The ORLEN Group is supplied with crude oil and natural gas through a central procurement process.
Crude oil is transported to the PKN ORLEN refinery mainly through the Druzhba pipeline and by sea, through the Gdańsk-Płock pipeline. The ORLEN Lietuva refinery is supplied through the Būtingė Terminal. In the Unipetrol Group, the feedstock is received chiefly through the southern section of the Druzhba pipeline (Litvinov) and TAL and IKL pipelines (Kralupy). The Litvinov refinery may also receive supplies from TAL and IKL pipelines.
In 2014, the Płock refinery received crude oil via a pipeline under three long-term contracts (with Mercuria Energy Trading S.A., Rosneft Oil Company, and Souz Petrolium S.A.). Each of the contracts provided for an option of annual price renegotiation and termination in case the parties fail to agree on the price. The contracts also ensured the security and continuity of oil supplies to the refinery and contained clauses to guarantee supplies based on financial guarantees. The long-term contracts accounted for 80% of PKN ORLEN’s total crude oil supplies.
PKN ORLEN provides oil to the refinery in Płock, to the ORLEN Group refineries located in Litvínov and Kralupy in the Czech Republic, and to its Lithuanian plant in Mažeikiai. In 2014, the refineries were supplied with crude oil as planned. The feedstock for the refineries was provided by oil producers and other companies operating on the oil market, including international traders.
The crude oil for the Płock refinery was sourced primarily from Russia, as well as Kazakhstan, Norway and the United Kingdom. Supplies for the refineries in the Czech Republic originated from Russia, Azerbaijan, Kazakhstan, Libya and Tunisia. Since July 2006, crude oil for the Mažeikiai refinery has been supplied by sea to the port in Būtingė, and then by pipeline to the plant. In 2014, the refinery’s supplies were sourced exclusively from Russia.
Oil supply logistics at the ORLEN Group
Source: In-house analysis based on an article from Wyborcza.biz.
Natural gas is supplied under PKN ORLEN’s long-term contract with PGNiG and short-term contracts with alternative suppliers. In 2014, gas prices were higher in Poland than on the deregulated markets of Germany and the Czech Republic. The ORLEN Group continues to take steps to ensure a steady supply of raw materials and to lower its natural gas procurement costs, chiefly by diversifying supply sources. In 2014, more than 30% of the ORLEN Group’s natural gas was supplied by alternative suppliers.
The ORLEN Group is also implementing a number of exploration and production projects with a view to securing its own sources of natural gas and crude oil.