Polish top refiner PKN Orlen ready for any Russian oil ban: CEO

Poland's largest refiner, PKN Orlen, is fully prepared to implement a ban on Russian crude imports if decided by the EU, company CEO Daniel Obajtek said.

It comes as pressure builds on the EU to step up sanctions against Moscow in response to alleged war crimes in Ukraine, with the re-election of President Emmanuel Macron in France expected to underpin calls for a tougher policy.

Poland has been one of Kyiv's staunchest supporters and a major conduit for fuel supplies to Ukraine, even as PKN Orlen still buys significant quantities of Russian oil. Its subsidiary in neighboring Lithuania, Orlen Lietuva, until recently got the majority of its crude from Russia by sea.

However, Obajtek highlighted the strides PKN Orlen has made in diversifying its purchases -- as recently as 2013, before Russia's annexation of Crimea, the company got 95% of its crude feedstock from Russia.

PKN Orlen is consolidating its position in the market with the takeover of Polish Number 2 refiner Grupa Lotos, which will also give it greater control over the Gdansk oil terminal on the Baltic coast once completed. The terminal is being discussed as possibly playing a greater role supplying feedstock into eastern Germany as part of efforts to marginalize Russia.

"If the EU introduces an embargo on Russian oil, PKN Orlen will comply with it. We can do it anytime -- we are prepared," Obajtek told state news agency PAP April 25.

Contrasting with earlier times, PKN Orlen now takes 400,000 mt/month of crude under a long-term contract with Saudi Aramco, while Russian export blend REBCO makes up 30% of the company's total feedstock, Obajtek said.

PKN Orlen is building ties with the Saudi state company, which is set to take a 30% stake in the Gdansk refinery as part of PKN's purchase of Lotos, but Poland has already been importing crude from across the Middle East, West Africa and the US.

"We have fully adapted the refineries to different types of crude than Russian, so I believe that we are safe and we will manage. The level of diversification today is at 70%," Obajtek said.

Russian contracts

However, PKN has two long-term supply contracts for its Plock refinery with Rosneft and Tatneft, which contribute about 50% of the plant's feedstock needs. Obajtek said at least one of those would not expire until next year.

The company's Unipetrol-branded Czech refineries are also partially dependent on Russian pipeline supplies. At the end of March, Obajtek said the Orlen Lietuva refinery in Mazeikiai, Lithuania, had stopped taking any Russian cargoes. He said then that PKN had contracted 28 spot cargoes since the start of the war for its plants.

Asked what PKN plans to do if the bloc does not introduce a ban on Russian oil imports, he said: "We are preparing for full diversification. We will definitely not support military operations".