Polish Refiner PKN Orlen to Take Over PGNiG
Polish oil refiner PKN Orlen has signed a letter of intent to acquire the company's state gas monopoly PGNiG, it announced on July 14, as part of government plans to merge the country's biggest energy groups.
PGNiG is involved in exploration and production, primarily in Poland and Norway, oil and gas trade, storage and distribution, and power generation. PKN said it would analyse the "optimal model" for acquiring the gas firm, noting that it was too early to set a schedule for completing the takeover.
PKN bought national power company Energa earlier this year and has just received conditional EU antitrust approval to acquire another Polish refining firm Lotos. Integrated, the four companies will boast zlotys 200bn ($50.9bn) in annual revenues and zlotys 20bn in annual core earnings. The government's aim to establish a company with enough clout to compete in international oil, gas and power markets.
"We are building a powerful multi-energy group with global reach in Poland," state assets minister Jacek Sasin said in a statement on the government's website. "The consolidation of state-owned companies is our response to the increasingly demanding environment."
PKN is a leader in central Europe's fuel market, controlling six refineries and thousands of filling stations across Poland, the Czech Republic, Germany, Lithuania and Slovakia. It also has an upstream presence in both Poland and Canada. Lotos, meanwhile, runs a refinery in Gdansk, northern Poland, domestic filling stations and upstream assets off the coast of Norway and in the Baltic Sea.
Announcing its approval of PKN's takeover of Lotos on July 14, EU antitrust commissioner Margrethe Vestager said "the extensive commitments offered by PKN Orlen will ensure that the relevant Polish markets remain open and competitive and that the merger will not lead to higher prices or less choice for fuels and related products for businesses and consumers in Poland and the Czech Republic."
PKN will have to sell a 30% stake in Lotos' refinery, along with nine fuel storage depots and 389 filling stations, Lotos' 50% interest in a jet fuel marketing partnership with BP and two Polish bitumen plants, in order to get the deal done, the European Commission said in a statement.
The country's president Andrzej Duda won re-election for another five-year term July 13, in a 51-49 split of the vote, suggesting that the country's relations with the European Commission will remain difficult. The Law & Justice party (PiS) has not been complying with a number of the bloc's aims regarding civil rights and competition.