Rejection of applications for consent to announce MTO for shares in UNIPETROL, PARAMO and SPOLANA

The Management Board of PKN ORLEN S.A. (“PKN ORLEN” the “Company”), Central Europe’s largest downstream oil company, hereby gives notice that on July 19, 2005, the Czech Securities Commission (the “SC”) informed the Company that it has rejected the applications for consent to PKN ORLEN’s announcements of mandatory tender offers for the shares issued by UNIPETROL, a.s., PARAMO, a.s. and SPOLANA a.s.

In connection with the purchase on May 24, 2005 of shares which entitle PKN ORLEN to 62.99% of the votes in UNIPETROL, a.s. and 9.76% votes in SPOLANA, a.s., PKN ORLEN was required to announce mandatory tender offers for shares in UNIPETROL, a.s., PARAMO, a.s., and SPOLANA a.s. (the “Mandatory Tender Offers”).

PKN ORLEN authorized Patria Finance, a.s. to conduct the Mandatory Tender Offers.

As under Czech law the terms of the Mandatory Tender Offers have to be approved by the SC prior to their announcements, applications asking the SC for approval concerning the Mandatory Tender Offers were filed with the SC in appropriate term, i.e. on June 30, 2005.

The prices proposed by PKN ORLEN were: CZK 103 per one UNIPETROL share; CZK 701 per one PARAMO share; and, CZK 100 per one SPOLANA share. The valuations were based on DCF method, compiled by an independent Czech expert NS Group.

According to the explanation behind the decision given by the SC, the principal reason for the rejection of the application was irregularities in the valuation of the shares in UNIPETROL, SPOLANA and PARAMO, attached to the application, compiled by the independent Czech expert, which PKN ORLEN selected last year in September to comply with Czech Republic regulations.

Under the Czech regulations, PKN ORLEN should announce the Mandatory Tender Offers for shares in UNIPETROL, a.s., PARAMO, a.s. and SPOLANA a.s. on or before July 25, 2005. Failure to announce the tender offers by that deadline may produce the following consequences:
1. Within six months after July 25, 2005, minority shareholders may require PKN ORLEN to purchase the shares they hold in UNIPETROL, PARAMO and SPOLANA for a price determined in compliance with the relevant regulations.
2. In the period following July 25, 2005 until the announcement of the tender offers approved by the SC, PKN ORLEN and persons acting in concert with PKN ORLEN until the Mandatory Tender Offers are announced may not exercise the voting rights attached to the shares they hold in UNIPETROL a.s. and SPOLANA a.s. Furthermore, during that period the SC may issue a decision barring PKN ORLEN from exercising other rights attached to the shares in those entities.
3. If the SC deems it indispensable from the point of view of protecting the interests of other shareholders, lenders or employees, it may pass a decision forbidding PKN ORLEN to exercise its voting rights for up to one year.
4. The SC may impose a fine on PKN ORLEN.

It is PKN ORLEN’s intention not to appeal against the decision received and to proceed forthwith to prepare new applications which will take into account the requirements indicated in the SC’s decisions. PKN ORLEN will ask the SC to defer prohibiting the exercising of voting rights attached to the shares in UNIPETROL and SPOLANA.