PKN ORLEN is one of the biggest and most-advanced fuel and energy enterprises in Central Europe, ranked among an elite group of the most recognisable companies. The Group operates on 5 home markets – in Poland, Germany, Czech Republic, Lithuania and Canada. Its products are delivered to 91 countries on 6 continents.
The Group operates six refineries in three countries: Poland, Czech Republic and Lithuania. The integrated refining and petrochemical complex in Płock is considered as one of the most advanced and efficient facilities of its type in Europe. It converts crude into petrol, diesel, fuel oil and aircraft fuel. Last year, the total volume of crude processed at PKN ORLEN was 33.2 million tonnes. It is a leading petrochemical producer.
The Group owns the region’s largest retail chain of nearly 2.8 thousand service stations located in Poland, Germany, Czech Republic and Lithuania. It consistently grows its segment of hydrocarbon exploration and production, as well as power generation. Exploration and extraction projects in Poland and Canada play an important role in the context of the company’s future business, with 152.6 million boe of total 2P oil and gas reserves and 15.6 thousand boe/d of average extraction in 2017.
The processing capacity of the 6 refineries located in Poland, Czech Republic and Lithuania is more than 35 million tonnes. Given the size of the Group’s operations, it is important to ensure diversification of crude supply. Petrochemical assets integrated with refinery assets comprise 5.2mt of sold petrochemical products. The scale of operations is also evident in the 3.8 thousand kilometres of pipelines and 47 storage depots and terminals.
The key development projects of the Group include the construction of a polyethylene unit at Unipetrol and the construction of a metathesis unit and a visbreaking unit in Płock.
The company’s shares in the retail market are: 34 percent in Poland, 6 percent in Germany, 21 percent in the Czech Republic and 5 percent in Lithuania.
It must be added that the company is consistently pursuing its mission: by discovering and processing natural resources, we fuel the future.
Priority directions
The strategy of PKN ORLEN focuses the company’s efforts connected with strengthening its market position, customer orientation, use of the integrated value chain, growing role of the petrochemical sector and a cautious continuation of the extraction activities in the upstream segment. Key elements of the strategy also include the emphasis on value-adding innovations. The Group’s strategic development vision is consistent with global trends concerning the use of energy sources, technology development and social processes shaping customer behaviours and expectations. The dynamic market environment forces the company to adjust its planning perspective. The key investment tasks in 2018 include the construction of a polyethylene (PE3) unit in Litvinov, a metathesis unit in Płock, and a PPF Spliter in Lithuania. In mid-2018, the most advanced Polish power generation unit was commissioned in Płock. The year 2018 was also marked by the opening of 40 new own stations, development of the Stop Cafe 2.0 format (more than 200 new locations_ and introduction of new products and services.
As regards the upstream segment, exploration and extraction activities in Poland and Canada were continued.
Petrochemical investments
The strategy of PKN ORLEN focuses the company’s efforts connected with strengthening its market position, customer orientation, use of the integrated value chain, growing role of the petrochemical sector and a cautious continuation of the extraction activities in the upstream segment. Key elements of the strategy also include the emphasis on value-adding innovations. The Group’s strategic development vision is consistent with global trends concerning the use of energy sources, technology development and social processes shaping customer behaviours and expectations. The dynamic market environment forces the company to adjust its planning perspective. The key investment tasks in 2018 include the construction of a polyethylene (PE3) unit in Litvinov, a metathesis unit in Płock, and a PPF Spliter in Lithuania. In mid-2018, the most advanced Polish power generation unit was commissioned in Płock. The year 2018 was also marked by the opening of 40 new own stations, development of the Stop Cafe 2.0 format (more than 200 new locations_ and introduction of new products and services.
As regards the upstream segment, exploration and extraction activities in Poland and Canada were continued.
Petrochemical investments
In 2017, the Group began intensive work on the Strategic Plan for Development and New Technologies (SPRINT) for PKN ORLEN and the ORLEN Group, which is expected to produce a long term (2030+) vision of development of the Group’s production assets. PKN ORLEN carried out preparatory work towards extending the value chain and building operational excellence of the downstream segment. As part of the investment projects, a front-end engineering design was developed and a licence was purchased for the construction of a visbreaking unit to further deepen crude conversion and obtain high-margin fractions from vacuum residue. A procurement procedure was launched to purchase the licence and front-end engineering design for a MaxEne unit to optimise refining and petrochemical feedstock management and improve yields and margins. Co-financed under the INNOCHEM Sectoral Programme, the Gassto project was continued to develop a technology for production of motor gasolines intended for long-term storage in salt caverns.
INNOCHEM funding was also granted to PKN ORLEN for two other projects: to develop a technology for co-hydrogenation of petroleum fractions with vegetable oils or animal fats to obtain high-quality biocomponents which could be used to meet the NIT; and to implement an integrated corrosion monitoring system, which will help increase process safety and optimise management of anticorrosion agents. Work was commenced on an international BioRECO2VER project, designed to explore the possibility of bioconversion of carbon dioxide into compounds used in the manufacturing of value-added chemical products, including bioplastics. The initiative received funding under European Horizon 2020, the largest-ever EU programme for financing research and innovation. R&D projects are carried out in partnership with scientific institutions, including the Industrial Chemistry Research Institute, Warsaw University of Technology, University of Warsaw, Oil and Gas Institute, and Gdańsk University of Technology. Moreover, PKN ORLEN consistently pursues its R&D strategy. It started working on developing a concept for expanding its research facilities, by creating a Research and Development Centre in Płock. In response to new, stricter heavy diesel oil standards issued by the International Maritime Organization (IMO), ORLEN Lietuva completed research into technologies to reduce volumes of heavy fractions generated in the course of refining processes.
Projects aimed at enhancing the efficiency of production processes were continued. The company is also engaged in a number of environmental projects, including reduction of dust emissions from the FCC unit, reduction of SO2 and NOX emissions from the on-site CHP plant, and deployment of an emission monitoring system for the FCC, sulphur recovery and hydrogen plant.
Motor fuels
Meanwhile, the Unipetrol Group continued research projects into motor fuel production processes and conversion of heavy fractions from crude processing. Efforts were also made to explore the availability and applicability of renewables in the refining processes and to identify potential sources of feedstock among alternative materials and refuse generated in motor fuel production. Given the future sulphur content requirements for marine fuels, a project was launched to enable deeper conversion of heavy fractions. In the petrochemical segment, long-term development plans are focused on improving the quality of the product portfolio and enhancing production efficiency. The key steps in this regard included research into manufacturing of new chemicals from naphthalene concentrate, potential applications of pyrolysis by-products, and use of renewable energy sources. Other projects included work on securing high-quality feedstock for polyolefin production, efforts to optimise polyolefin production, and launch of new REACH-compliant catalytic systems (Registration, Evaluation, Authorisation and Restriction of Chemicals).
Research
ANWIL continued research under the INNOCHEM sectoral programme to develop an innovative production technology for PVC-based ceramic composites for the construction industry, which will improve fire resistance of cable and wire sheaths. Funding was also obtained for two projects seeking to develop an innovative catalytic system for ethylene chlorination and ammonia synthesis. The objective of the projects is to increase chemical reaction yields and reduce volumes of the by-products. If laboratory trials prove successful, the projects will help improve efficiency of the production processes. Having evaluated the front-end engineering design and developed an embodiment design, the ORLEN Południe Group launched a development project entitled “Glycerine conversion to 1,2-propylene glycol”. It also completed a project to “Increase biodiesel production capacity to 250 thousand tonnes/year”, while projects to develop 2nd and 3rd generation biofuels were continued. As part of the INNOCHEM programme, the project entitled “Biodegradable anti-caking agents for the fertilizer industry” was continued and another one, “Development of biotechnology-based conversion of organic raw materials into lactic acid using microorganisms”, was launched, covering industrial research and development work. ORLEN OIL’s key research efforts focused on the commercial launch of new products and modification of existing ones, and defining new development directions for the lubricant technology. Manufacturing technologies for 34 new oils and service fluids were developed and implemented, with 19 more products undergoing modification.
Development programme
This year, PKN ORLEN commenced the biggest investments in the company’s history in the area of petrochemicals. Their value is estimated at around PLN 8.3 billion. As part of the adopted 2023 Petrochemical Sector Development Programme, new investment projects will be implemented in Płock and Włocławek. After they are completed, annual EBITDA could grow by as much as PLN 1.5 billion. New investments under the programme for development of the Polish petrochemical sector will strengthen the integration of the refining and petrochemical segments, allowing the Group to futher diversify its revenues. The estimated annual EBITDA after project completion will grow by PLN 1.5 billion. This means a return on the investment in a 5 – to 6-year horizon, which is very good news for the shareholders.
The investment will strengthen the Group’s competitive advantage on the European market and bring measurable benefits to the Polish economy, including balance of trade in petrochemical products to be manufactured as result of the programme. This means that Poland will transform from an importer into an exporter of those products. The new investment programme of PLN ORLEN will cover the construction and enhancement of production capacity in aromas, olefins and phenol. It will also boost the Group’s R&D capabilities through investments in the Research and Development Centre.
The value of the market for petrochemicals and base plastics will double by 2040. PKN ORLEN wants to fully use its potential in this area. The investment will allow it to increase production capacity in the petrochemical segment by around 30 percent. What is important is that new products will be placed on the local market, which guarantees a significant improvement in Poland’s trade balance for petrochemicals.
The demand for petrochemical products is set to grow, driven by the increasing global population, economic growth and changing demand structure for industrial feedstock. The upward trend is also evident in Poland, where improving welfare translates into rising consumption of plastic, and consumption per capital is still much below the Western European level. More and more petrochemical products will be used in the manufacture of plastic, including for vehicle-related applications. For instance, the share of plastic in cars is expected to reach 25 percent after 2020, compared to 20 percent in 2000. Hence, PKN ORLEN’s investments in the petrochemical sector are consistent with the European and global development trends for vehicles powered by alternative energies. In parallel to the proposed investments, existing petrochemical projects will be continued to extend PKN ORLEN’s value chain. The current nominal output of polymer-grade propylene is 450 thousand tonnes. Estimated at more than PLN 400 million, the investment will boost production capacity to 550 tonnes a year.
