MOSCOW (MRC) -- Poland’s PKN Orlen said late on Tuesday it has signed a non-binding agreement with the state treasury and Grupa Lotos to shape a deal to take direct or indirect capital control of fellow state company Lotos.
“The State Treasury and the Company [Orlen] confirmed the intention to conduct the Transaction and indicate that, on the day of signing the Agreement, the scope and structure of the Transaction has not been defined yet,” Orlen said in a statement. “Thus the State Treasury and the Company declared their will to cooperate and continue talks to work them out."
In mid-July, the European Commission approved Plock-based Orlen’s planned acquisition of Gdansk-based Grupa Lotos, subject to conditions and extensive commitments to ensure Poland’s fuels markets remains open and competitive. The EU approval came after the Commission conducted an in-depth investigation during which it raised a number of concerns about impacts of the proposed Orlen-Lotos combination on the wholesale and retail supply of fuels in Poland.
To address those concerns, Orlen offered remedies and commitments, including: - To divest a 30% stake in Lotos' refinery accompanied by strong governance rights, with the purchaser having the right to about half of the refinery's diesel and gasoline production, while also giving the purchaser access to important storage and logistics infrastructure.
- To divest nine fuel storage depots to an independent logistics operator, and to build a new jet fuel import terminal in the Polish city of Szczecin, which would be transferred to the independent logistics operator on completion.
- To release most of the capacity booked by Lotos at independent storage depots, including the capacity booked at Poland's biggest terminal for the import of fuels by sea.
- To divest 389 retail stations in Poland, amounting to about 80% of the Lotos network, and to supply these with motor fuels.
- To divest two bitumen production plants in Poland, and to supply the purchaser with up to 500,000 tonnes/year of bitumen/heavy residues. In late April, Orlen closed the acquisition of power utility Energa.
Also, in line with the Polish government policy of creating large “national champion” industrial groups capable of competing in global markets, Orlen in July launched a process to acquire oil and gas exploration and production company PGNiG, another group contolled by the Polish state.
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 polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
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