PKN ORLEN develops its petrochemical assets

PKN ORLEN is consistently investing to expand its petrochemical assets in a response to the growing demand at home and on the European market. The Company has signed an agreement to acquire the business of LDPE production and marketing from the country’s largest plastics manufacturer Basell Orlen Polyolefins, in which PKN ORLEN holds an equity interest. LDPE is a polyethylene product with a wide range of applications, used typically to make plastic films, bags, canisters and food packaging. The acquired production capacity is 100 thousand tonnes per year, which means that PKN ORLEN, as Poland’s only producer of LDPE, will single-handedly cover about a third of the country’s overall demand for the plastic.

- We are investing in petrochemicals as we realise their crucial role in ensuring the ORLEN Group’s future, but also in strengthening Poland’s economy. According to global forecasts, the value of the petrochemicals and base plastics market is expected to double by 2030. With the acquisition of a part of Basell Orlen Polyolefins assets and development of a plastic that is steadily growing in demand, we are set to entrench our position among Europe’s leading petrochemical producers. The purchase of the business is tied in with the expansion of the olefins complex in Płock, launched last year. We intend to utilise its ethylene output in the production of polyethylene, thus extending the value chain. The expanded petrochemical portfolio will support quick profit generation for the benefit of the Company and its shareholders. At the same time, as a shareholder in Basell Orlen Polyolefins, we will continue to develop its range of other products - says Daniel Obajtek, President of the Management Board of PKN ORLEN.

Low density polyethylene, or LDPE, is a polymer commonly used to make consumer and industrial products, found in plastic films, bags, canisters, food packaging, as well as components of electronic devices, such as wires and cables. It is a fully recyclable product playing an important role in advancing the circular economy.

As a result of the transaction, PKN ORLEN will acquire Basell Orlen Polyolefins assets engaged in LDPE production (with a capacity of about 100 thousand tonnes per year) and marketing. The Company expects to close the deal by the end of this year, meanwhile obtaining all the required antitrust approvals from the competent authorities in Poland and the Netherlands.

Poland is the largest consumer of LDPE in Central Europe, forecast to account for nearly 35% of regional demand by 2025. At present, annual demand on the Polish market is about 300,000 tonnes, compared with close to 800,000 tonnes in Central Europe. As for the combined capacities of regional producers, they are estimated at 520 thousand tonnes. According to forecasts, by 2025 the LDPE market in Central Europe and in Poland will grow to about 890 thousand tonnes and 312 thousand tonnes, respectively, in which PKN ORLEN is bound to have a significant share.

Basell Orlen Polyolefins is a joint venture in which PKN ORLEN and LyondellBasell Industries each hold a 50% stake. After the transaction is completed, the company will focus on continued development of its business involving production and marketing of HDPE (high density polyethylene) and polypropylene.

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