Wind, solar and nuclear energy, biogas and biomethane, biofuels, electromobility and green hydrogen technologies are all the flagship investment areas included in PKN Orlen’s new business strategy, unveiled during a press conference by the company’s CEO Daniel Obajtek on Tuesday (28 February).
The company’s Orlen2030 strategy will be predicated on renewable energy, supported by gas, independent gas extraction, effective, low-emission refining and petrochemical production and a comprehensive offer for individual customers, Orlen said in a press release.
Looking at the numbers, by 2030, the ORLEN Group’s capital expenditures are expected to rise to a total of around 320 billion złotych (63.3 billion euros), of which approximately 40 per cent (120 billion złotych), will be allocated to green investments, including offshore and onshore wind energy, photovoltaics, biogas and biomethane, biofuels, electromobility and green hydrogen. Whilst the existing traditional and transitional business areas, such as gas extraction, refinery, petrochemicals, conventional energy and integrated retail will account for 60 per cent of the company’s expenditure.
The company’s accelerated shift towards clean energy will aim to treble its renewables capacity to 9 GW compared to the Orlen Group’s initial plans from two years ago. As part of this, the Orlen Group plans to develop projects in onshore and offshore wind power, solar and energy storage facilities. In terms of the geographical scope, the renewables targets will encompass the company’s activities abroad, investing in among others, wind farms in the Baltic Sea, Orlen added.
New leadership ambitions in renewable gases
By 2030, the ORLEN Group aims to become the leading company in biogas and biomethane production in Central Europe, which it hopes to achieve by producing one billion cubic metres (bcm) of biogas (equivalent to around 0.65 billion m3 of biomethane) in modern biogas plants. As part of the company’s development of the relevant infrastructure, Orlen said that it will support the construction of a local value chain by managing a central raw material base and integrating dispersed assets.
The company is currently building a pilot biogas plant in Głąbowo (north-east Poland), which is expected to produce over seven million cubic metres of biomethane annually, from mid-2024.
By 2030, the company seeks to become a regional leader in the biofuels segment, increasing production to three million tonnes per year. In order to implement this assumption, an HVO installation is already being built in Płock (central Poland), which will allow the production of sustainable aviation fuel from used cooking oil. On the other hand, in Jedlicze (south-east Poland), an installation is being built that will produce second-generation bioethanol from straw supplied by local farmers.
The Group will also strive to become a regional leader in the production and distribution of renewable hydrogen. The total assumed capacity of electrolysers in the ORLEN Group by 2030 is aimed at approximately 1 GW, which, combined with waste-to-hydrogen projects, will enable the production of over 130 kt of renewable hydrogen by the end of the current decade, Orlen said.
Accelerating the country’s coal phase-out and nuclear future
The company will look to develop CCGT gas-fired power plants to replace the most emission-intensive and least efficient power plants and coal-fired CHP plants in the short term, which in the long term will stabilise the operation of the renewables-based system. By 2030, the ORLEN Group will have around 4 GW of installed capacity in CCGT.
Looking at ORLEN Group’s electricity distribution network, the company plans to continue its modernisation and expansion of the distribution network. In terms of gas distribution, the company will focus on the modernisation of the gas network and the cost-optimised expansion of gas source connections, including the biomethane infrastructure.
Regarding the company’s extraction activities, by 2030, the volume of gas extraction in Poland and abroad is planned to exceed 12 billion m3 annually, which is an increase of around 50 per cent. Orlen wants to achieve this by maintaining exploration and optimising production in Poland, as well as through exploration investments in Norway. Additionally, the company said that it aims to strengthen its position as a proven gas supplier in the region by securing new contracts for LNG supplies to Poland, which in 2030 will allow it to reach around 15 bcm of LNG per year, as well as by developing its own fleet of vessel gas carriers.
Separately, the company will focus on developing Poland’s small nuclear reactor (SMR) technology. By 2030, the ORLEN Group will have 1-2 reactors in Poland and a “very large potential” for the development of further units in the coming years, Orlen said. In late April, the company will present the location and progress of Orlen’s partners on the development of SMR power plants in Poland, said Mr Obajtek during the press conference.
R&D, innovation, petrochemicals and climate neutrality
By 2030, the ORLEN Group plans to spend around three billion złotych (645 million euros) on research & development (R&D) and innovation, in particular in hydrogen technologies, advanced petrochemistry and new materials, as well as zero- and low-emission products and technologies. The ORLEN Group will also implement a new management model adapted to the increased scale of operations.
The Orlen Group also aims to increase its petrochemical production portfolio. According to the company, this will be possible thanks to the consistent expansion of olefin capacity and the launch of new projects aimed at increasing the share of advanced and specialised products in its portfolio. As part of its development in this area, the ORLEN Group, in consultation with Saudi Aramco and its subsidiary, SABIC, is analysing the possibilities of cooperation on a potential petrochemical project in Gdańsk (north Poland).
Last but certainly not least, the Orlen Group’s new investment strategy will seek to speed up its 2050 climate neutrality commitments. By 2030, the company aims to reduce emissions by 25 per cent (compared to 2019 levels) in the refining, petrochemical and mining segments. In addition, it aims to reduce the intensity of CO2 emissions by 40 per cent in the energy sector. In addition, the NCI emission intensity factor, referring to the total energy sold by the ORLEN Group, is planned to decrease by as much as 15 per cent.
This will be achieved primarily by accelerating investments in zero- and low-emission generation sources, Orlen said. This will include improving the efficiency of the currently operating assets and investing in the construction of infrastructure for capturing and storing carbon dioxide, enabling the capture of up to three million tonnes of CO2 per year, as estimated by Orlen. In turn, by 2035, the Group plans to end energy production using coal assets, largely replacing them with technologies such as SMR.