Poland’s largest oil refiner, state-run PKN Orlen is scheduled to buy Nigeria’s Bonny light oil in March, a deal which will be Africa biggest oil producing country’s second export to Poland.
According to Bloomberg Intelligence, Poland-based oil firm Orlen will buy 120,000t of Bonny Light oil in March and is also expected to receive the same amount in January.
Orlen is also expected to get 130,000 tons of crude oil from Angola in March as the Polish oil refiner and petrol retailer PKN Orlen intensify plans to decrease its reliance on Russian oil supply.
This newest addition of buyer for Nigeria comes on the heels of the country’s crude grades having it tough finding buyers.
Reuters reported that Nigeria crude oil was offered at its highest levels in almost a year last week ending 18 December, citing cheaper freight rates and shorter supply of competing grades such as Libyan crude.
Recall last year, Nigerian crude struggled to find buyers as Nigerian cargoes were slow with an overhang of close to 20 unsold cargoes from the 58-strong October loading programme, while the November programme, the largest in six months, saw fairly muted demand in a period oil surged towards $84 per barrel, the highest in 2018 as a result of output shortfalls in Iran, currently being sanctioned by the United States.
Traders noted that major grades such as Bonny Light and Qua Iboe was offered as high as $2 a barrel above dated Brent, their strongest since March last year.
In recent years, Poland has been trying to diversify its oil supplies to reduce its reliance on Russian oil imports. Last year, it bought its first ever Nigerian crude oil of 130,000-ton cargo which arrived in mid-October.
Daniel Obajtek, CEO PKN of Orlen told Reuters last year that PKN Orlen is exploring Nigerian oil as its new source of supply. “If tests confirm the assumed yields structure and margins, further oil supplies from Nigeria will be a viable option.”
“The deteriorating quality of Russia’s Urals also played a part in PKN seeking new suppliers,” Obajtek told Reuters.
Poland has been trying to diversify its oil supplies to reduce its reliance on Russian oil imports. Last year, Poland reduced the share of its imports of Russian oil to the lowest level since 2005, according to a report by Poland’s central bank from May 2018.
Yet the bid for energy independence came at higher import costs for Poland, because Russian oil prices averaged $59.70 a barrel in December 2017, compared to $60.20 per barrel for oil from Kazakhstan and $65.60 per barrel for U.S. oil, the central bank’s report showed.
With the above developments, PKN Orlen is now beginning to intensify efforts to receive cargoes from other new destinations, and it is negotiating medium- and long-term supply deals with many parties, including Nigeria.
