Polish oil concern Orlen, which owns Orlen Lietuva, which operates the Mazeikiai refinery, sold PLN2.292 billion ($513.1 million at current exchange rates) worth of products to customers headquartered in Ukraine in the first half of 2023, up 61.9% from the first half of 2022.
According to the company’s consolidated report on the Warsaw Stock Exchange, meanwhile, revenue in Ukraine fell by 8.2% to PLN1.046 billion ($234.2 million) in the second quarter of this year to the second quarter of last year.
The document specifies that directly Polish Orlen increased sales for Ukraine in the first half of the year to PLN1.253 billion ($280.5 million), although in the second quarter they decreased by 39.2% to PLN541 million ($121.1 million)
Overall, the Polish oil major’s sales jumped 79.1% to PLN184.891 billion ($41.4 billion) in the first half of this year, including a 29.1% jump to PLN74.612 billion ($16.7 billion) in the second quarter of this year.
The report indicates that since the beginning of February 2023, after the expiration of the contract with Rosneft, Russian oil supplies have covered only about 10% of the company’s demand for the commodity.
“These were only pipeline deliveries that were not subject to international sanctions,” Orlen pointed out.
It added that at the end of February 2023, the Russian side suspended deliveries through the Druzhba pipeline to Poland, which consequently led to the termination of the last contract with Tatneft for pipeline deliveries of crude oil to Poland from the Russian direction, so currently ORLEN refineries in Poland do not receive crude oil from Russia.
It is emphasized that the company has recently taken intensive actions to diversify supplies to the above mentioned refineries, which are carried out by sea transport from the North Sea, West Africa, the Mediterranean basin, as well as the Persian Gulf and the Gulf of Mexico. Among others, Saudi Aramco is an important partner in the import portfolio for this feedstock, with whom Orlen has a strategic contract for crude oil supply in 2022. In addition, a long-term contract with BP for the supply of Norwegian crude oil was also concluded in 2023. Thus, according to the group, the suspension of oil supplies from Russia will not affect the supply of the company’s Polish customers, including gasoline and diesel fuel.
The Polish oil concern Orlen has an actual plan to enter the Ukrainian market of oil products, Energy Minister of Ukraine Herman Haluschenko has said.
“They visited [Ukraine] recently. Unfortunately, I could not meet with them. But I know from my colleagues that they came up with a real plan to enter the Ukrainian market. This is great!” Haluschenko said in an exclusive interview with Interfax-Ukraine.
According to him, the concern is considering the possibility of buying out the networks and entering several segments, in particular, oil refining and petrochemicals.
At the same time, the minister suggested that in this process, some problems may arise, related, in particular, to the shortage of crude oil made in Ukraine.
“They [Orlen] also understand that oil in Ukraine is not a subject of production. We have to get it somewhere… At most, we can buy oil instead of oil products, but what is the point then? And will there be investments in Ukraine if nearby Mazeikiai oil refinery in Lithuania, part of Orlen, and several other refineries are located?” the minister said.
Regarding the state policy on the oil products market as a whole, in his opinion, it consists in the need to change the geography of imports and to carry out import substitution.
“Today, we have a huge percentage of imports – 80% and even more: Russia and Belarus. This is not a completely normal story. Therefore, it is very important to look at partners from other countries and at how much we ourselves can increase refining,” the head Ministry of Energy said.
At the same time, he said that to increase internal processing, it is important to avoid another problem – the transition from an external monopolist to an internal one, which could become the Kremenchuk refinery.
“In fact, our key one is Kremenchuk [Refinery]. By the way, they declare the possibility of increasing processing capacity at least twice. And this [the transition from one monopolist – Russia – to another] can also potentially become a problem,” Haluschenko said.
According to him, to avoid monopoly on the part of anyone, it is necessary to promote increased competition in the market, and the ministry is ready for any steps that will help investors enter the Ukrainian market as soon as possible.
“Where we do not have our own production, we must very carefully build a policy of balance sheets and ensure supplies from different directions. There must be diversification,” the minister said, expressing his conviction and adding that communications are underway with many companies in the oil and gas industry.
At the same time, he said that the creation of minimum reserves of petroleum products will make it possible to balance in the market in case of contingencies.
