Page 6 - EurOil Week 49

EurOil COMMENTARY EurOil

PKN Orlen shifts to renewables

and petrochemicals

PKN Orlen has followed in the footsteps of others in declaring a net-zero goal

POLAND POLAND’S PKN Orlen has unveiled plans to regional fuel network. Both companies also have
invest some PLN140bn over the next decade, upstream businesses.
WHAT: shifting its focus from its core oil refining busi- The acquisition secured conditional approval
PKN Orlen has announced ness to petrochemicals and clean energies. from the European Commission in July, and
a $38.3bn 10-year Around PLN85bn will be spent on new Lotos’ business is taken into account in its lat-
investment programme. growth areas, namely renewable energy and est 10-year strategy. Orlen has since also made
advanced petrochemicals, while PLN55bn will a bid for state gas company PGNiG, though
WHY: go towards making its existing assets more effi- that company is not included in the plan. Orlen
The plan has a heavy cient, Orlen explained. needs EU approval for the deal first, and plans to
focus on renewables and “We are opening a new chapter in the history request this from Brussels in the first quarter of
petrochemicals. of PKN Orlen,” CEO Daniel Obajtek said in a 2021. Earlier it also took over Polish power utility
statement. “We are building a new multi-energy Energa.
WHAT NEXT: group, capable of competing in the face of signif-
Orlen wants to have icant changes.” Petrochemicals push
2.5 GW of clean energy Orlen wants to have 2.5 GW of clean energy A number of climate-conscious oil companies
capacity online in 2030 generation capacity up and running by 2030, are ploughing more investment in petrochem-
and wants to generate including some 1.7 GW of wind farms in the icals, attracted by firmer growth prospects
half of its earnings from Baltic Sea. The group is meanwhile looking to compared with standard refined products. Pet-
petrochemicals by that deliver a 20% reduction in carbon emissions rochemicals also attract less environmental crit-
point. from its refining and petrochemical assets by icism, as oil and gas are converted into plastics
2030, and a 33% cut at its energy segment. rather than burnt for energy.
The state-owned company followed in the Austrian oil group OMV has similarly fixed
footsteps of a number of others in the Euro- its attention on petrochemicals, recently closing
pean oil industry with a pledge in September to a $4.7bn to buy an extra 39% stake in polymer
become emissions-neutral by 2050. Its commit- producer Borealis from Abu Dhabi state investor
ment contrasts with that of Poland, the only EU Mubadala. OMV is also expanding its gas busi-
state which has not promised to bring its emis- ness at the expense of oil sales, citing a stronger
sions to zero by 2050. demand outlook and the role the fuel will play in
Poland still generates about 80% of its elec- the energy transition. This may be Orlen’s think-
tricity from burning coal, although rising car- ing in acquiring PGNiG.
bon taxes, low gas prices and growing pressure “By 2030, the petrochemical segment will
from the EU have encouraged the country to generate approximately half of the Orlen Group’s
develop more gas and renewables generation. profits from crude oil processing,” Orlen said.
Orlen is leading the way here. In addition to its The producer wants to expand its production
raft of renewable projects, it aims to scale up its capacity in olefins and other base products, and
gas-fired generation capacity to 2.0 GW by 2030 build up its position in polymers. It will look to
from the current 1.1 GW. extend the value chain, it said, entering the area
“We are preparing for changes, especially that of compounding and concentrates.
oil refining will be becoming less significant,” A scaling up of plastic recycling in recent
Obajtek said. Renewables and petrochemicals years has weighed down on growth prospects for
will become the main drivers of the group’s petrochemicals. Orlen intends to hedge against
EBITDA growth, he said. this risk by setting up a new business line focused
Orlen’s goal is to bring about a two-and-a-half on recycling and biomaterials.
fold increase in its annual EBITDA to PLN26bn “The share of specialised, high-margin prod-
in 2030. It is also returning to a progressive ucts, such as phenol and aromatic derivatives,
dividend policy, pledging a payment of at least will increase in the group’s portfolio from the
PLN3.5 per share starting next year. current 16% to approximately 25%,” the com-
Orlen owns refineries in Poland, Lithuania pany said. “By 2030, the Orlen group will achieve
and the Czech Republic, and sells refined fuels recycling capacities – primarily of plastics – of
across Central and Eastern Europe. It is in the up to 400,000 tonnes per year. It will also imple-
process of acquiring its smaller rival Lotos, ment advanced technologies of the circular
the owner of another refinery in Poland and a economy.”™

P6 www. NEWSBASE .com Week 49 10•December•2020