Saudi Aramco enters Baltic market with oil supply deal with Polish PKN

Jun 01, 2016 12:00 AM

Saudi Aramco and Poland's biggest refiner PKN Orlen on Wednesday signed a contract agreed in May for Aramco to supply PKN with 50,000 barrels of crude oil per day starting this month, the companies said.

The deal solidifies the slow erosion of Russian state oil giant Rosneft's dominance in northern Europe, its core market for sales of its medium sour grade Urals.

Saudi Aramco has been aggressively trying to expand its global market share and success in Russia's backyard will likely stoke existing tensions with the Kremlin over failed efforts to reverse the fall in global oil prices.

"This agreement marks a strong first-step for Saudi Aramco's entry into the Baltic market, adding value in the key markets of Poland, Lithuania, and the Czech Republic, where PKN Orlen operates refineries," Saudi Aramco's CEO Amin Nasser said in a statement.

Polish state-run oil companies - PKN Orlen and Lotos , which refine mostly Russian oil - started to diversify their supplies at the end of last year.

The contract agreed with Saudi Aramco in May is PKN's first long-term deal with a supplier from the Gulf region.

PKN Orlen began buying Saudi crude last year along with Swedish refiner Preem and Poland's second refiner Lotos.

OPEC will meet on Thursday with hopes that a plan to freeze output may be revived. OPEC sources said on Wednesday that a new output ceiling would be considered.

A freeze deal, meant to be rubber-stamped in Qatar by OPEC and non-OPEC producers like Russia, was scuppered by Saudi Arabia after Iran failed to show up.

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