Bogdan Tudorache

PKN ORLEN has just filed a formal application for the European Commission’s approval of its proposed acquisition of LOTOS Group. The completion of the process would result in a single strong internally integrated entity with international potential, whose position in the oil supply market would be even more prominent, reveals a release received by energynomics.ro.

The acquisition of LOTOS Group by PKN ORLEN was initiated in February 2018 by signing a Letter of Intent with the Polish State Treasury, holding 53.19% of voting rights at the General Meeting of LOTOS Group. The letter outlined the transaction structure. In the first stage, PKN ORLEN would acquire 32.99% of LOTOS Group shares from the State Treasury. Next, a tender offer for shares representing up to 66% of total voting rights at the General Meeting of LOTOS Group would have to be announced.

With the consolidation of PKN ORLEN and LOTOS Group, Poland is joining the global trend towards building major players on the fuel and energy market. It is a response of the Polish companies to global trends in the refining industry, which would reduce the risk of liquidity loss by the domestic refineries. Consolidation processes in this sector have been ongoing a long time, driven primarily by the need to ensure national energy security. Similar sectoral consolidations were undertaken by such refiners as Hungary’s MOL, Norway’s Statoil, Spain’s Repsol, Portugal’s GalpEnergia, Italy’s ENI, Austria’s OMV, and France’s TOTAL.

Thanks to the combined refining capacities, the plants which are now operated by the two groups would be able to achieve an annual output of approximately 12 million tonnes of light products (mainly gasoline) and 20 million tonnes of medium distillates (mainly diesel oil and aviation fuel). Importantly, about two-thirds of this output would come from Polish plants.