GRI Disclosures:

The fuel and energy sector has never faced such a challenging time as it does now. However, we consider these challanges a growth opportunity for the ORLEN Group. The vision of the ORLEN Group’s growth is aligned with the global trends in developing technologies, changing consumer preferences and growing pressure on environmental protection.

One fundamental trend driving the energy transition is the rapid development of new technologies, which significantly improve the cost-effectiveness of renewable energy projects, as well as the electrification of transport and industry.

The energy transition is also supported by changing customer expectations, which require us to deliver increasingly more efficient and environmentally friendly solutions. The rising public awareness has translated into greater concern for the environment, as manifested by ambitious goals to reduce greenhouse gas emissions, as well as social and regulatory pressure on reducing environmental impacts in general.

In recent years, the ever farther-reaching changes in the energy sector have been gathering momentum. The impact of the ongoing energy transition on the world around us has been growing.

We have identified a number of trends to define the fundamental changes that will have bearing on the structure of the energy sector until 2030 and beyond:

  • slowing pace of growth in oil demand;
  • geographic shift in hydrocarbon supply;
  • growing competition from new energy sources;
  • increased environmental concerns;
  • changes in consumer megatrends;
szanse Peak oil expected between2030 and 2035 Combustion engine efficiency Alternative fuels and modesof transport Growing shareof biocomponents Slowing pace of growthin oil demand Shale revolutionin North America Oil market collapsecaused by COVID-19 Potential shiftsin the oil supply curve Shifts in oiland gas supply Consumermegatrends Growing awareness Digitalisation of sales channels ‘Righ here, right now’ economy Expectation of a comprehensiveand personalised offering Competitivenew energy sources Some RES alreadyfully competitive (e.g. wind) Significant decreasein solar PV costs Growth of prosumer energy Environmentalconcerns AmbitiousParis Agreement goals Europe’s regulatory leadership(Green New Deal, RED II) Restrictions ondisposable packaging szanse

To respond to these changes, the ORLEN Group – as part of its 2030 Strategy – is consistently adapting its business model and strategic development plans across all business segments, focusing on:

  • Further integration and efficiency improvement in the Refining segment with a focus on growing the biofuels business.
  • Capacity expansion, integrated production and investments in speciality products and recycling.
  • Major outlays on zero- and low-carbon energy.
  • Significant step-up of retail sales in the region based on the expanding non-fuel segment.
  • Sustainable growth of the upstream portfolio with a focus on natural gas assets.

The ORLEN Group has a sound and sustainable foundation for further growth until 2030.

Integrated refining

With integrated refining assets in three Central European countries, ca. 33 million tonnes of various crude oil grades processed every year, and annual biofuel output of approximately 0.3 million tonnes, the ORLEN Group is perfectly placed to further develop its refining business. Key initiatives to be undertaken over the period covered by the 2030 Strategy include continued efforts to improve refining efficiency and leverage synergies through further, deeper integration of the refining assets (also after the potential acquisition of Grupa LOTOS), as well as a substantial increase in investment spending on the production of biofuels, including 2nd generation biofuels.

Capacity increase and extended production chain in Petrochemicals

What underlies the position of the ORLEN Group’s Petrochemical business is its production integrated with the Refining segment, 40 petrochemical products sold to over 60 countries and a 16% share of speciality products in the mix. The next decade will see capacity expansion in olefins and other base products to foster further development in advanced products (such as phenol and aromatic derivatives). The ORLEN Group will also strengthen its position in polymers and extend the chain through compounding and masterbaches. The Group will be building its position in mechanical and chemical recycling as well as biomaterials.

Significant investment in zero- and low-carbon capacity in Energy

Already today, after taking control of the Energa Group, the ORLEN Group has over 3.2 GW of installed capacity and approximately 200,000 kilometres of power lines. Enerfy is one of the principal growth directions for the next decade. In the period covered the strategy until 2030, the ORLEN Group will focus on significant investments in zero- and low-carbon generation capacities. Within a decade, the ORLEN Group will become a leader in renewable energy with a strong capacity portfolio comprising offshore and onshore wind and solar PV assets. It will also further expand its CCGT generating capacity. New investments in network asset expansion and upgrades will be an important component of the strategy for Energy.

Expansion of the retail chain with a significantly extended offering

The Retail segment comprises more than 2,800 service stations, making up the largest retail chain in Central Europe. Over the next decade, the sales network will be significantly bolstered (both organically and non-organically) through entry into new markets across the region. New growth platforms will be developed and operations in alternative fuels will be expanded. Growth will also be driven by building a wide offering beyond service stations, with store and food service formats and our own network of parcel pick-up points and e-commerce services. Finally, an essential part of the strategy for the Retail segment is to continuously improve the service quality and develop an integrated offering for retail customers with a comprehensive range of products of the growing ORLEN Group.

Sustainable upstream production growth with a focus on natural gas assets

The Upstream segment currently has 174.0 million boe of 2P reserves in Canada and Poland, with average production at approximately 18 thousand boe/d. The next decade is set to see sustainable growth of the upstream portfolio, with a particular focus on gas fields and potential reconstruction of the existing portfolio of upstream assets after the merger with Grupa LOTOS. Increased competitiveness achieved through advances in operational excellence and digital solutions will be a driver of the segment’s growth.

R+D+I that create value

Pursuit of our strategic objectives will also require changes within the organisation. Over the next decade, the Group will spend approximately PLN 3bn (ca. 3% of its overall capex budget) on research, development and innovation, as a key area of its necessary transformation.The funds will be used to develop the Corporate Venture Capital fund and finance the activities of the ORLEN Research & Development Centre, among other projects. Another essential element will be the digital transformation, driving efficiency gains in production and distribution, helping mitigate the environmental footprint and fostering customer relations. We will put in place a new management model, tailored to the scale of the Group’s operations and taking into account the ongoing acquisition processes. The ORLEN Group will be an organisation relying on knowledge and versatile competences, investing in talent and human capital.

ORLEN Group Integrated Report

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