Seaborne Oil, a lifeline for German and Polish refiners

Oil transported by sea has thrown a lifeline to refiners in eastern Germany and Poland, with non-Russian deliveries to the Polish port of Gdansk hitting at least seven-year highs this month as that they turn away from Russian supplies.

Imports booked for May in Gdansk from Egypt, the United States, Norway, Britain and West Africa had reached 8.4 million barrels by May 16, their highest level according to Refinitiv Eikon vessel tracking data dating back to 2015.

Meanwhile, Russian crude booked for May in Gdansk and the port of Rostock stood at 700,000 barrels, down from a high of 12.9 million in May 2019, the data showed.

“Volumes of non-Russian marine crude to Gdansk have increased at the expense of Russian barrels,” said Ioannis Papadimitriou, senior cargo analyst at oil analyst firm Vortexa.

The sharp increase in this supply comes as Europe works towards an outright ban on Russian oil.

Imports into Gdansk from Norway in April and from the United States and via Egypt in May all hit record highs, according to Refinitiv data.

Norwegian imports in April reached 2.2 million barrels, similar to US volumes booked for May, while those booked through Egypt this month have reached 5.7 million so far, according to reports. data.

“Poland is replacing Russian oil with Saudi crude oil supply through the Egyptian port of Sidi Kerir,” said Ehsan Ul-Haq, senior oil analyst at Refinitiv.

“Rough imports from countries other than Russia are now at an all-time high.”

In January, Saudi Aramco agreed to buy a 30% stake in Lotos, Poland’s second-largest refinery, and increase oil supply from major Polish energy company PKN Orlen to 200,000-337,000 barrels. per day (bpd), which dented Russia’s dominance in the region.

The deal could cushion some of the higher freight costs for oil shipped from the Middle East, Ul-Haq added.

Anders Opedal, chief executive of Norwegian energy company Equinor, told Reuters that all crude oil from Norway’s Johan Sverdrup oilfield, the largest in Western Europe, was now destined for Europe, while there are one year, about 60% was destined for Asia.

Imports from Britain’s North Sea have not increased significantly since the start of the war in Ukraine in February, but have become more regular since late 2021.

Larger pipe feed
The German government has hailed imports into the two Baltic Sea ports of Gdansk and Rostock as promising alternatives to Russian oil, although volumes are still only a fraction of the capacity of Russia’s Druzhba pipeline, which delivered in February about 22.4 million barrels.

However, Rostock has yet to come into play, with the only crude oil spilled there since June 2019 having been delivered last month from Russia. Since the start of 2015, there have only been nine crude shipments in Rostock, four of which have come from Russia.

“Exports to Rostock since March remain flat as the region struggles to diversify away from Russian barrels,” Vortexa’s Papadimitriou said.

The capacity of the Gdansk Oil Refinery is 210,000 bpd, second only to Poland’s Plock Oil Refinery, with around 270,000 bpd. In eastern Germany, Druzhba supplies 233,000 bpd to the Schwedt refinery and the 240,000 bpd Leuna refinery.

(Reporting by Shadia Nasralla, additional reporting by Nerijus Adomaitis in Oslo; editing by Jason Neely)