Last week, the biggest energy company in the CEE region, PKN ORLEN, finalised a transaction to acquire a part of Poland’s largest plastics manufacturer, Basell Orlen Polyolefins, in which the ORLEN holds an equity interest. The acquisition was approved by the antitrust authorities in Poland and the Netherlands.
The business segment, acquired by ORLEN, specialises in the production and sale of low-density polyethylene (LDPE) as well as customer service in the Polish market. It is a polymer commonly used to make consumer and industrial products, found in plastic films, bags, canisters, food packaging, as well as components of electronic devices, such as wires and cables.
“Keeping a close eye on the market environment, we can see that demand for petrochemical products is growing strongly across the globe,’ said the CEO and President of the Management Board of PKN ORLEN, Daniel Obajtek. “According to forecasts, the value of the petrochemicals and base plastics market is expected to double by 2030. This is a big chance for our Company. We want to capture the largest possible share of that promising business in order to drive fast profit growth. The acquisition we have just completed is opening up such opportunities. We are also looking into a project that would allow us to add another petrochemical product to our portfolio, solidifying our position as a leading producer in Europe. It is this business segment that is expected to generate half of our future profits from oil processing.”
Poland is the largest consumer of LDPE in Central Europe, forecast to account for nearly 35 per cent of regional demand by 2025. At present, annual demand in the Polish market is about 300,000 tonnes, compared with close to 800,000 tonnes in Central Europe. The combined capacities of regional producers are estimated at 520,000 tonnes. According to forecasts referenced in ORLEN’s press release, by 2025, the LDPE market in Central Europe and in Poland will grow to about 890,000 tonnes and 312,000 tonnes, respectively, in which the company “is bound to have a significant share”.
In July 2022, PKN ORLEN signed a preliminary agreement to acquire a part of the assets of Basell Orlen Polyolefins. Once all antitrust approvals had been secured in Poland and the Netherlands, it was possible to finalise the transaction. Basell Orlen Polyolefins is a joint venture in which PKN ORLEN and the Dutch chemicals company LyondellBasell Industries each hold a 50 per cent stake. Following the separation of the LDPE production business from Basell Orlen Polyolefins, the company will focus on developing the PP technology, used to produce polypropylene and high-density polyethylene (HDPE).
In response to the “steadily growing market demand”, PKN ORLEN is also developing conceptual work to expand the LDPE unit at the Płock Production Plant. Last year, the company signed a licence and front-end engineering design agreement with LyondellBasell, the business segment of LyondellBasell Industries specialising in polymer technology.