PKN Orlen doubled its refining margin. What about oil prices?
PKN Orlen has disclosed the latest information on the model refining margin achieved. It increased to $ 31.4 in October 2022. from $ 16.7 recorded in September. This is a very big change.
The model refining margin of PKN Orlen is calculated in such a way that the revenues from the sale of products are taken (36% gasoline + 43% diesel + 14.5% heavy fuel oil) and costs are deducted from them (100% of the input is oil and other raw materials). The entire charge is calculated according to Brent crude oil quotations from the London Stock Exchange.
The latest statistics confirm that Orlen is one of the beneficiaries of expensive oil, which has become a curse for drivers. It is worth emphasizing, however, that the model refining margin cannot be equated with direct profits. It does not take into account, for example, the costs of CO2, gas, electricity and logistics.
The rest of the article is below the video
– The model refining margin around which the recent storm was unleashed does not translate into the level of net profit – he emphasized in Orlen’s CEO Daniel Obajtek in a recent interview for Business Insider. He explained that this is a model created for analysts, under which the market quotations of crude oil and finished products are based, i.e. data independent of individual companies.
– The Ural / Brent differential significantly distorts these results. Work on shifting away from Russian oil. Treating the model margin as a hidden earnings for the company is completely irrational. Especially that its level, which we show, does not take into account the costs incurredsuch as the purchase of CO2 emission allowances, renovation costs or replacement investments.
The Ural / Brent differential mentioned by President Obajtek, i.e. the difference in the price of Russian and European oil in October was $ 5.9. a barrel, against $ 4.2. a month earlier and $ 2.2. in October 2021
As Orlen reports, the increase in the differential is the effect of weaker demand from India and China resulting from the approaching date of imposing sanctions on Russian oil by the European Unionincluding the imposition of a maximum price on Ural oil, as well as the availability of an alternative oil to Ural oil.
The concern announced that in October, the average price of a barrel of Brent crude was $ 93.3. against $ 89.9 in September. The price increase was mainly due to OPEC + decision to cut production by 2 million barrels a day from November 2022.as well as the impending date for the introduction of sanctions on Russian oil by the EU from 5 December 2022.
Orlen indicated that 36 percent. the increases in diesel resulted, among others, from limited availability of products (strikes in French refineries, shutdowns of refineries in Europe), small reserves of raw material in Europe, greater demand for diesel used as a substitute for expensive natural gas, and an increase in exports from Poland to Ukraine. Gasoline increased similar increases.
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