Poland's Orlen strikes one-year oil supply deal with BP

Poland’s state-owned oil company PKN Orlen has signed a one-year contract with British oil and gas company BP for the supply of 6mn tonnes of crude oil from Norwegian fields in the North Sea.

The supplies are set to cover 15% of the annual demand of the entire Orlen group, the Polish refiner informed in a press release on August 19.   

“Working with BP, a stable and well-established player, is a key element in diversifying Orlen Group’s feedstock portfolio,” commented Ireneusz Fafara, President of the Orlen management board, adding that the two companies  “will also explore other potential areas where we can work together”.

BP’s head in Poland, Bogdan Kucharski, praised the Norwegian crude oil supplies from BP, saying that it will help “enhance energy security for Poland and the wider Central and Eastern European region”, and that “through our trading team we are able to supply not only North Sea crudes but also access many of the other types of oil Orlen uses”.

Kucharski expects further cooperation with Orlen on “projects aimed at accelerating energy transformation”.

Under the cooperation, crude oil cargoes will head to the Polish port of Gdansk and the Lithuanian Butinga, “depending on demand”, giving Orlen flexibility of supply, the group noted. “The first oil tanker […] is expected to arrive in Gdansk in September 2024."  

In a separate development, Orlen’s Fafara told Polish press agency PAP that Orlen is ready to end Russian oil imports completely pending the completion of enhancing oil pipeline connections from Germany to Czechia.

“Orlen Group is ready to completely cut itself off from Russian crude oil which is currently processed only at the refinery in Litvinov in the Czech Republic,” Fafara was quoted as saying.

The sitting centre-right Czech government expects the country to be freed from dependency on Russian oil imports by the middle of next year following the completion of the TAL-PLUS projects – a CZK1.6bn (€67.5mn) expansion of the TAL pipeline which runs from the Italian port city of Trieste north to Austria and Germany, where Czechia is connected to it with its IKL pipeline. TAL-PLUS will increase the pipeline’s transporting capacity for Czechia to 4 million tonnes of oil annually, which will enable the country to stop importing oil from the Russian Druzhba [Friendship] pipeline.

Fafara also told PAP that ongoing tests in Czechia’s key oil refinery in Litvinov “confirm that the refinery can use non-Russian crude oil only” and that “the second Czech plant owned by Orlen Group in Kralupy [nad Vltavou] does not use Russian crude at all”.

In June, Czech state oil company Mero’s spokesperson Pavel Kaidl said that the Litvinov refinery “is ready technologically for the transfer to process a new oil mix”. As bne Intellienws reported, the Litvinov refinery completed a three-week test processing only non-Russian crude oil already last October.   

Orlen is a significant energy actor in the Baltic and Central European regions and its Lithuanian subsidiary is Orlen Lietuva. As bne Intellinews reported, last month Orlen Lietuva was unsuccessful in recovering more than €8mn in damages and interest from Inter RAO Lietuva, a former power supplier controlled by Russia’s energy giant Inter RAO, after a Lithuanian court rejected Orlen’s claim and lifted an €8.4mn asset freeze imposed on Unter RAO in December 2023.