to the Polish market (before it was almost totally dependent on Russian oil). Iran usually focused on the Asian market but now they are also in and this is the first post-sanction cargo to Poland for them. This is a one-off delivery now and further relationships will depend on the oil quality. There were also some supplies from Iraq and Africa in 2016. Only four out of ten oil tankers that were unloaded in Gdansk in July had Urals on board, the others had different oil brands. Urals is still going through the Druzhba oil pipeline but by sea the supplies keep being diversified.
The biggest refineries working on the Polish oil market are PKN Orlen (which operates also in the Czech Republic, Germany and the Baltic States) and Grupa Lotos. The main supplier of Russian oil on the pipeline is Rosneft with the 25 million tonnes contract with the Polish refiner PKN Orlen for the period of 2016-2019, and also the 2,7 million tonnes a year contract with another refiner Grupa Lotos. Rosneft also has a contract with Orlen for supplying Urals to the Czech Republic using the southern brunch of Druzhba pipeline. Besides, a large supplier is Tatneft, providing 100,000 – 200,000 tonnes a month to PKN Orlen and another 200,000 — to Grupa Lotos.
The Rosneft head Igor Sechin says that Russia intends to fight for its share on the European oil market. Certainly, it means price reduction and it is in favor of Poland, which keeps constantly strengthening its energy security and decreasing the dependence on Russian oil imports. PERN tank farm capacity in Gdansk increased more than twice and in April, 2016 was more than 677,000 cubic meters. 'They wanted to allocate part of the tanks for a strategic oil reserve,' the source told Reuters. The same diversification has already been made with natural gas import. Earlier this year, Poland has declared its plans to end long-term gas supplies from Russia after 2022 and to build a new pipeline to carry gas from Norway.