Page 7 - Euroil Week 43 2019

EurOil PIPELINES & TRANSPORT EurOil
Polish imports of Russian oil down 20% in Q2
POLAND
Shipments slumped because of the Druzhba oil contamination crisis.
POLISH imports of Russian oil slumped 20% year on year in the second quarter, according to a report by the country’s central bank, as a result of the Druzhba pipeline system’s temporary closure and a change in a purchase contract.
The bulk of oil refined by Poland’s state- owned PKN Orlen and Lotos is still supplied by Russia via pipeline. But the pair have ramped up purchases in recent years from Saudi Arabia and other producers, to improve their supply security.
These diversification efforts paid off in the summer, allowing Polish refineries to keep run- ning after Druzhba, Russia’s main channel for oil supplies into Europe, was taken offline for 46 days after millions of barrels of oil were contam- inated with organic chlorides.
“The fall in imports via the pipeline was com- pensated by a strong increase in supplies via the sea,” the central bank said in its second-quarter balance of payments report, according to Reuters.
Poland increased deliveries from Saudi Arabia to compensate for the drop in Druzhba
flows, with the kingdom becoming its sec- ond-biggest oil supplier in the period, the bank stated. Total oil imports fell 14% between April and June, while their average cost increased to 257 zlotys ($67) per barrel from 234 zlotys a year earlier.
Poland’s national pipeline operator PERN expects to clear its system completely of all con- taminated Russian oil by July 2020. Organic chlo- rides are used to boost production at oilfields but can cause damage to refining equipment if left in the oil. Unlike refiners in neighbouring Belarus, PKN Orlen and Lotos were alerted to the con- tamination before any tainted oil reached their plants. But they still intend to seek compensation from Russia for the disruption in supplies. PERN will also seek redress for the cost of cleaning its pipelines.
Polish imports of coal also fell in the second quarter to 3.5mn tonnes from 4.5mn tonnes a year ago, the bank said, while the value of elec- tricity imports soared 70% between April and June to PLN1bn. ™
Denmark approves Baltic Pipe
DENMARK
The Baltic Pipe is
a major element in Poland’s plan to wean itself off Russian gas, which currently covers around two-thirds of the country’s demand.
THE Danish government granted the Pol- ish-Danish gas pipeline project, the Baltic Pipe, construction permits for Denmark’s offshore ter- ritory on October 25.
The permits were the last important paper- work that the project’s operators – Poland’s Gaz-System and Denmark’s Energinet – needed to obtain before kicking off construction of the pipeline in 2020. The Baltic Pipe is a major ele- ment in Poland’s plan to wean itself off Russian gas, which currently covers around two-thirds of the country’s demand.
Poland has said a number of times it would not renew its long-term gas supply contract with Russia’s Gazprom, expiring in 2022, the year of the completion of the Baltic Pipe.
“The approval of the Danish government for the construction of the offshore part of Baltic Pipe is a key element for the project’s implemen- tation,” Tomasz Stepien, CEO of Gaz-System said in a statement.
“As to the project’s implementation, we are currently working on selecting the pipe supplier and the construction and installation works con- tractor,” Stepien also said.
The pipeline will transport gas from the
Norwegian offshore fields operated by the Polish state oil and gas company PGNiG. Its capacity is expected at 10bn cubic metres (bcm) a year. That is around 55% of Poland’s current demand and 45%-47% of the forecast demand in 2023-2024.
To cover the remainder of the demand, Poland is expanding its LNG terminal in the northwestern port of Swinoujscie from 5 bcm to 7.5 bcm as well as planning a floating LNG ter- minal in the Bay of Gdansk by 2024.
With the new infrastructure coming online soon and the domestic production combined, Poland is hoping to become a regional gas exporter.
The cost of the Baltic Pipeline is estimated at €2.1bn. ™
Week 43 31•October•2019 w w w . N E W S B A S E . c o m P7