Saudi Arabia enters a major oil refinery in Poland reducing Russia's influence

State-owned Saudi Aramco has announced an agreement to buy a 30% stake in Poland's second largest oil refinery, Gdansk, and increase its oil supplies to between 200,000 and 337,000 barrels per day. The production capacity of this refinery is 210,000 barrels per day, compared to 270,000 barrels per day at Blok, Poland's main refinery.

The announcement of Saudi Arabia's purchase of the refinery comes at a time of geopolitical tensions between Russia and Poland. The strong influence that Russia has had over Poland as the country's main oil supplier has led to Polish dependence on Russia in recent years, a situation that the Kremlin has taken advantage of to benefit from geopolitical conflicts with Poland and other European countries. This is why the presence of Saudi Arabia, the largest oil producer in the Organisation of Petroleum Exporting Countries, will give greater dynamism to Poland's oil market as Russian influence is reduced.

Poland has sought to reduce this dependence on Russian energy imports through agreements with other suppliers, and its determination has been sharpened as tensions between the two countries have increased. Their relations had already worsened in early 2021 when Poland was forced to reduce purchases of Russian oil due to a price dispute between Russia's Rosneft and Poland's BKN.

However, geopolitical tensions are the determining factor in Poland's decision to reduce Russian influence. Disputes between Moscow and Warsaw in recent months erupted over the migration crisis involving neighbouring Belarus. In addition, ongoing Russian threats to invade Ukraine have contributed to Poland facing similar threats. So much so that the military exercises to be conducted by the Russians in Belarus will take place near the country's western borders with Poland and Lithuania. Poland's Foreign Minister Zbigniew Rau has warned that 'the danger of war in the region is now greater than any that has arisen in the last 30 years'.

Russia's Energy Ministry and pipeline monopoly Transneft have yet to comment on Saudi Arabia's purchase announcement. Russia is expected to supply 120,000 barrels this month through Druzhba, down from 220,000 barrels in January 2021 or 500,000 barrels in the 2000s. In any case, if the deal is completed, Saudi Aramco will increase its oil supplies to Poland by three to five times and can meet between 50 and 70 % of Poland's crude oil needs.

However, sources close to the Saudi deal have stated that while the agreement was very important for Poland, it is unlikely to have an impact on policies within the OPEC+ group, which includes the Organisation of the Petroleum Exporting Countries and allies, notably Russia.