Poland's PKN says quality of Russian oil generally deteriorating

WARSAW (Reuters) - The quality of Russian crude oil, which was hit by a contamination crisis earlier this year, is deteriorating in general, an official at Poland’s biggest refiner PKN Orlen said on Friday.

FILE PHOTO: A logo of PKN Orlen, Poland's top oil refiner, is pictured at their petrol station in Warsaw, Poland October 7, 2017. REUTERS/Kacper Pempel/File Photo

In April, buyers discovered that supplies of Russian crude had been contaminated with organic chloride, a chemical used in oil recovery that can damage refining equipment.

Poland halted Russian oil imports via the Druzhba pipeline after the contamination was detected. Flows partially resumed in June.

“It is deteriorating, but still worth being processed,” the official said during a conference call.

PKN Orlen said that because of efforts to diversify deliveries, the tainted oil and subsequent suspension of supplies via Druzhba had no significant impact on the group’s results in the second quarter.

Earlier on Friday PKN beat analyst expectations with its second-quarter results, sending the company’s shares up 6% by 1043 GMT.

“The suspension of oil supplies via the Druzhba pipeline was quite a challenge, but ... we were able to maintain a high level of throughput,” PKN Orlen board member Wieslaw Protasewicz told a news conference.

Oil throughput at PKN’s refineries increased to 8.3 million tonnes in the second quarter from 7.5 million a year earlier.

Currently, 50% of the oil processed at PKN’s refinery in Poland comes from sources other than Russia, while for all PKN refineries the share amounts to 30%. In 2012, the share of non-Russian crude processed by the group was 5%.

PKN Orlen is calculating its losses from the contamination and will present claims to its suppliers within weeks.

Since the start of 2018, PKN has contracted spot purchases from Angola, Nigeria, the United States and the United Arab Emirates.

Reporting by Agnieszka Barteczko; Editing by Jan Harvey and Dale Hudson