Jan. 23 (Bloomberg) -- PKN Orlen SA, eastern Europe’s largest refiner, reduced the amount of crude it buys via long-term contracts to rely on more favorable spot transactions, the company’s Chief Financial Officer said.
Supplies from such agreements were cut to 500,000 metric tons per month from 1 million tons after one accord expired, Slawomir Jedrzejczyk said today on a conference call. The change means that Orlen will now seek about 80 percent of its annual crude requirement from the spot market.
“The situation is very dynamic but it’s often cheaper to buy on the spot market rather than in the long-term contracts,” Jedrzejczyk said. “We may sign another long-term contract.”
The company issues eight to 10 spot tenders a month, according to two people with knowledge of the matter, asking not to be identified as the information is confidential. The most recent was made yesterday and Orlen bought 100,000 tons of Urals blend from Vitol Group, according to four traders who participate in the market.
Orlen has refineries in Poland, the Czech Republic and Lithuania, which processed 28 million tons of oil last year, according to a company presentation.
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