MOSCOW (MRC)-- PKN Orlen’s fourth-quarter 2019 net profit fell 15% year on year to zloty (Zl) 771m (USD198m), with the group experiencing its lowest model petrochemical margin in nearly five years at the end of 2019, the Polish producer said.
Cleaned LIFO EBITDA before impairments came to PLN 1.4 bln, Orlen's investor relations informed market participants separately. The tally came 21% below the market consensus.
LIFO EBITDA ex-impairments fell by more than half q/q or 26.3% y/y to PLN 1.08 bln. Management cited a PLN 907 mln impact versus the prior year period from deteriorating macro factors, chiefly margins on middle distillates, heavy fractions, olefins, PTA and PVC, partially offset by better margins on light distillates, fertilizers and weakening of the Polish zloty. Increased volumes had a PLN 300 mln positive impact versus the prior year period.
Downstream sales of 8.2 mln tons were down 4.1% y/y and 5.0% q/q. Sales volumes rose in petchems, were the margin decline was mildest. Sales volumes were down across the board in fuels, even most deeply in the light distillates where margins gains could have been captured.
The upstream segment suffered a q/q decline in EBITDA LIFO to PLN 69 mln in Q4 from PLN 85 mln in Q3, while in annual terms the line was flat.
The segment results were supported by positive macro factors including an increase in crude oil, gas and NGL prices in y/y terms, which still failed to compensate for the negative impact from lower sales volumes that followed a decrease in the average production in Canada by 1.7k boe/d on an annual basis, Orlen said in the presentation. The average production in Poland grew by 0.2k boe/d y/y.
As MRC informed earlier, Polish oil refiner PKN Orlen, said it would increase monthly crude oil purchases from Saudi Aramco to 400,000 from 300,000 tons as part of its efforts to diversify supply. Poland’s biggest oil refiner, which buys most of its oil from Russia via pipeline, has been receiving oil from Saudi Aramco since 2016.
As MRC informed earlier, in H1 September 2019, Honeywell announced that PKN ORLEN had licensed the UOP MaxEne process, which can increase production of ethylene and aromatics and improve the flexibility of gasoline production. The project, for the PKN ORLEN facility in Plock, Poland, currently is in the basic engineering stage. Honeywell UOP, a leading provider of technologies for the oil and gas industry, first commercialized the UOP MaxEne process in 2013. The process enables refiners and petrochemical producers to direct molecules within the naphtha feed to the processes that deliver the greatest value and improve yields of fuels and petrochemicals.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.
PKN ORLEN would be the first refining and petrochemicals company in Europe to use the Honeywell UOP MaxEne technology for molecule management of a naphtha stream to produce high-quality products including olefins, aromatics and gasoline.
MRC