Saudi Tankers Will Not Change The Crude Oil Supply Structure, When It Comes To Poland

19 października 2015, 11:49

There are no symptoms suggesting that the Saudi tankers are to be a sign of a large contract, signed by one of the Polish petroleum companies. This is rather a single-time purchase, one of those that are made when the market offers some unusual opportunities. This is proven by several factors:

  • The state-governed PERN company gains a lot of profit from maintaining the “Friendship” pipeline, reaching Germany from Russia, through Belarus and Poland. Resigning from that income could be interpreted as a business suicide. It is also worth to remember the fact that these assets make it possible to finance the expansion of infrastructure of the Gdansk oil terminal, planned to be finalized in 2018
  • PKN Orlen is an international company, and the Polish treasury is one of its shareholders. The company also includes the Czech assets, also the refineries (Česká Rafinérská). Russia still remains the main supplier of the crude oil for the aforementioned facilities (Rosneft). How the relations with Russia would look like, should information emerge that a serious contract is to be signed with the Saudi Arabia? In my humble opinion, the above would have catastrophic consequences, as the decision would be seen as a political, rather than a business step.
  • Similar conclusions can be reached, when one assumes that Lotos, not Orlen, would be the recipient of the Middle East supplies. The treasury would probably consider the implications of the potential contract with the Saudi Arabia holistically, not from a perspective of a single company, thus interest of both Orlen and PERN should be taken into account.
  • Today, Saudi Arabia is fighting for its market space, and its offer contains, as it was defined by Igor Sechin, Chairman of the Rosneft Management Board, a dumping pricing policy. However, the situation is going to change with the passage of time, and the upward trend in the crude oil market is going to be noticeable again. Then, the pipeline supplies are yet again going to be significantly cheaper than those realized with the tankers. The largest tankers, at the moment, need to make stopovers in the narrow Danish straits. Polish petroleum companies are – without any doubt – aware of that situation and in the future they are going to want to earn money on the price differential, i.e. the difference between the prices of the Russian oil and the Brent crude.
  • It is hard to imagine that a large contract with Saudi Arabia is going to be signed at the moment when Iran is entering the game, which may have even larger impact on the market situation. Besides the above, the Saudi and Iran issues constitute a good set of arguments in negotiations with the Russians who, without any doubts, are able to propose some better offer.
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