PKN to sell Lotos assets to Aramco, Mol ahead of merger

  • Spanish Market: Crude oil, Oil products
  • 12/01/22

Saudi Arabia's state-controlled Saudi Aramco is poised to re-enter Europe's refining sector after agreeing to buy some of Polish firm Grupa Lotos' assets ahead of its planned takeover by domestic rival PKN Orlen.

PKN today announced a package of asset sales designed to win EU competition approval for the Lotos deal. The pick of them is an agreement to sell Aramco a 30pc stake in Lotos' 210,000 b/d Gdansk refinery for a headline price of 1.15bn zlotys ($255mn). The final price will factor in any debt held by the refinery. Aramco has also agreed to buy Lotos' refined products supply and logistics company in Poland for 1bn zlotys, and a stake in its jet fuel supply joint venture Lotos Air BP Polska.

PKN said it will sign a term contract to buy 200,000-337,000 b/d of crude from Aramco if the Gdansk sale goes through. This could take a sizeable chunk of demand away from Russia, which is Poland's main crude supplier. PKN, which already has a contract for 100,000 b/d of Saudi crude that is renewed on a yearly basis, said if the deal is completed Saudi crude could represent as much as 45pc of its total crude slate. It said it plans to direct the new Saudi supply to several of its refineries, including Plock and Gdansk in Poland, Mazeikiai in Lithuania, and Litvinov and Kralupy in the Czech Republic.

"The investments will widen Aramco's presence in the European downstream sector and further expand its crude imports into Poland, which aligns with PKN Orlen's strategy of diversifying its energy supplies," Aramco said today.

Tracking data show PKN's Saudi term supplies are delivered to the port of Gdansk from storage in Sidi Kerir, Egypt. PKN's refineries also receive pipeline shipments of Russian Urals, along with Caspian, North Sea, US and west African grades. The shift to a higher Saudi intake will likely tighten PKN's reliance on spot purchases.

The proposed Gdansk acquisition is Saudi Arabia's second step in strengthening its marketing foothold in Europe this week. Yesterday, German commodities trader and refiner Klesch Group said it had agreed a deal with Aramco's trading subsidiary ATC for the supply of 110,000 b/d of non-Saudi crude over a three-year period. Unlike Aramco, ATC does not typically trade Saudi crude. It has previously operated crude-for-products supply deals with PKN and Greek refiner Motor Oil Hellas (MOH).

Aramco has focused on Asia-Pacific to grow its international refining footprint in more recent years, but it does have past experience in Europe, having previously owned a stake in MOH. Expanding its presence in Europe's downstream sector will help the firm to optimise its Red Sea-facing terminals, such as Yanbu, Jeddah, Shuqaiq and Rabigh.

Retail sales

Other Lotos assets being divested ahead of the PKN merger are staying in European hands. Hungarian firm Mol has agreed to buy 417 Lotos filling stations in Poland for $610mn. These include 270 owned by retail subsidiary Lotos Paliwa. Mol expects to gain country-wide market coverage and potentially become Poland's third-largest motor fuel retailer as a result of the deal.

Mol said it also signed a long-term fuel supply agreement with PKN for its future Polish retail network. It has no refining assets in Poland, although it owns the 120,000 b/d Bratislava refinery in neighbouring Slovakia. Subject to the Polish acquisition being approved, Mol will divest 144 retail stations in Hungary and 41 in Slovakia to PKN for $259mn, marking the Polish firm's entry into the Hungarian retail market.

Other Lotos divestment deals agreed today include the sale of biofuels subsidiary Lotos Biopaliwa to Hungary's Rossi Biofuel, in which Mol holds a minority stake, and the sale of storage and bitumen assets to Polish trading firm Unimot. The latter deal includes an agreement for Unimot to buy 500,000 t/yr of bitumen from the Gdansk refinery.

PKN said it will present all of these deals to the European Commission within seven days and aims to finalise them within 12 months assuming it receives the EU's approval.


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17/06/24

Iran rebukes G7 over nuclear warning: Update

Iran rebukes G7 over nuclear warning: Update

Adds quotes from IAEA director general Dubai, 17 June (Argus) — Iran's foreign ministry has called on the G7 to distance itself from "destructive policies of the past" after the group issued a statement condemning Tehran's recent nuclear programme escalation. "Unfortunately, some countries, driven by political motives and by resorting to baseless and unproven claims, attempt to continue their failed and ineffective policy of imposing and maintaining sanctions against the Iranian nation," the foreign ministry's spokesperson Nasser Kanaani said on 16 June. Kanaani advised the G7 "to learn from past experiences and distance itself from destructive past policies". His comments were in response to a joint statement from G7 leaders on 14 June warning Iran against advancing its nuclear enrichment programme. The leaders said they would be ready to enforce new measures if Tehran were to transfer ballistic missiles to Russia. The G7's reference to Iran comes on the heels of a new resolution passed by the board of governors of the UN's nuclear watchdog the IAEA . The resolution calls on Iran to step up co-operation and reverse its decision to restrict the agency access to nuclear facilities by de-designating inspectors. Kanaani said "any attempt to link the war in Ukraine to the bilateral co-operation between Iran and Russia is an act with only biased political goals", adding that some countries are "resorting to false claims to continue sanctions" against Iran. Tehran will continue its "constructive interaction and technical co-operation" with the IAEA, Kanaani said. But the agency's resolution is "politically biased", he said. Not an "anti-Iran" policy In an interview with the Russian daily newspaper Izvestia published today, IAEA director general Rafael Grossi refused claims of political bias. "We do co-operate with Iran. I don't deny this. This is important for inspection. My Iranian colleagues often say that Iran is the most inspected country in the world. Well, it is, and for good reason. But this is not enough," Grossi said, adding that the IAEA does not adhere to an "anti-Iran policy". Grossi also stressed the need for countries to return to diplomacy with Iran, while expressing concerns over the expansion of its nuclear programme. "Russia plays a very important role in this diplomacy, trying to keep the Iranian programme within a predictable and peaceful framework. But again, everything needs to be controlled," he said. The IAEA's new resolution and the reference to Iran in the G7 statement could be the start of a more concerted effort to raise pressure on Tehran over its nuclear programme. "What is happening right now is the process of accumulation of resolutions, so that when the day comes and the IAEA makes a referral to the UN Security Council, there will be enough resolutions to make a case for action at the security council level," a diplomatic source told Argus . Iran is enriching uranium to as high as 60pc purity. Near 90pc is considered to be weapons grade, according to the IAEA. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Japex takes control of Norway-focused upstream venture


17/06/24
17/06/24

Japex takes control of Norway-focused upstream venture

Tokyo, 17 June (Argus) — Japanese upstream firm Japex has acquired a majority stake in Longboat Japex from London-listed independent Longboat Energy to take full control of the Norwegian oil and gas joint venture. Japex spent $2.5mn to buy the 50.1pc stake, which will completed during July-September this year, Japex said. It bought a 49.9pc stake in Longboat Japex from Longboat Energy in May last year, with the UK firm last year looking to raise extra funds through asset sales, farm-down deals or issuing new equity. By Reina Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Iran rebukes G7 after warning over nuclear escalation


17/06/24
17/06/24

Iran rebukes G7 after warning over nuclear escalation

Dubai, 17 June (Argus) — Iran's foreign ministry has called on the G7 to distance itself from "destructive policies of the past" after the group issued a statement condemning Tehran's recent nuclear programme escalation. "Unfortunately, some countries, driven by political motives and by resorting to baseless and unproven claims, attempt to continue their failed and ineffective policy of imposing and maintaining sanctions against the Iranian nation," the foreign ministry's spokesperson Nasser Kanaani said on 16 June. Kanaani advised the G7 "to learn from past experiences and distance itself from destructive past policies". His comments were in response to a joint statement from G7 leaders on 14 June warning Iran against advancing its nuclear enrichment programme. The leaders said they would be ready to enforce new measures if Tehran were to transfer ballistic missiles to Russia. The G7's reference to Iran comes on the heels of a new resolution passed by the board of governors of the UN's nuclear watchdog the IAEA . The resolution calls on Iran to step up co-operation and reverse its decision to restrict the agency access to nuclear facilities by de-designating inspectors. Kanaani said "any attempt to link the war in Ukraine to the bilateral co-operation between Iran and Russia is an act with only biased political goals", adding that some countries are "resorting to false claims to continue sanctions" against Iran. Tehran will continue its "constructive interaction and technical co-operation" with the IAEA, Kanaani said. But the agency's resolution is "politically biased", he said. The IAEA's new resolution and the reference to Iran in the G7 statement could be the start of a more concerted effort to raise pressure on Tehran over its nuclear programme. "What is happening right now is the process of accumulation of resolutions, so that when the day comes and the IAEA makes a referral to the UN Security Council, there will be enough resolutions to make a case for action at the security council level," a diplomatic source told Argus . Iran is enriching uranium to as high as 60pc purity. Near 90pc is considered to be weapons grade, according to the IAEA. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Venezuela to require appointments at some gas stations


14/06/24
14/06/24

Venezuela to require appointments at some gas stations

Caracas, 14 June (Argus) — Venezuelan drivers will need to schedule appointments in order to purchase gasoline from retail outlets selling government subsidized fuel, oil minister Pedro Tellechea told Argus on Friday. The subsidized gasoline is still inexpensive, at 2¢/liter, and plentiful, Tellechea said, despite drivers often waiting in line for hours for the fuel. But under a plan to modernize the stations selling the subsidized gas with new pumps and flat screen monitors, an appointment system will soon be required for purchases. Venezuela raised gasoline prices to 50¢/liter in 2020, to what the government has called a "international price," but then set aside stations meant just for members of the ruling party and other groups, where they could buy gasoline for much less. Today about 60pc of the country's 1,800 retail gas stations sell at unsubsidized prices. Half of Venezuela's gas stations will be refurbished this year, with pumps that can fill up an SUV in 20 seconds, supply 700 vehicles a day, and accept all forms of payment, Tellechea told reporters at a model station in Altamira, east Caracas, on Friday. "There aren't in South America gas stations right now just like the ones you are seeing today," he said. "Drivers won't have to wait in line at subsidized stations, they will have their appointments programmed to the second." Tellechea said Venezuelans are now using 95,000 b/d of gasoline but he declined to say how much is being produced domestically. Tallecha said oil production was growing, reaching "above 950,000 b/d" on Friday, but that included about 40,000 b/d of condensates and natural gas liquids. By Carlos Camacho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Q&A: Phillips 66 to balance fossil and renewable fuels


14/06/24
14/06/24

Q&A: Phillips 66 to balance fossil and renewable fuels

Houston, 14 June (Argus) — With Phillips 66's Rodeo, California, refinery expected to ramp up to over 50,000 b/d of renewable fuels production by the end of this quarter, all eyes are on the refiner for what is next. Zhanna Golodryga , executive vice president of emerging energy and sustainability for Phillips 66, talked to Argus at the refiner's Houston headquarters about how the company looks at investments, its focus on sustainable aviation fuel (SAF) production and why Texas might be the Silicon Valley of the energy transition. The conversation has been edited for clarity and length. When Rodeo reaches full capacity, it will represent about 3pc of your overall output. What will your fleet look like longer-term and what will be the renewables/petroleum split? Not all the refineries in our portfolio are created equal, and when we look at them what I call them is "lower-carbon energy hubs". Not low, lower, because it's going to be a combination of everything. We're looking at the assets we have in the portfolio and what we can do to help bring in lower carbon solutions and what can we build out. Our focus is going to continue to be SAF. We understand the limitations of feedstocks and we have a very strong commercial organization that is now working on providing feedstocks just for Rodeo. But we're also thinking about what we can do to bring in different feedstocks. Energy transition opportunities aren't going to replace our traditional fossil fuel refining. It's an "and", not an "or". You've highlighted a future focus on SAF. Does that mean a move away from renewable diesel (RD)? I think we have flexibility to do both and it will be market driven going forward. We have to look at demand but there is demand for SAF globally, not just in the US. Demand for gasoline is not as strong as demand for diesel and sustainable aviation fuel. That is what our focus is and then we want to diversify the feedstock. What is your outlook for RD? I think RD is here for quite some time. It's hard to predict what's going to happen by 2050 but I think we will have the demand. It's going to take a long time to electrify all future transportation. I think we have a much better opportunity for now to focus on what we're really good at. That's fuels, renewable fuels. You have faced activist investor pressure calling for Phillips 66 to focus on its core refining business. How do investors feel about the Rodeo conversion and your future plans? We have taken a pragmatic approach to the energy transition. We have criteria that we follow prior to taking any projects over the line, specifically the energy transition type projects. They must meet five key prerequisites: the right returns, the right technology that has been proven at scale, the right regulatory environment, preferably involve a partnership and be done at the right time. We have to prove with Rodeo that this is, as I call it, our license to continue to grow the business. This is our license to operate additional energy transition business. This one is going to be done extremely well. What are the policy tailwinds and headwinds to your renewables investments? When we look at our opportunities in our energy transition portfolio, we are building our economic model for them to produce the right returns without any incentives. That is our starting point. On the other hand, the IRA [US Inflation Reduction Act] has been a bipartisan initiative and we think it's going to stand for the greater good of the planet. We have to think globally, as we have the Humber refinery in the UK. It's interesting for us to see what's possible in the US with the IRA incentives, versus more of a stick in Europe. But the challenge for us is permitting and timing. We probably could have brought Rodeo online sooner if we didn't have to wait for some permits. Our headquarters are in Texas and Texas is the "energy transition Silicon Valley". I'm repeating someone's words and those are the words of Bill Gates. But I believe that. We're perfectly positioned on the Gulf coast to go to the next phase and build something here. You've mentioned Phillips 66's 265,000 b/d Sweeny refinery in Old Ocean, Texas, as a low carbon energy hub. Does that mean it is a candidate for renewable fuel conversion or co-processing? It could be an option, maybe not at Sweeny, but in the Gulf coast, maybe Lake Charles. It's driven by our hardware, just like what we've done at Rodeo. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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