Poland is replacing Russian oil with Iranian oil and unsold Urals crude, Russia's main oil export grade, is being redirected to Asia, industry sources told Reuters.
Trader Mercuria, once the largest seller of Urals in Poland, is closing down and emptying Russian oil out of its tanks in the port of Gdansk. Mercuria will use a tanker bringing in Iranian oil to transport out its unwanted Urals.
Mercuria is sending more than 250,000 tons of Urals to Asia via supertanker Atlantas, which will arrive in Gdansk with two million barrels of Iranian oil on board, said two industry sources familiar with Mercuria’s plan.
A Mercuria spokesman told Reuters that the company was still interested in the Polish market and will continue working and developing its business there in the coming years.
"Unloading of Urals from tanks in Gdansk is just the company's response to market changes and that does not mean Mercuria plans to stop working in Gdansk and in Poland," he said.
Urals lost its position on the Polish market in the past year due to the increased activity of Middle East producers, which boosted supplies to the Baltic Sea region, forcing Russian companies to cut prices.
The considerable reduction of pipeline oil prices in Poland since the start of 2016, combined with Gdansk imports, squeezed out Mercuria’s supplies.
Polish refiner Lotos bought 2 million barrels of oil from National Iranian Oil Company and the cargo will arrive in Gdansk in mid-August.
Mercuria’s lease contract for shore tanks in Gdansk with PERN, the Polish operator of trunk oil pipelines, expires in August, sources say.
"Storing oil in Gdansk lost its point for Mercuria this year. In March, the company practically exited the Polish market," a trader said.
Direct Contracts
Mercuria had a leading position on the Polish oil market. The company bought Urals pipeline supplies, provided by Russian producers through the Druzhba oil pipeline system, under long-term contracts and then resold the oil to Polish refiners PKN Orlen and Grupa Lotos.
However, in recent years, Russian producers began to sign direct contracts with refineries and Mercuria’s share in the Polish market began to fall.
"Since the beginning of summer, there is almost no Urals in Gdansk. PKN Orlen buys Kirkuk and Arab brands, Lotos started working with Iran, not to mention some unusual purchases like African crude or Azeri light,” said a major Russian oil trader who asked not to be identified. Rosneft and Tatneft were the major suppliers of Urals pipeline supplies to Poland this year. The companies supplied crude oil under direct contracts with PKN Orlen and Grupa Lotos.
Rosneft has a contract to supply 25.2 million tons of Urals to PKN Orlen between 2016 and 2019. Rosneft also has a contract with Lotos to supply 2.7 million tons of Urals per year till the end of 2017.
Tatneft's contract is for the supply of 100,000-200,000 tons a month of Urals to PKN Orlen and up to 200,000 tons to Grupa Lotos.
Increasing Competition
Saudi Arabia, the world's largest oil producer, started supplies of crude oil to Poland at the end of September 2015. The volume and range of imported crude grades have only increased since then.
In July, 10 tankers were unloaded in Gdansk, including six with oil brands other than Urals, data from the ship tracking system in Reuters terminal showed.
In recent years, Poland has been actively working to increase energy security and reduce its dependence on Russian oil imports.
In April this year, Gdansk’s tank farm capacity, owned by PERN, increased from 300,000 to 677,000 cubic meters. Petroineos, Shell and Total have leased tanks in the port, said traders.
