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ORLEN Group

No. 6/2007  | 17-01-2007

PKN ORLEN has signed an agreement with PETRACO Oil Company Ltd for crude oil deliveries

Polski Koncern Naftowy ORLEN S.A. ("PKN ORLEN"), Central Europe’s largest downstream oil company, hereby informs that on 17 January 2007, PKN ORLEN signed an agreement with PETRACO Oil Company Limited (“PETRACO”), headquartered in Guernsey, for crude oil deliveries via the “Druzba” pipeline to PKN ORLEN for 3 360 000 tonnes of REBCO crude oil annually (“the Agreement”). The crude oil delivered to PKN ORLEN will come from Rosneft reserves. The Agreement is in force from 1 January 2007 until 31 December 2011. The conditions of the Agreement allow the contractual period to be extended for a further year or more.

In case of a lack, or delay, in delivery, a condition of the Agreement requires the payment of a penalty whose total value exceeds the PLN equivalent of EUR 200,000, translated at the average exchange rate quoted by the National Bank of Poland as of the day of signing the Agreement. Payment of the penalties does not exclude the right for PKN ORLEN to claim for compensation exceeding the value of the penalties.

On the day of signing the Agreement, the estimated value of the crude oil supplies to PKN ORLEN, by 31 December 2011 amounts to ca. USD 6 billion (i.e. approximately PLN 18.1 billion, based on the average USD/PLN exchange rate as of 17 January 2007, as stated by the National Bank of Poland). There are no capital connections between PKN ORLEN and the PETRACO Oil Company Limited.

In accordance with the “Regulation of the Minister of Finance dated 19 October 2005 on current and periodic information to be published by issuers of securities” the Agreement constitutes a “significant agreement” due to the fact that its value exceeds 10% of PKN ORLEN’s equity.

This announcement has been prepared pursuant to par. 5 section 1 subsection 3 and § 9 of the Regulation of the Minister of Finance dated 19 October, 2005 on current and periodic information to be published by issuers of securities (Journal of Laws No. 209, item 1744).