The Polish oil refiners and retailers PKN Orlen (27.5% state-owned) and Grupa Lotos (53.2% state-owned) have agreed and signed a merger plan involving the transfer of the Lotos assets to PKN Orlen. In exchange for one share held in Grupa Lotos, its existing shareholders will receive 1,075 shares in the enlarged PKN Orlen. The transaction is subject to approval of the share exchange ratio and other terms of the merger by shareholders of both companies. As a result of the merger between PKN Orlen and Grupa Lotos, the Polish State Treasury’s stake in the combined entity will increase to approximately 35%. Assuming a subsequent merger with the national oil and gas company PGNiG (71.9% state-owned), this stake will increase to about 50%.
PKN Orlen is active in oil production, transportation (it operates 1,900 km of oil pipelines in Poland, including 930 km for crude oil and 960 km for oil products), refining (16 Mt/year Plock refinery and 53% indirect stake in Grupa Lotos' 10.5 Mt/year Gdansk refinery), wholesale of oil products (15 Mt sold in Poland in 2020) and retail (1,830 service stations, i.e., 1/4 of the market in March 2021, plus 700 stations held by Grupa Lotos (9%). Grupa Lotos operates in oil upstream activities in Poland (61 mboe of reserves and production of 20 kb/d hydrocarbon in 2020, including 5.3 in Poland), Norway, and Lithuania, as well as in refining and distribution; it also owns and operates a refinery in Gdansk with a capacity of 10.5 Mt/year.
The European Commission approved the acquisition of Grupa Lotos by PKN Orlen under the EU Merger Regulation in July 2020. The approval is conditional on full compliance with a commitments package offered by PKN Orlen. Specifically, the company pledged to divest a 30% stake in Lotos' refinery (including granting a 50% share in the refinery's diesel and gasoline production to the buyer), to divest 9 fuel storage depots to an independent logistics operator, to build a new jet fuel import terminal in Szczecin that would be transferred to the independent logistics operator, to release most of the capacity booked by Lotos at independent storage depots, to divest 389 retail stations in Poland (80% of the Lotos network) and to sell Lotos's 50% stake in the jet fuel-marketing joint venture with BP (among other measures). In May 2021, the Polish Ministry of State Assets, the oil refiner and retailer PKN Orlen, PGNiG and Grupa Lotos signed a four-party agreement providing for a merger formula between the three energy groups. In March 2022, the Polish Office of Competition and Consumer Protection (UOKiK), which implements antimonopoly regulations in the country, conditionally approved the merger between the oil group PKN Orlen and the gas company PGNiG. Most notably, PGNiG will have to relinquish control over its Gas Storage Poland unit, to ensure that competition on the Polish gas market is not restricted.