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Poland releases emergency stocks due to Russian crude contamination

London — Poland is releasing emergency oil stocks in response to the shutdown of pipeline crude supplies from Russia caused by a contamination issue, the International Energy Agency said Tuesday.

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The emergency release is aimed at sustaining normal operations at Poland's two main refineries, which are located on the Baltic coast at Gdansk and inland at Plock, and is "fully in accordance with how the IEA system is meant to work," the agency said.

"Poland has notified us that they are releasing emergency oil stocks to maintain normal operations at their two refineries supplied on the line," it said.

Deliveries of Russian Urals crude via the Druzhba pipeline have been halted since last week after extremely high levels of corrosive organic chlorides were found in the crude.

Belarus' Mozyr refinery, which is located further upstream, east of Poland, first reported the problem on April 18. Russian seaborne exports from the Baltic have also been affected by the contamination, which appears to have entered Russia's pipeline network in the southern region of Samara, according to state pipeline operator Transneft.

Russia said Monday that crude deliveries into Belarus through the pipeline had been restored to export quality. However, the system in Belarus is not yet free of contaminants and a full clean-up of the 1 million b/d route is likely to take "several months of hard work," Belarusian refiner Belneftekhim said Tuesday.

Poland's Material Reserves Agency (ARM), which manages strategic stocks, oversees 90 days' worth of crude stocks at its own facilities and those of refiners, as part of its obligations as a member of both the IEA and European Union.

The IEA made no reference to a release of crude stocks announced by Poland's southern neighbor the Czech Republic, saying it was unaware of any other government taking such a step in response to the contamination issue. Poland's PKN Orlen owns refineries in the Czech Republic and Lithuania, in addition to the Plock refinery, northwest of Warsaw.

SUPPLY DIVERSITY

State-controlled refiner Grupa Lotos, which owns Poland's second largest refinery, Gdansk, played down the severity of the situation, noting its access to maritime imports via the nearby Naftoport terminal.

"We are safe when it comes to crude oil supplies to the refinery," deputy chief executive for investment and innovation Patryk Demski told a news conference Tuesday. "What we can say today is we are calm and supplies are secure."

Poland has deliberately diversified its crude purchases, taking more from the Middle East and even the US, in recent years, even though in practice it still makes heavy use of Russian oil for its refining operations. The Plock refinery has less easy access to maritime imports due to its location, but a pipeline from Plock to the coast at Gdansk can be used in reverse if necessary.

Separately, Germany's oil stock administration, EBV, told S&P Global Platts it had not received any request for a stock release. Germany last released strategic oil stocks when Rhine water levels fell to record lows last autumn.

-- Adam Easton, with Nick Coleman and Paul Hickin in London, newsdesk@spglobal.com

-- Edited by Jonathan Loades-Carter, newsdesk@spglobal.com