Poland's Orlen praises merger, new Saudi and Hungarian partners

According to Obajtek, the contract with Saudi Aramco is an opportunity to ensure a stable source of quality oil supply for Poland. Albert Zawada/PAP

The acquisition of the Polish petroleum company Lotos by its bigger peer PKN Orlen, with some of Lotos assets having been sold to Saudi and Hungarian partners, will offer a wide range of benefits, the Orlen CEO has said.

In July 2020, the European Commission approved the acquisition of Lotos Group by PKN Orlen under the condition that certain divestments are carried out. Both Lotos and Orlen are controlled by the Polish state.

Saudi Aramco, a Saudi Arabian oil company, will buy a stake in the refining subsidiary of Lotos, while the MOL Group, a Hungarian oil and gas company, will purchase 417 petrol stations from Lotos, while Orlen will buy 144 petrol stations operated by the MOL Group in Hungary and 41 in Slovakia, according to a report released by Orlen.

"We're finalising the acquisition of Lotos Group, which will be beneficial for the Polish economy, the two companies as well as their customers, employees and shareholders," PKN Orlen CEO Daniel Obajtek said on Wednesday.

Additionally, PKN Orlen has signed a deal with Saudi Aramco for the supply of oil, as well as agreements on strategic cooperation in petrochemical business and R&D.

According to Obajtek, the contract with Saudi Aramco is an opportunity to ensure a stable source of quality oil supply for Poland.

Under the contract, the Saudi Arabian company will deliver between 200,000 and 337,000 barrels of oil per day to Orlen, or some 45 percent of the total demand of Orlen refineries in Poland, Lithuania and the Czech Republic, Obajtek said.

The Orlen CEO also praised Saudi Aramco's technology. "They have solutions from the 22nd century," he said.

Commenting on the exchange of petrol stations with MOL, Obajtek said the move will help Orlen speed up its foreign expansion plans. As a result of the deal, the Polish company will gain a seven-percent market share in the Hungarian market and will become the fourth largest petrol station operator in Hungary.

The proceeds from the sale of Lotos businesses will also accelerate the expansion of Orlen's petrol station network. Orlen says it will soon have close to 400 new petrol stations which will support its sales and Orlen's brand recognition on several key markets.

Jacek Sasin, Poland's deputy prime minister and state assets minister, expressed satisfaction with Wednesday's deal.

"The acquisition of Lotos and establishment of cooperation with such strong partners will facilitate foreign expansion, helping the Orlen eagle (part of the company's logo - PAP) become recognisable in the entire Central and Eastern Europe," Sasin said.