Rosneft wants to increase oil exports to Poland

The company wants to increase oil exports to the country.
"Rosneft" has entered into a new contract with Polish Lotos group for the supply of oil before the end of 2020, which is likely to become the largest in the mutual relations of companies. Within three years, Rosneft is going to supply 6-12 million tons of oil. Poland in recent years has been trying to reduce oil purchases in Russia, and Rosneft is trying to retain a traditional market for Russian oil. Experts estimate the minimum contract volume of $ 3 billion.

Rosneft entered into a new contract with the Polish Lotos group to supply oil to Poland by 2020, the Russian oil company said. Under the terms of the agreement, Rosneft will ship Lotos from 6.4 million to 12.6 million tons of oil. The contract may become the largest in terms of shipments to Lotos, which is the second largest refiner in Poland after the state Orlen. Rosneft declined to comment. In accordance with the applications of the oil companies, Transneft will keep the volumes of oil supplies to Poland in 2018 at the level of 17 million tons, but it is capable of increasing them, Kommersant was told in the pipeline company.

The northern branch of the Druzhba oil pipeline passes through Poland, along which raw materials go directly to Lotos's refinery in Gdansk with a capacity of 10 million tons. For a long time, Polish companies bought Russian oil only through traders, the first direct contract between Rosneft and Lotos was signed in 2013. In 2013-2017, the deliveries amounted to 10.8 million tons of oil. At the same time, since 2014, Polish companies have been looking for alternative suppliers outside of Russia amid falling prices for raw materials, despite the fact that due to the presence of an oil pipeline, the Russian oil has the simplest logistics. Lotos purchased certain tanker shipments of Saudi and Iranian oil, and in 2016 also began buying light oil from the United States. As a result, in 2017 the share of Russian oil in deliveries to Poland decreased to about 80%.

Lotos planned to continue diversifying supplies and enter into a long-term contract for the purchase of Iranian oil. However, entering into force in the fall of the US sanctions against Tehran make such a deal impossible. Nevertheless, due to diversification of shipments of shipment of Russian oil to Poland for seven months decreased by 8%, to 8.2 million tons.

Judging by the wide range of the contract, Rosneft now expects to increase supplies to Poland, despite the fact that in recent years it has acted on the contrary, redirecting all new volumes of oil to the east and removing them from the western export direction. "The operation of the OPEC agreement and the growth of supplies to China contributed to a reduction in the number of free shipments of Russian raw materials for European buyers," Argus reported in the first quarter of this year. Thus, Russia's exports to the People's Republic of China via the Skovorodino-Mohee oil pipeline (the withdrawal from the ESPO) this year should grow by almost 50%, to more than 28 million tons. Redirection of supplies of light oil to China was one of the reasons for the decline in exports to Eastern Europe (see "Kommersant" on May 10). Transneft then claimed that consumers located on the southern branch of the Druzhba pipeline (primarily Hungary and Slovakia) are not satisfied with the sulfur content, which increased this year to 1.75%.

According to Andrei Polishchuk from Raiffeisenbank, although a direct contract with Poland may not give Rosneft a significant premium to the price, the advantage is that the company can fix its presence on the market. The minimum volume of the contract can be about $ 3 billion at current prices, the expert believes.