21 June 2013 10:39 [Source: ICIS news]
LONDON (ICIS)--Poland's PKN Orlen has secured the oil supplies of Czech refining and petrochemical subsidiary Unipetrol by signing a three-year supply contract with Russia's Rosneft valued at nearly zloty (Zl) 20.4bn ($6.2bn, €4.69bn), Orlen said on Friday.
Unipetrol last year came across difficulties in scheduling enough Russian crude deliveries, with analysts warning that central and eastern European oil and petrochemical players were facing a more aggressive Moscow oil export policy because Russia had more sale options given the completion of new export infrastructure.
“Contracting directly with an oil producer guarantees stability of supplies, which is crucial to us, particularly in the challenging business reality of the Czech market,” he added.
The contracted volumes from Rosneft, to be delivered through the Druzhba pipeline, would cover from 60% to 100% of Unipetrol's total annual demand for oil over three years, depending on the economics of the contracted deliveries relative to the conditions prevailing on the crude oil market at a given time, Orlen said.
“Following supply disruptions and uncertainty over the past two years, a mid-term crude supply contract seems to be positive news, in our view, particularly as a direct contract with a major producer such as Rosneft is also likely to incorporate favourable conditions and prices,” said Robert Rethy, an analyst at Prague-based investment bank WOOD & Company.
“We note that this agreement follows an apparent change in the Orlen management’s thinking, who have commented earlier that signing a term contract would be too risky for its Czech business under the company’s current operating conditions,” he added.
($1 = Zl 3.29, €1 = Zl 4.35)
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