Polish state energy firm Orlen to sue Russia for halting oil supplies

Polish state energy firm Orlen has announced that it will take legal action over the recent suspension of oil supplies from Russia to Poland via the Druzhba pipeline

Russia last month unilaterally halted oil exports to Poland. The decision came one day after Poland became the first country to donate modern, Western tanks to Ukraine and just a few days after US President Joe Biden visited Warsaw to mark one year anniversary of Russia’s full-scale invasion of Ukraine.

“After President Joe Biden’s visit, the Russians stopped pumping oil to Poland,” Orlen’s CEO, Daniel Obajtek, told Radio Zet this morning. “We will now take legal action and assert claims.”

After Russia’s invasion, the Polish government announced that it would end the import of all Russian energy by the end of 2022. While it achieved that aim with gas and coal, it this year continued to import Russian oil (though at a much lower level than before).

In January 2023, Poland imported around 10% of its oil from Russia. It was that month the biggest importer of Russian oil in the EU. State energy giant Orlen argued at the time that this was only because of a previously agreed contract that could not be broken without EU sanctions.

“There were two contracts…One contract expired in January, the other expires in 2024,” Obajtek told Radio Zet today. “It is difficult to break a contract without sanctions. We would expose ourselves to large fines and that money would go to Putin anyway. We would pay for the oil that we didn’t even receive.”

Orlen has an oil supply contract with Russian company Tatneft in force until the end of 2024, which, the Polish firm says, it is willing to suspend if the European Union imposes appropriate sanctions.

In June 2022, the European Council adopted a ban on the purchase, import or transfer of seaborne crude oil and certain petroleum products from Russia. An exception, however, exists for imports of crude oil by pipeline into certain EU member states

When asked about the level of penalties Orlen would face for breaking the contract in question, Obajtek said he was bound by contractual confidentiality but that “these are very large sums of money”.

Tatneft has not publicly commented on why it has cut off supplies to Poland. Last year, another Russian state energy firm, Gazprom, cut off gas supplies to Poland after Warsaw refused its demand to pay for them in roubles.

In 2015, Russian oil accounted for almost all of the crude processed at Orlen’s plants and recent years have been marked by an intensive diversification process, the company points out.

Currently, Orlen’s import portfolio is based on crude oil supplies from the North Sea, West Africa, the Mediterranean, as well as the Persian Gulf and Mexico. The company notes that among its partners is the world’s largest oil company, Saudi Aramco, with whom Orlen signed a strategic oil supply contract last year.

According to an IBRiS poll for Radio ZET published today, 83.6% of Poles do not want Russian oil to be imported into the country, even if this would entail higher fuel prices. Only 11% of those surveyed are in favour of continued imports.

Main photo credit: Tatneft press pack

Alicja Ptak

Alicja Ptak is senior editor at Notes from Poland and a multimedia journalist. She previously worked for Reuters.