MARKET PROSPECTS IN 2021
Expectedmacroeconomic environment
- GDP forecast for 2021 – Poland 3.1%, the Czech Republic 1.7%, Germany 5.1%, Lithuania 1.9%..
- Brent crude – expected growth of crude oil price in comparison to average from 2020, mainly due to forecasted strong increase of demand on fuels in the second half of 2021 (COVID-19 vaccination program). Since the beginning of the year Saudi Arabia decreased the crude oil production by 1 mbd significantly reducing the oil surplus on the market. Above factors translated to an increase of expectations in crude oil price growth by 10 USD/bbl. The expected crude oil price in the first quarter of 2021 will amount to USD 55/bbl reaching USD 60/bbl level at the end of the year.
- Refining margin – expected to increase relative to the 2020 average, but the growth will be slow until global production capacity is reduced by approximately 3.7 mbd (including by approximately 1.7 mbd in Europe), which may take a few quarters.
- Petrochemical margins – expected to remain at around EUR 800/t. The petrochemical sector depends heavily on general business activity, which has taken a plunge; however, in Europe, which imports many base petrochemicals, opportunities have opened up to sell local products as import sales collapsed.
Projectedmarket trends
- Fuel consumption – demand for fuel is expected to increase in keeping with the economic recovery after COVID-19.
Legislativechanges
- Retail sales tax – in force as of January 1st 2021.
- NIT – with the 2021 baseline at 8.7%. PKN ORLEN may use an option to reduce NIT to 5.707%.
Investment activitiesof the ORLEN Group
Capital expenditure planned for 2021 is PLN 9.5 billion, of which PLN 7.7 billion in the ORLEN Group and PLN 1.8 billion in the ENERGA Group.
The largest expenditure, of PLN 2.9 billion, will be earmarked for the Petrochemicals segment, followed by the Refining segment (PLN 2.6 billion), Energy (2.3 billion), Retail (PLN 1.0 billion), and Upstream (PLN 0.3 billion).
Kay growth projects in 2021:
Refining
- Construction of a visbreaker unit in Płock
- Construction of a polypropylene glycol unit at ORLEN Południe
Petrochemicals
- Expansion of olefins production capacities at Płock
- Expansion of fertilizer production capacities at Anwil
- Construction of a DCPD unit (feedstock for the production of specialty plastics) at Unipetrol
Energy
- Upgrades of existing assets and connection of new customers at the ENERGA Group
- Construction of solar photovoltaic farms at the ENERGA Group
- Construction of offshore wind farms in the Baltic Sea
- Expansion of the EV charging network (70 new stations)
Retail
- Expansion of the service station chain (50 new stations, including 30 CODO locations)
- Expansion of the food service network (140 new Stop Cafe/Star Connect outlets)
- Launch of new services and products
Upstream
- Canada / Poland – focus on the Kakwa and Ferrier / Egde, Miocene and Płotki projects
Increase in non-current assets in 2021
Increase in non-current assets by segment in 2021 [PLN billion]
Scheduledmaintenance shutdowns
Maintenance shutdowns of production units at the ORLEN Group in 2021:
- PKN ORLEN: shutdown of the olefins, PTA and Reforming Plant V, hydrogen production and recovery plant and HOG units.
- ORLEN Lietuva Group: the schedule of maintenance shutdowns similar to 2020.
- Unipetrol Group: no major shutdowns planned for 2021 given the periodic scheduled overhaul of the Litvinov refinery and the spring shutdown of the Kralupy refinery in 2020.
- Anwil: alternating shutdowns of lines A and B at the fertilizers complex and shutdown of the PVC complex due to upgrade work carried out at the olefins unit.
- BOP: PE and PP unit shutdowns correlated with the olefins unit shutdown at PKN ORLEN.
