Financing to Basell Orlen Polyolefins

The Management Board of Polski Koncern Naftowy ORLEN S.A. ("PKN ORLEN") hereby gives notice that, on December 19, 2003, it has concluded a number of legal transactions. In particular, it has entered into certain agreements in connection with provision of financing (the "Financing Transaction") by the banking consortium lead by Bank of Tokyo Mitsubishi, KBC, Societe Generale and European Bank for Reconstruction and Development (the "Arranging Banks") to Basell Orlen Polyolefins Sp. z o.o. (the "Joint-Venture Company"), a joint-venture company of PKN ORLEN and Basell Europe Holdings B.V. ("BEH").

In connection with the Financing Transaction, the Arranging Banks have committed the financing to the Joint-Venture Company up to a total amount of EURO 350 millions consisting of: (i) an investment loan facility in a total amount up to EURO 320 million, for the purpose of, inter alia, financing expenses for construction of new polypropylene and polyethylene production plants; and (ii) a revolving working capital facility in a total amount of EURO 30 million to finance the working capital of the Joint-Venture Company.

In compliance with the requirements set out in the Ordinance of the Council of Ministers, dated October 16, 2001, regarding the current and periodic information to be disclosed by issuers of securities (the "Ordinance"), to the extent required under the Ordinance, PKN ORLEN hereby discloses to the public the following information regarding legal transactions concluded on the basis of documents executed in connection with the Financing Transaction (the "Financing Documents"):

1. Pledge established on the issuer's financial assets of significant value:
Pledge established on the shares held by PKN ORLEN in the share capital of the Joint-Venture Company

Pursuant to the registered share pledge agreement dated December 19, 2003, PKN ORLEN established for the benefit of Kredyt Bank S.A. with seat in Warsaw (acting as the Security Agent) (the "Security Agent") a registered pledge, and as the interim security until the date of entering the registered pledge into pledge register an ordinary pledge (i.e., a pledge under Article 327 et seq. of the Civil Code), in respect of all the shares held by PKN ORLEN in the share capital of the Joint-Venture Company, that is, 907,398 shares with a nominal value of PLN 500 each, which shares represent 50% of the share capital of the Joint-Venture Company, and entitle the shareholder to exercise 50% of the votes at the Shareholders Meeting of the Joint-Venture Company. The condition for the effective establishment of the registered pledge is the entering of such pledge into the pledge register held by the applicable court. Upon registration of the registered pledge the ordinary pledge shall expiry.

The pledge established pursuant to the share pledge agreement dated December 19, 2003, provides security for repayment of present and future pecuniary claims of the pledgee under the Hedging Intercreditor Agreement up to the maximum amount of 750,000,000 Euro.

The book value of the PKN ORLEN's shares in the Joint-Venture Company pledged by PKN ORLEN, as recorded in the books of account of PKN ORLEN, amounts to 453,699,000 PLN.

According to the best knowledge of the issuer, no relationship whatsoever exists between the issuer and the issuer's management or supervisory authorities, and Kredyt Bank S.A. or the management authorities of Kredyt Bank S.A., in favor of which the share pledge was established.

The 907,398 shares in the Joint-Venture Company, on which the pledge was established by PKN ORLEN, represent 50% of the share capital of the Joint-Venture Company, whereby the shares constitute financial assets of a significant value within the meaning of § 2 Section 3 of the Ordinance.

2. Amendments to material project agreements

The Financing Documents include the amendments to the following material project agreements which have been executed by PKN ORLEN and qualified by it as material agreements within the meaning of the Ordinance:

2.1 Joint-Venture Agreement on the establishment of the Joint-Venture Company dated September 30, 2002, as amended, by and between PKN ORLEN and BEH (the "Joint-Venture Agreement") (as described in the issuer's current report no. 85/2002, dated September 30, 2002).

Pursuant to (i) a Direct Agreement among Joint-Venture Company, Security Agent, PKN ORLEN and BEH, and (ii) a Share Ownership Agreement among Joint-Venture Company, Security Agent, PKN ORLEN, BEH and Basell N.V., among other things, certain amendments have been made to the Joint-Venture Agreement.

Pursuant to the above amendments effecting during the term of the financing, the terms of the Joint-Venture Agreement dealing with the parties' obligations upon change of the ownership structure of the Joint-Venture Company caused by the events specified in the Agreement have been amended. In addition, certain restrictions as to termination and suspension by either PKN ORLEN and BEH of its respective obligations under the Joint-Venture Agreement have been introduced. PKN ORLEN and BEH also have undertaken to introduce amendments to the deed of association of the Joint-Venture Agreement in order to enable allow creation of a security interest over the shares in the Joint-Venture Company for the benefit of the banking consortium providing the financing.

2.2 Propylene Supply Agreement dated February 28, 2003, by and between PKN ORLEN and the Joint-Venture Company (the "Propylene Supply Agreement") (as described in the issuer's current report no. 12/2003, dated February 28, 2003).

Pursuant to a Direct Agreement among PKN ORLEN, the Joint-Venture Company and the Security Agent effective during the term of the financing, certain amendments have been made to the Propylene Supply Agreement. In particular, new provisions have been introduced into the Propylene Supply Agreement (i) providing for a mechanism of determination of the amount payable for damages caused to the Joint-Venture Company by PKN ORLEN as a result of its failure to supply certain minimum quantity of propylene and (ii) making certain changes to principles of the parties' liabilities under the Propylene Supply Agreement.

In addition, among other things, certain restrictions as to termination and suspension by either PKN ORLEN and the Joint-Venture Company of its respective obligations under the Propylene Supply Agreement have been introduced.

2.3 Ethylene Supply Agreement dated February 28, 2003, by and between PKN ORLEN and the Joint-Venture Company (the "Ethylene Supply Agreement") (as described in the issuer's current report no. 12/2003, dated February 28, 2003).

Pursuant to a Direct Agreement among PKN ORLEN, the Joint-Venture Company and the Security Agent effective during the term of the financing, certain amendments have been made to the Ethylene Supply Agreement. In particular, new provisions have been introduced into the Ethylene Supply Agreement (i) providing for clear mechanism of determination of the amount payable for damages caused to the Joint-Venture Company by PKN ORLEN as a result of its failure to supply certain minimum quantity of ethylene and (ii) making certain changes to principles of the parties' liability under the Ethylene Supply Agreement.

In addition, among other things, certain restrictions as to termination and suspension by either PKN ORLEN and the Joint-Venture Company of its respective obligations under the Ethylene Supply Agreement have been introduced.

2.4 Agreement on Supply of Services, Utilities, Materials and Facilities, dated February 28, 2003, by and between PKN ORLEN and the Joint-Venture Company (the "SUMFS Agreement") (as described in the issuer's current report no. 12/2003, dated February 28, 2003)

Pursuant to a Direct Agreement among PKN ORLEN, Joint-Venture Company and Security Agent effective during the term of the financing, certain amendments have been made to the SUMFS Agreement. In particular, new provisions have been introduced into the SUMFS Agreement providing for certain changes to principles of the parties' liability under the Ethylene Supply Agreement.

3. Transactions with a related entity

On December 19, 2003, PKN ORLEN and the Joint-Venture Company entered into the number of the agreements. In consideration of the fact that the value of certain of such agreements exceeds the amount of EURO 500,000, and the Joint-Venture Company is an entity related to the issuer within the meaning of the Ordinance (PKN ORLEN holds shares that represent 50% of the share capital and entitle the holder to exercise 50% of the votes at the Shareholders Meeting of the Joint-Venture Company), the execution of such certain agreements is subject to mandatory disclosure in the form of a current report in compliance with the requirement set out in § 5 Section 1 Clause 9 of the Ordinance.

3.1 The Sponsor Support and Subordination Agreement

On December 19, 2003, PKN ORLEN, BEH, Security Agent, Basell N.V., the Joint-Venture Company and Agryppa Sp. z o.o. (a wholly owned subsidiary of Joint-Venture Company) have entered into the Sponsor Support and Subordination Agreement.

Pursuant to the above agreement, PKN ORLEN and BEH have undertaken to provide contingent equity to the Joint-Venture Company in the form of: (i) share capital increase, (ii) additional payment ("doplaty"), and (iii) a loan, subject to the cap and conditions provided in this agreement. In support of such undertaking, each of PKN ORLEN and BEH has agreed to provide letters of credit in the total amount specified in the agreement.

Additionally, on the basis of this agreement PKN ORLEN and BEH subordinated their claims against Joint Venture Company under the Sponsor Support and Subordination Agreement to the claims of the banking consortium providing financing.

3.2 Technical Services Agreement

On December 19, 2003, PKN ORLEN, BEH and the Joint-Venture Company have entered into the Technical Services Agreement providing for terms of technical support by PKN and BEH to the Joint-Venture Company through secondment of their highly qualified personnel and provision of advisory services specified in this agreement.

The Joint-Venture Company will bear the costs of remuneration of the seconded personnel increased by the agreed maximum margin and shall bear any additional costs relating to the secondment of such personnel.

The Joint-Venture Company will pay a fee for services to be provided by PKN ORLEN and BEH which will be based on fixed rates specified in the agreement.

In connection with this agreement, a Direct Agreement has been executed by and between PKN ORLEN, BEH, the Joint-Venture Company and the Security Agent on the same date. This agreement, among other things, provides for certain restrictions as to termination and suspension by PKN ORLEN, BEH and the Joint-Venture Company of their respective obligations under the technical services agreement.

3.3 Project Management Agreement

On December 19, 2003, PKN ORLEN, BEH and the Joint-Venture Company have entered into a project management agreement, pursuant to which a joint committee and an investment group to assist with management of the construction of the new propylene and ethylene plants of the Joint-Venture Company will be established. PKN ORLEN and BEH will be paid fees for providing their management services to the Joint-Venture Company.

In connection with this agreement, a Direct Agreement has been executed by and between PKN ORLEN, BEH, the Joint-Venture Company and the Security Agent on the same date. This agreement, among other things, provides for certain restrictions as to termination and suspension by PKN ORLEN, BEH and the Joint-Venture Company of their respective obligations under the project management agreement.

3.4 Agreement in relation to the Waiver of Claims for Damages

On December 19, 2003 PKN ORLEN and the Joint-Venture Company have entered into the above agreement providing for mutual waiver of potential claims for any damages suffered by one party arising as a result of fire or explosion of the facilities of the other party, as well as damages incurred as a consequence of acts or omissions of the other party under certain circumstances.
Pursuant to this agreement, PKN ORLEN and the Joint-Venture Company have agreed to procure that agreements with insurers will exclude insurers' right of subrogation against the other party.

3.5 Agreement for Security Assignment of Rights and Claims

On December 19, 2003 PKN ORLEN, the Joint-Venture Company and BEH have entered into the Agreement for Security Assignment of Rights and Claims, pursuant to which, the Joint-Venture Company has assigned its rights under the excess cash account agreement to PKN ORLEN and BEH as a security for its payment obligations to PKN ORLEN and BEH under the Sponsor Support and Subordination Agreement described in Section 3.1 above.

Pursuant to the above agreement, PKN ORLEN and BEH can enforce the security by delivering an enforcement notice to the Joint-Venture Company as a result of the acceleration of the financing to be provided by the banking consortium to the Joint-Venture Company. The security interest is valid until the Sponsor Support and Subordination Agreement expires.