According to the CEE TOP 500 report published by Coface, the ORLEN Group is one of the largest corporations in Central and Eastern Europe in terms of revenue. Its revenue for 2020 was in excess of PLN 86bn. In line with the new Strategy 2030 adopted in November 2020, our ambition is to be an active leader of energy transition in Poland and Central Europe.
The ORLEN Group’s core business consists in the production and distribution of electricity, crude oil processing, and production of fuels, petrochemical and chemical products, as well as sale of the Group’s products on the retail and wholesale markets. The Group is also engaged in hydrocarbon exploration, appraisal and production. The ORLEN Group is one of Poland's largest electricity distributors, operating an electricity grid with a total length of 191 thousand kilometres, covering approximately one-fourth of the territory of Poland. As at the end of 2020, it managed a network of 2,855 service stations. In 2020, PKN ORLEN acquired RUCH, Poland’s countrywide newsagent chain. Based on its 1,209 RUCH newsagents, the Company will expand its range of stores and catering services beyond service stations. As at the end of 2020, the Group had a network of 114 electric vehicle charging stations.
In 2020, the segments with the largest contribution to the ORLEN Group's consolidated EBITDA were Energy and Retail, each of which accounted for approximately 40% of the Group's total profit. The ORLEN Group companies' business also includes services: crude oil and fuel storage, transport, repair and maintenance services, laboratory, security, design, administrative, insurance and financial services.
A significant portion of the ORLEN Group’s fuel output is sold through the Group’s own retail network, which spans Poland, Germany, the Czech Republic, Slovakia and Lithuania, and is the largest chain of service stations in Central Europe. The ORLEN Group’s retail network is supported by wholesale and logistics infrastructure consisting of above- and underground storage tanks and long-distance pipelines.
For more key data on the operations of each segment in 2020, see ‘About the ORLEN Group’ .
ORLEN Group built a sound and sustainable foundation for further growth until 2030.
HOW WEWILL CHANGE
In response to the energy transition, ORLEN 2030 will evolve into a more sustainable multi-utility business.
Capex budget of PLN 40bn
Our transformation into a multi-utility powerhouse will be based around renewable energy and gas-fired energy, efficient low-emission refining and petrochemical production, upstream production of hydrocarbons, and an integrated retail offering. The Group will actively manage its business portfolio on a capex budget totalling PLN 140bn by 2030. Most of the capital expenditure will be allocated to segments that best fit in with our strategic ambitions. Around PLN 85bn will be allocated to new prospective growth areas, related mainly to renewable energy and advanced petrochemicals, while PLN 55bn will be spent to enhance the efficiency of the Group’s existing assets.
Carbon neutrality as an integral objective of the strategy
The ORLEN2030 strategy incorporates a commitment to our long-term objective of achieving a net zero carbon footprint by 2050. The Group’s 2030 CO2 reduction targets are 20% less emissions from its existing refining and petrochemical assets and 33% less from its energy business. The ORLEN2030 strategy is expected to drive a two-and-a-half-fold increase in EBITDA, to approximately PLN 26bn in 2030. The energy, petrochemical and refining segments will each deliver EBITDA of about PLN 7bn, while the retail and upstream segments will generate EBITDA of ca. PLN 5bn and PLN 1bn, respectively.
Energy as a key growth area
Our key growth area over the next decade will be energy, based mainly on renewables and supported by gas-fired sources. By 2030, the Group intends to achieve 2.5 GW of installed RES capacity, including 1.7 GW in offshore wind farms and 0.8 GW in onshore (wind power and solar PV) sources. We will also increase the installed capacity of our modern gas-fired power plants from today’s 1.1 GW to 2.0 GW. By 2030, up to 20% of gas used internally by the Group will be produced from its own reserves. The generation capacity will be supported by the Group’s extensive and modern distribution network, allowing it to reach a broad base of retail customers and generating a steady stream of profits. The Group will also build energy storage facilities on a pilot basis to optimise the costs of electricity distribution.
Investment into petrochemical capacities across speciality products and recycling
By 2030, around a half of our profits from crude oil processing will be derived from the petrochemical business. Expansion of the existing portfolio and entry into new business areas will help entrench the Group’s position as a leading petrochemical producer in Central Europe. PKN ORLEN is set to ramp up its capacities in olefins and other base products. It will also solidify its position in polymers – a business line with attractive growth potential – by extending the value chain and entering into compounding and concentrates. Concurrently, the share of speciality high-margin products (such as phenol and aromatic derivatives) in the Group’s portfolio will grow from 16% to approximately 25%. Recycling and biomaterials will be new branches of the petrochemical segment. By 2030, we will expand our recycling capacity (mainly in plastics) up to 0.4 million tonnes. We will also implement advanced circular economy technologies.
Maintaining the position of a leading regional refiner with major investment into biofuels
Until 2030, refining will remain an important segment of our business. Its transformation will be driven by energy efficiency improvements, increased crude conversion rates and integration with Grupa LOTOS, the Group’s major domestic peer. Expansion of the biofuel and hydrogen fuel output will be another vital driver. Within the coming decade, the Group will emerge as the region’s leading producer of biofuels (including 2G biofuels), with an annual capacity of 2m tonnes. As part of the ORLEN2030 strategy, work will be continued on the Group’s hydrogen hub projects in Włocławek and Płock, and steps will be taken to launch green hydrogen production.
Strengthening the retail network and expansion of the non-fuel segment
The ORLEN2030 strategic vision is to vigorously develop our retail arm, based on the network expansion and significant additions to the retail offering. By 2030, the number of service stations operating across Central Europe under the Polish brand ORLEN will be at least 3,500. The ORLEN retail network will be expanded mainly on foreign markets, with the share of foreign locations up from the current 37% to 45%. We will seek to enhance the availability of alternative fuels, by deploying at least 1,000 EV fast chargers and increasing the sales of hydrogen and LNG/CNG.Our broad, integrated offering of non-fuel products and services will keep attracting new customer groups. Based on the RUCH countrywide chain of newsagents, we will expand our store and food service formats beyond service stations, and will also develop our own network of parcel pick-up points and e-commerce services. Integration with the Energa Group will help ORLEN develop comprehensive service centres for both retail and business customers, encompassing fuel and electricity sales as well as distributed energy solutions. Delivery of the initiatives outlined in the ORLEN2030 strategy will drive a 50% increase in gross non-fuel margin relative to 2019.
New Group-wide management model and significant investment into R&D
Pursuit of the ORLEN2030 strategic objectives will also require changes within our 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. ORLEN2030 will be an organisation relying on knowledge and versatile competences, investing in talent and human capital.
Further growth of the ORLEN Group from stable financial foundations
The ORLEN2030 strategy is also designed to ensure stable financial foundations for the Group. Our value will be built by profitable investment projects, sustainable funding sources and a robust balance sheet. Having capped our net debt/EBITDA ratio at 2.5x, we will align the Group’s CAPEX plans with its current financing capabilities. We will rely on a balanced mix of funding sources with current cash flows supported by an additional debt capacity. We will also use alternative funding sources, such as project finance, EU funding for innovation and energy transition projects, and engaging with external partners who would co-fund selected projects. Projects aligned directly with the Group’s carbon neutrality goal will be partly financed through green and sustainable bonds issued on the European capital market.