The European Commission has approved PKN Orlen’s acquisition of Grupa Lotos, “subject to conditions and extensive commitments to ensure Poland’s fuels markets remains open and competitive”.

PKN Orlen is a Polish integrated oil, gas and petrochemicals company, which owns one of only two refineries in Poland, as well as refineries in Lithuania and Czech Republic. Grupa Lotos is the Polish integrated oil and gas company that owns Poland’s other refinery.

The EU approval came after the Commission conducted an in-depth investigation, during which it raised a number of concerns about impacts of the proposed Orlen-Lotos combination on the wholesale and retail supply of fuels in Poland.

Orlen offered the following remedies and commitments to address those concerns:

“- To divest a 30% stake in Lotos’ refinery accompanied by strong governance rights, with the purchaser having the right to about half of the refinery’s diesel and gasoline production, while also giving the purchaser access to important storage and logistics infrastructure.

– To divest nine fuel storage depots to an independent logistics operator, and to build a new jet fuel import terminal in the Polish city of Szczecin, which would be transferred to the independent logistics operator on completion.

– To release most of the capacity booked by Lotos at independent storage depots, including the capacity booked at Poland’s biggest terminal for the import of fuels by sea.

– To divest 389 retail stations in Poland, amounting to about 80% of the Lotos network, and to supply these with motor fuels.

– To sell Lotos’s 50% stake in the jet fuel-marketing joint venture that it has with BP, to continue to supply the joint venture, and to give the joint venture access to storage at two airports in Poland.

– To make available up to 80,000 tonnes/year of jet fuel to competitors in Czechia via an annual open tender;

– To divest two bitumen production plants in Poland, and to supply the purchaser with up to 500,000 tonnes/year of bitumen/heavy residues.”

Commission Executive Vice President Margrethe Vestager said: “We can approve the proposed acquisition of Lotos by PKN Orlen because the extensive commitments offered by PKN Orlen will ensure that the relevant Polish markets remain open and competitive and that the merger will not lead to higher prices or less choice for fuels and related products for businesses and consumers in Poland and Czechia.”

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20th July 2020