According to the company’s website press release on January 2, 2023, PKN ORLEN has closed the transaction to acquire a part of the business of Poland’s largest plastics manufacturer Basell Orlen Polyolefins, in which the Company holds an equity interest. The business involves the production and marketing of LDPE, as well as customer service in the Polish market. The transaction was cleared by the Polish and Dutch antitrust regulators. The acquired production capacity is 100 thousand tonnes per year, which means that PKN ORLEN, as Poland’s only producer of LDPE, will single-handedly cover about a third of the country’s overall demand for the plastic.
Low density polyethylene, or LDPE, is a fully recyclable product playing an important role in advancing the circular economy. It is a polymer commonly used to make consumer and industrial products, found in plastic films, bags, canisters, food packaging, as well as components of electronic devices, such as wires and cables.
“Keeping a close eye on the market environment, we can see that demand for petrochemical products is growing strongly across the globe. According to forecasts, the value of the petrochemicals and base plastics market is expected to double by 2030. This is a big chance for our Company. We want to capture the largest possible share of that promising business in order to drive fast profit growth. The acquisition we have just completed is opening up such opportunities. We are also looking into a project that would allow us to add another petrochemical product to our portfolio, solidifying our position as a leading producer in Europe. It is this business segment that is expected to generate half of our future profits from oil processing,” says Daniel Obajtek, CEO and President of the Management Board of PKN ORLEN.
Poland is the largest consumer of LDPE in Central Europe, forecast to account for nearly 35% of regional demand by 2025. At present, annual demand on the Polish market is about 300 thousand tonnes, compared with close to 800 thousand tonnes in Central Europe. The combined capacities of regional producers are estimated at 520 thousand tonnes. According to forecasts, by 2025 the LDPE market in Central Europe and in Poland will grow to about 890 thousand tonnes and 312 thousand tonnes, respectively, in which PKN ORLEN is bound to have a significant share.
In July 2022, PKN ORLEN signed a preliminary agreement to acquire a part of the assets of Basell Orlen Polyolefins. Once all antitrust approvals had been secured in Poland and the Netherlands, it was possible to close the transaction. Basell Orlen Polyolefins is a joint venture in which PKN ORLEN and LyondellBasell Industries each hold a 50% stake. After the spin-off of the LDPE production business from Basell Orlen Polyolefins, the company will focus on developing the PP technology, used to produce polypropylene and HDPE, high density polyethylene.
In response to steadily growing market demand, PKN ORLEN has undertaken conceptual work to expand the LDPE unit at the Płock Production Plant. PKN ORLEN has signed a licence and front-end engineering design agreement with the world leader in polymer technology LyondellBasell.
