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ORLEN Group and PGNiG to develop biomethane production business

ORLEN Południe, part of Polish oil refiner and petrol retailer ORLEN Group signed a letter of intent with oil and gas company PGNiG to strengthen cooperation in the development of renewable energy sources.

The companies plan to set up a special purpose vehicle that will invest in the development of a network of biomethane plants. Using agricultural and waste substrates and residues from the processing industry, state-of-the-art plants would produce environmentally friendly biomethane which could be used in the industrial or power generation sectors.

“We are enhancing the ORLEN Group’s competencies and position in the RES market,” said Daniel Obajtek, President of the PKN ORLEN Management Board. “By joining forces with PGNiG, we are developing a new business line – biomethane production. The large potential of this clean, environmentally-friendly fuel, which may become a source of green hydrogen, will allow us to achieve our strategic business objectives and effectively contribute to the energy transition of Poland’s economy.” 

The letter of intent provides for the possibility of cooperation mainly in the acquisition and construction of biomethane facilities, development of biomethane production technologies and production and use of biomethane in various areas of the companies’ operations.

“The integration of PGNiG’s and PKN ORLEN’s resources, knowledge and experience will provide a significant and much-needed incentive to the development of the biomethane market in Poland,” added Paweł Majewski, President of the PGNiG Management Board. “The SPV will allow both partners to grow their competencies along the entire value chain. This cooperation fits perfectly with PGNiG’s plans to reduce the emissions intensity ratio of Poland’s gas sector and to dynamically grow to trade in green gases.” 

The new biomethane production business line will be developed by the ORLEN Group and the PGNiG Group by constructing their own biogas plants and acquiring existing facilities. In December 2020, ORLEN Południe acquired an existing biogas plant located in Konopnica, the Rawa Mazowiecka municipality. In January, the company purchased two plots of land in the municipality of Ryn with the intention to construct its own facility. In March, it finalised the purchase of an agricultural biogas plant in Wojny-Wawrzyńce, the Szepietowo municipality. The company plans to expand those facilities and transform them into plants producing biomethane that would be injected into the distribution network and could potentially be also used to produce green hydrogen.

The PGNiG Group is interested, among other things, in purchasing biomethane from its producers and transmitting biomethane mixed with natural gas via distribution networks. To this end, PGNiG has developed a quality standard for biomethane that can be fed into the network, conditions for connecting a biomethane plant to the network, and a distribution agreement template.

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