Saudi Aramco to buy stake in Polish refinery

PKN Orlen said on Wednesday that, according to the preliminary agreement, Saudi Aramco is expected to pay around PLN 1.1 billion (EUR 243 million) for its stake in the Lotos Asfalt company. Albert Zawada/PAP

Saudi Aramco, a Saudi Arabian oil company, will buy a stake in the refining subsidiary of Polish oil company Lotos, while the MOL Group, a Hungarian oil and gas company, is to purchase its 417 petrol stations, according to a report released by Polish fuel company PKN Orlen.

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

PKN Orlen said on Wednesday that, according to the preliminary agreement, Saudi Aramco is expected to pay around PLN 1.1 billion (EUR 243 million) for its stake in the Lotos Asfalt company. Additionally, Orlen has signed a long-term contract with the Saudi Arabian company for oil supplies of between 200,000 and 337,000 barrels per day as well as an agreement on probing investment research in the petrochemical sector.

Orlen's CEO, Daniel Obajtek, said that Aramco is the largest global producer of oil as well as a leader in petrochemical technology. "Saudi Aramco does not follow the market trends, it creates them. The company has access to the world's most advanced technologies and patents," Obajtek said.

Mohammed Al Qahtani, Aramco's deputy CEO, said in a release: "The agreement with Orlen will enable the development of the petrochemical industry in Poland and in the whole of the Central-Eastern Europe region, while the oil supplies from Saudi Arabia will provide a significant boost to the Polish market."

Polish President Andrzej Duda took to Twitter to hail the Orlen/Lotos merger as important for the region's energy security.

"The merger of PKN Orlen and Grupa Lotos is a great economic, political and social event in our part of Europe," Duda tweeted. "Thanks to the contracts signed, energy security in Central and Eastern Europe improves significantly. It is carrying out the idea of the Three Seas in practice. I keep my fingers crossed for final success!"

The Three Seas Initiative is a Polish-Croation-initiated project to improve infrastructure and energy connections between the 12 countries lying between the Black, Baltic and Adriatic seas.

When it comes to the preliminary agreement between PKN Orlen and the MOL Group, the "fixed" part of the price for 417 petrol stations owned by Lotos is around USD 610 million. The agreement also foresees that Orlen will buy 144 petrol stations operated by the MOL Group in Hungary and 41 stations in Slovakia for around EUR 229 million.