PKN ORLEN and Basell sign JV Agreement

Polski Koncern Naftowy ORLEN S.A. ("PKN ORLEN"), Central Europe's largest downstream oil company, announces today that it has signed a joint venture agreement with Basell Europe Holdings B.V. ("Basell"), a company organised and existing under the laws of the Netherlands and having its principle place of business at Hoofddorp, the Netherlands, as a first step towards the formation of a new polyolefins company in Plock, Poland.

This announcement follows the approval of the agreement by PKN ORLEN's Supervisory Board on Saturday, 28th September 2002.

The 50 / 50 JV is planned to start operations not later than in January 2003. The project's cost is estimated at approximately EUR 500 million. The shareholders' contributions have been valued at EUR 108.5 million each. The financing for the new investments will be mainly arranged using 'project finance' on a non-recourse to shareholders basis.

The new company will first operate the 150 KT Polyethylene (PE) and 140 KT Polypropylene (PP) plants that PKN ORLEN is contributing to the business. As a target, the JV intends to construct a new 400 KT PP plant (Spheripol process) and 320 KT HD PE plant (Hostalen process) to replace most of the existing polyolefin assets in Plock. The two new plants are planned to start commercial production in early 2005. Feedstock will be supplied from PKN ORLEN's revamped ethylene cracker, which is not part of the JV.

Zbigniew Wróbel, PKN ORLEN's President and CEO said:

"PKN ORLEN considers this important project as a cornerstone in its petrochemical development programme. Increased polyolefins production from world-scale plants integrated with an adjacent cracker, both of which are tailored to market conditions, and the opportunity to integrate with the world's leading polyolefins player, are the driving forces of the project."

The transaction is subject to the finalisation of certain associated commercial agreements subject for completion by 15th October 2002. Should these agreements not be signed by this date each Party shall have the right to terminate the Agreement. The transaction is also subject to clearance from the Polish Office for Protection of Competition and Consumers and securing satisfactory financing for the project.