Conclusion of agreements with Aramco Overseas Company B.V. as part of the finalization of the implementation of remedies according to conditional decision of the European Commission on taking control by PKN ORLEN S.A. over Grupa LOTOS S.A.

PKN ORLEN S.A. (PKN ORLEN”, „Company”) informs that in order to implement remedies in fuels production market and fuels wholesales market area specified in the decision of the European Commission as of 14 July 2020 on concentration of taking control by PKN ORLEN over Grupa LOTOS S.A. headquartered in Gdańsk (“Grupa LOTOS”), (“Remedies”), on 30 November 2022 the Company signed with:

1)     Aramco Overseas Company B.V. („Aramco”) the final agreement on sales to Aramco of 100% of shares in LOTOS SPV 1 Sp. z o. o. (“LOTOS SPV 1”), to which as a result of the division of LOTOS Paliwa Sp. z o. o. (“LOTOS Paliwa”), an organized part of fuel wholesale enterprise was contributed, for the price which consists of fixed element in the amount of ca. PLN 1 bn and variable element, depending on the level of net debt and working capital of LOTOS SPV 1 as on the day of signing of the final agreement;

2)     Aramco the final agreement on sales to Aramco of 30% of shares in Rafineria Gdańska Sp. z o. o. („Rafineria Gdańska”), to which the refinery located in Gdańsk ("Refinery") was contributed as an in-kind contribution, for the price which consists of fixed element in the amount of ca. PLN 1,15 bn and variable element, depending on the level of net debt and working capital of Rafineria Gdańska as on the day of signing of the final agreement;

3)     Aramco and Rafineria Gdańska a joint venture agreement (“JV Agreement”) specifying the terms of cooperation between partners in Rafineria Gdańska, including the corporate governance adopted therein and the powers granted to them;

4)     LOTOS SPV 1 and Rafineria Gdańska a processing agreement ("Processing Agreement"), which will be effective for contractual period of JV Agreement. Pursuant to the Processing Agreement, Rafineria Gdańska will provide PKN ORLEN and LOTOS SPV 1 ("Processors") with services related to the processing of feedstock supplied by Processors in order to obtain refining products for Processors. Each of the Processors will be the owner of the feedstock it supplies and the refining products obtained from this feedstock;

5)     LOTOS SPV 1 and Rafineria Gdańska an off-take agreement (“Off-take Agreement”), which will be effective for contractual period of JV Agreement. Pursuant to the Off-take Agreement, LOTOS SPV 1 will be entitled, but not obliged, to purchase from the Company each year an agreed volumes of diesel and unleaded gasoline ("Products"). The annual volumes of Products sold will be reduced in proportion to the reduction in production resulted from shutdowns or slowdowns in the Refinery's operation;

6)     LOTOS SPV 1 a framework agreement on storage of mandatory reserves of crude oil by the Company, on behalf of LOTOS SPV 1, effective for a period of 10 years from the date of its entry into force;

7)     LOTOS SPV 1 a framework agreement on railway logistics outsourcing services provided by PKN ORLEN on behalf of LOTOS SPV 1, effective for a period when the Processing and Off-take Agreements are in force.

 

 

In order to implement Remedies in aviation fuels market area on 30 November 2022, the Company and Aramco signed the final agreement for the sale to Aramco of all shares held by the Company in LOTOS-Air BP Polska sp. z o.o. (“LOTOS-Air BP”).

 

Accordingly, all conditions for the entry into force of the agreements concluded between the Company and LOTOS-Air BP on 12 January 2022 have been fulfilled, i.e.:

1)     conditional agreement on sale of aviation fuel to LOTOS-Air BP, effective for a period of up to 15 years from the date of its entry into force;

2)     conditional agreement on LOTOS-Air BP aviation fuel storage at the Company's fuel terminal, effective for a period of up to 15 years from the date of its entry into force;

3)     conditional agreement on providing services of operating activity support in case of force majeure between PKN ORLEN, ORLEN Aviation Sp. z o.o. and LOTOS-Air BP, effective for a period of up to 15 years from the date of its entry into force.

 

Continuing the cooperation started in January 2022, on 30 November 2022, PKN ORLEN signed with Saudi Arabian Oil Company and Saudi Basic Industries Corporation a joint development agreement for the common realization of a feasibility study for petrochemical complex in Gdansk.

 

See also: regulatory announcement no 1/2022 as of 12 January 2022, no 2/2022 as of 12 January 2022, no 38/2022 as of 1 August 2022 and no 85/2022 as of 30 November 2022.