Output at Poland’s second biggest oil refiner, Lotos rose to more than 2.5 million barrels of oil equivalent (boe) or around 350,000 tonnes in the first quarter this year from around 1 million boe a year ago, the company announced on April 4.
Most of the 10.2 million tonnes of oil Lotos refines annually comes from Russia, but is trying to diversify its supplies by increasing its own crude production. The state-run firm produces 75% of its own oil in Norway, where it has shares in 27 concessions. In addition to Lotos, Polish refiners have primarily processed Russian REBCO crude, that is typically sold at a discount to Brent crude (Urals/Brent differential), according to a blog published in late 2015 by Adam Czyzewski, who focuses on the economics of the energy sector. Czyzewski noted that other types of crudes still only account for a small portion of the Polish refining crude slate in general.
According to a 2014 report by the Polish Organization of Oil Industry and Trade, Polish refineries processed 24.3 million tonnes of crude in 2013, 93% (22.7 million tonnes) of which was Russia-sourced oil. However Czyzewski noted that there should be every reason to believe that Polish refiners may begin importing a steady stream of competitive supplies from Iran and Saudi Arabia. Some Polish refiners have recently completed major process upgrades resulting in higher complexity, thereby opening up opportunities to upgrade a wider variety of feedstocks.
In early 2016, after it became apparent that the U.S. lead embargo and sanctions against Iran would be lifted, Iranian government officials began actively “lobbying” several European oil companies and refiners for joint cooperation agreements.
Lotos also noted on April 4 that its refining margin fell to $4.74 per barrel in the first quarter of 2016 from $6.21 in the fourth quarter 2015. Lotos will release its full first-quarter results on April 28.
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