Russia’s crude ban is costing Poland’s state oil company millions of dollars a day as it struggles to find alternative supplies for its Czech refinery.
Daniel Obajtek, chief executive of PKN Orlen, described the loss of Russian oil as losing about $27 million a day due to the price difference of about $30 a barrel between cheaper Russian oil and alternative supplies.
“I wouldn’t define it [a] loss: it’s about not supporting Russia,” he said. “This is a market cost that applies to all companies that do not import oil from Russia.”
However, he said his company still used Russian oil piped through the Druzhba network to the group’s Czech refinery in Litvínov, which has so far not been covered by sanctions even as the Warsaw government pushes for tougher EU sanctions against Moscow.
“Complete replacement of Russian oil requires an improvement in the logistics of oil supplies, which we are working on with the Czech government,” he said in an interview with the Financial Times.
Despite Poland’s initial pledge to stop importing Russian oil by the end of last year, Orlen also continued to import Russian oil into its domestic market through February.
Orlen announced last month that he had ended his latest contract with Russian firm Tatneft, saying he could not have done so sooner without risking a Russian lawsuit for breaching the terms of the contract.
Last year, the EU banned imports of oil from Russia by sea, but exempted oil transported overland via the Druzhba pipeline network, which connects Russia to Poland and a handful of other EU countries.
While Orlen herself has struggled to wean herself off Russia, Obajtek said Russian oil companies were still “flooding Europe with petrochemicals” and other oil derivatives despite EU sanctions designed to reduce Russia’s capacity to finance his war in Ukraine.
He listed several loopholes that had allowed the Russian oil sector to continue earning “decent money” from the EU, without offering hard evidence of sanctions violations.
“In summary, I think the penalties should be tougher. It shouldn’t just be a gimmick to improve Europe’s media image,” Obajtek said.
“Russia does not sell oil and natural gas, but still trades petrochemicals in Europe. It generates margins not only on hydrocarbons but also on processing. Not to mention fertilizers and other products”.
His criticism also comes from the European Commission consider new restrictions on certain EU exports to countries it suspects are re-exporting sanctioned products to Russia.
Asked if he was concerned about countries like Germany gaining access to re-exported Russian crude through recent supply deals with Kazakhstan, Obajtek said “the German side should better rethink the morality of what it is doing.”
Others also questioned Brussels’ enforcement of its own sanctions, saying EU exports could also reach Russia via countries such as Armenia, Kazakhstan and Kyrgyzstan.
Last year’s trade data was “suggestive of sanctions evaded through intermediary trade,” said Beata Javorcik, chief economist at the European Bank for Reconstruction and Development, in a separate interview with the FT.
For example, he noted that some 200 Russia-linked companies were set up in Kazakhstan in the three months following Moscow’s invasion of Ukraine last year. “In terms of volume, this does not compensate for direct trade which has disappeared, but in some products it is higher,” she said.
Orlen dominates the market in Poland and also has refining operations in Lithuania, but Obajtek said he saw potential to expand overseas, particularly to Germany.
“We are very interested in the German market, above all because we know it. We already have 600 stations there and we don’t intend to stop there, but we can also offer a sort of diversification alternative for the German refinery sector.”
—————————————————-
Source link