PKN ORLEN's statement over situation in Czech

As the company informed in the regulatory announcement on June 4, 2004, the operating Management of PKN ORLEN signed an agreement in the Czech Republic. The agreement, inter alia, obliged the involved parties to use all possible legal means to sell a part of Unipetrol’s assets to Agrofert Holding, a.s. Agrofert is the second biggest petrochemical group in the Czech Republic. Agreements with Agrofert include selling those parts of Unipetrol’s assets, which are not regarded as essential while considering the activity of PKN ORLEN. They are connected with products used in agriculture, plant protection products and chemical products. Based on these agreements, Agrofert was to purchase the shares and liabilities of some firms which were dependent on Unipetrol. These agreements include the price at which the assets should be sold. If PKN ORLEN failed to fulfill these agreements it would be obliged to pay a substantial contribution.

The present Management underlines the fact that most of the information concerning the agreement is secret. This means that, in the case that information is revealed, the company will have to pay compensation. Unfortunately, PKN ORLEN has not been allowed by the other party to reveal the details of the agreement, although it has applied for such permission.

The present Management of PKN ORLEN, immediately after gaining access to information about the assets described in the agreements, instructed independent experts to analyze all the possible consequences of the agreements’ implementation (the agreements signed in 2004 by the operating company’s then management). Moreover, as we informed in May 2005, the transaction concerning the purchase of Unipetrol Holding was controlled by The Office of Control and Safety of PKN ORLEN. Should it be necessary, the conclusions concerning the analyzed and controlled factors will be sent to the Public Prosecutor’s Office, the Agency of Internal Safety, and to the Central Investigation Office.

The present Management has accepted and presented to the Supervisory Board the strategy according to which all negative results of the described agreements to the company should be minimized. This decision was made because PKN ORLEN puts considerable emphasis on all matters connected with safeguarding investors’ rights. It also wishes to secure PKN ORLEN’s activities and investments in the Czech Republic. The decision is in line with all regulations of Polish and Czech law and it was made only after analyzing all possible results of the agreements described and after consideration of the opinions of highly professional experts.

The elements of this strategy are currently being discussed with Agrofert and cannot be revealed. At the same time, the Management of PKN ORLEN emphasizes that, in spite of the suggestions presented in the article, no agreement between Unipetrol and Agrofert concerning the selling-out of assets has ever been signed.

On 24 May 2005 PKN ORLEN SA purchased shares of Unipetrol a.s. from the Czech government. As a result of this transaction, one of the biggest petrochemical groups in the region emerged. This creates a great opportunity for PKN ORLEN to expand in other markets and to gradually increase the value of the company for its stake-holders. According to the present Management of PKN ORLEN, the existence of the described agreements does not change their positive opinion about the company’s presence in the Czech market. The Management of the company is convinced that it will get a satisfactory return on assets concerning this investment and this will, it is planned, be presented to investors in the second half of September 2005.