August 8, 2019 / 7:25 AM / 14 days ago

Poland's Lotos eyes projects to handle low-quality oil

WARSAW, Aug 8 (Reuters) - Polish oil refiner Lotos will continue to depend on Russian oil supplies for its Gdansk refinery but is evaluating options for handling low-quality oil after the discovery of contaminated Russian supplies this year, an executive said.

Polish state-run refiners - Lotos and its bigger rival PKN Orlen - process mostly Russian oil delivered via the Druzhba pipeline, and also buy supplies from other sources as part of a plan to reduce reliance on Moscow.

In April, Poland stopped oil flows from Russia after discovering that they had been contaminated with organic chloride. Flows partially resumed in June.

The contamination that remained in Poland’s pipeline system is being blended with clean oil while refineries and pipeline operator PERN calculate losses related to the contamination and suspension of oil supplies.

“We hope for successful conclusion of this matter,” Lotos Vice President Jaroslaw Kawula said in an e-mail when asked about relations with Russian suppliers after the contamination.

“Obviously we have drawn appropriate conclusions but we intend to continue cooperation with our Russian suppliers. Currently we do not see a reason for a change in the way the refinery is supplied, which includes pipeline deliveries.”

Lotos has looked into technical solutions to help neutralise the impact of low-quality or contaminated oil on the refinery in the future, he said.

“We will now analyse which of these projects should be implemented,” he said, without providing details.

Kawula declined to comment on whether Lotos will renegotiate its Russian supply contracts and on details of its claims.

Asked about the impact of refining a mixture of clean and contaminated oil, Kawula said that the organic chloride content in oil being sent to Gdansk does not exceed the standard limit of 10 parts per million (ppm).

“We are prepared to refine oil of this quality, therefore refinery operations and processing of crude is proceeding smoothly,” Kawula said.

Lotos refines a dozen different types of crude, including those from the United States, Africa and the Middle East, he said.

“We are not just trying to find a different crude than the one sent via the Druzhba pipeline. It also allows us to partly understand how to behave when there is a shortage of crude and how to develop technology to process various types of oil,” Kawula said. (Reporting by Agnieszka Barteczko, editing by Deepa Babington)

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