Only the major players count on the world market. This will be the Orlen Group when it merges with the Lotos. In addition, a single strong group will significantly strengthen national energy security”, the participants of the “Fuels and Fusion” debate in the PAP press centre agreed on the matter. Partners of the event were PKN Orlen and Warsaw Enterprise Institute.
The acquisition of the Lotos Group by PKN Orlen is planned for the middle of 2022. The merger will create a single, strong multi-energy group, to which PGNiG will also belong.
Contracts are the basis of PKN Orlen’s merger with the Lotos Group that allows, among other things, an increase in the supply of stable quality oil.
“Especially in the light of recent geopolitical events, the strategic partnership with Saudi Aramco, the world’s largest oil producer, is very important. The search for partners outside the East is crucial,” says Szymon Witkowski, legal analyst of the Confederation of Entrepreneurs and Employers.
In his view, the merger of Orlen and Lotos offers the potential for further growth and the opportunity to create a global energy giant.
“The company wants to improve the energy security of the country and the region, and the merger is a tool to achieve this,” said Jacek Ciborski, expert in PKN Orlen’s Mergers and Acquisitions Division.
In his view, the global market changed dramatically and both players should act together as a counterweight to strong competition. In particular, from the Middle East region, where modern refineries are being built, from the American market, which was revived after the Shale Revolution and used its refinery capacities to the maximum; and also, for the Russian refineries, which are moving towards fuel production and margin extension.
“In this environment, we need to build a competitive advantage over these global forces,” said Jacek Ciborski, recalling that 30 refineries have been closed in Europe over the past decade.
“The merger is a fight against negative trends, it is the creation of a force that will allow effective competition, maintain the national production of fuels and extend the value chain of the country. It will also enable the introduction of new alternative fuels and the establishment of facilities to finance capital-intensive investments in connection with the energy transition,” says PKN Orlen’s expert.
Journalist and analyst Jakub Pawlowski also agreed.
“The major players will be better equipped to cope with the energy transition”, he emphasised. – Orlen, unlike Lotos, which is based only on liquid fuels, has a larger arsenal of capabilities. In conjunction with Lotos, it can better prepare for the challenges, such as the conversion to hydrogen,” he explained.
According to Sebastian Stodolak, vice president of the Warsaw Enterprise Institute, we should move away from a model in which one owner, the state, owns two similar, competing entities.
As Marcin Roszkowski, President of the Jagiellonian Institute, stressed, alternatives for importing these raw materials from Russia must be found when it comes to gas, oil and coal.
“Diversification of supplies is the right way,” he stressed.
“The contracts signed with Lotos as part of the merger process include deliveries of up to 20 million tonnes of high-quality oil. This is a very large amount that can diversify the sources,” stressed Szymon Witkowski.
“Creating a powerful local player will make us feel geopolitically secure, that we have cards to play in crises,” said Vice President Stodolak.
“Fusion is a box with different tools. They can later be applied to solutions such as hydrogen, green gas or electrification of transport,” concludes Marcin Roszkowski.
Discussants also wondered whether the merger of Orlen and Lotos would be safe and beneficial for retailers.
“The introduction of new players increases competitiveness and is always a positive signal for customers,” stressed Sebastian Stodolak.
According to Mr Ciborski, the safety of fuel consumers is also ensured by a package of solutions that will enable them to remain competitive in the wholesale market for fuels.
“The positive effects of the merger will be the optimisation of crude oil processing, the improvement of cost efficiency and the further development towards alternative fuels,” explains PKN Orlen’s expert.