Partners in acquisition of LOTOS Group guarantee development and expansion

Diversification of oil supplies, cooperation in research, entering the Hungarian retail market, and strengthening in Slovakia are the benefits of selecting partners to meet the European Commission’s conditions that must be fulfilled to take over LOTOS Group PKN Orlen points out.

On Wednesday, 12 January 2022, PKN Orlen announced that to meet the so-called remedies set by the EC to take over Lotos, it had selected four partners who would buy individual parts of the Gdansk-based company.

Saudi Arabian Oil Company (Saudi Aramco) will acquire a part of Lotos’ refinery, wholesale and aviation fuel area. In addition, Hungarian company MOL will buy 417 Lotos petrol stations in Poland, Unimot – logistics assets, including fuel depots, and Hungarian Rossi Biofuel – assets in biofuels. Orlen, in turn, will buy 144 petrol stations in Hungary and 41 in Slovakia from MOL.

PKN Orlen has also signed with Saudi Aramco a contract for oil supplies and a strategic cooperation agreement on investments in the petrochemical area, research and development.

– We are completing the acquisition of Lotos Group, which will benefit the Polish economy, both companies and their customers, employees and stakeholders. From the beginning of this process, we have stressed that the priority is to provide additional benefits as part of implementing remedial measures. This has been achieved, – PKN Orlen CEO Daniel Obajtek assessed.

As Obajtek points out, the concluded long-term contract is an opportunity to ensure supplies of stable-quality crude oil to Poland from Saudi Aramco. The agreement envisages that Saudi Aramco will supply Orlen with between 200,000 and 337,000 barrels of crude oil daily. After the takeover of Lotos, these supplies are to cover up to 45 per cent of the total demand of Orlen Group’s refineries in Poland, in Mažeikiai in Lithuania and Litvinov in the Czech Republic.

According to the president of Orlen, the Saudi company has state-of-the-art technologies for processing crude oil and spends on research amounts that are unattainable for Orlen.

– These are solutions straight out of the 22nd century; they have some of the best catalysts, optimising refining processes – Obajtek mentioned.

– We are analysing further growth opportunities in the European petrochemical market, including in research and development activities – Aramco’s vice president in charge of downstream Mohammed Al Qahtani noted.

Under a separate agreement with Saudi Aramco and SABIC, PKN Orlen will discuss possible investments in the advanced and high-margin petrochemical sector. Potential areas of cooperation will include analysing development projects for olefins and derivatives, including aromatics derivatives, in Poland and Central and Eastern Europe.

According to Orlen, the exchange of retail assets with Hungary’s MOL will translate directly into implementing plans for geographical expansion by strengthening the network of petrol stations in Slovakia and entering a new market for the Plock-based company – Hungary.

In one asset swap transaction, PKN Orlen will gain over 7 per cent share in the Hungarian market and will be the fourth company on this market in terms of the number of stations, the company noted. In addition, some of the funds got from the sale of Lotos petrol stations will be used for further acquisitions.

– We are close to completing negotiations for the acquisition of another 100 fuel stations in the region – Obajtek added. In total, Orlen will thus gain almost 400 new fuel stations, which, according to the company, will support sales and strengthen the recognition of the Orlen brand in several key markets.

– The acquisition of Lotos and the establishment of cooperation with such strong partners will allow foreign expansion. As a result, the eagle featured in Orlen’s logo will be recognisable in the entire Central and Eastern European region – assessed Deputy Prime Minister, Minister of State Assets Jacek Sasin.