Analysis: Poland dips a toe in Middle East crude
PKN today said it will take a test cargo of Saudi Arabian crude in early November, with a view to a term contract that would reduce its reliance on Urals term deals. And chief executive Slawomir Jedrzejczyk said PKN is open to buying Iranian crude too, from early next year.
PKN Orlen refined 664,000 b/d of crude in the third quarter, a 13pc increase on the year and a 2pc increase on the quarter.
Crude marketed by the Kurdistan Regional Government (KRG) has become an established source of feedstock in Poland. Most recently the Suezmax tanker Sikinos loaded at the Turkish port of Ceyhan on 5 October, and is scheduled to arrive at Gdansk this week. The loading schedule lists Lotos and trading firm Vitol as charterers.
Lotos, operator of the 210,000 b/d Gdansk refinery, has been increasing seaborne supplies at the expense of Druzhba pipeline deliveries, although the bulk of the increase is probably seaborne Urals.
PKN said this month's sharp shift in the Urals discount to Brent, to its widest in 15 months, is in part driven by higher supplies of other crudes, including from the Middle East, in the Baltic region.
Buying KRG crude is contentious. Baghdad regards any crude not sold through state-owned marketer Somo to be smuggled, and said last year it would blacklist buyers of KRG crude, shipowners and others involved in its transportation. Court proceedings continue in the US over an order for the seizure of a KRG-marketed cargo that was moored offshore Texas. The KRG continues to rely heavily — but not exclusively — on a pool of just four shipowners.
The purchase of KRG crude is even more politically charged because some of it is routed through the Israeli terminal at Ashqelon, and Israel remains under an Arab oil embargo.
With the breakdown over the summer of its agreement to channel 550,000 b/d through its tanks at Ceyhan to Somo, the KRG is currently exporting around 584,000 b/d on its own account. Much of this goes to Israeli refineries, but some goes into tanks at Ashqelon for re-export and one destination is Gdansk. A shipment earlier this month was 80,000t aboard the Overseas Yosemite, chartered by Vitol. In September, trading firm Petraco took a 130,000t cargo from Ashqelon to Gdansk.
Other cargoes go direct from Ceyhan to the Croatian port of Omisalj for shipment through the Adria pipeline that feeds refineries in Croatia, Slovakia and Hungary. At least some of this goes to Hungarian refiner Mol's 165,000 b/d Danube plant, although feedstock from Adria accounts for no more than 10pc of Mol's total slate and not all of that is Kurdish crude. But the firm has increased volumes taken from Adria in parallel with the build up of Kurdish crude going to Ceyhan. Mol said in September that the number of cargoes purchased through Adria was expected to increase to 12-18 this year from eight in 2014 and only three in 2013.
Two 600,000 cargoes of KRG crude — on the tankers Mareta and United Seas — have discharged at Omisalj so far this month, but the buyer is unknown.
Seaborne imports of crude into Poland are grist to the mill of Gdansk terminal operator Naftoport. The terminal saw its throughput rise year on year, by 36pc to more than 300,000 b/d in the third quarter. The facility is completing construction of new crude storage capacity of 697,000m?, to add to the 900,000m? to which it already has access. It is linked to the Pern pipeline system that serves the 210,000 b/d Gdansk operated by Lotos and the 327,000 b/d Plock refinery operated by PKN Orlen, as well as the 210,000 b/d Leuna and 230,000 b/d Schwedt refineries in Germany.
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