Very good year for PKN Orlen

In 2010, PKN ORLEN completed the planned investment and development projects. The Płock production plant saw the launch of a diesel oil hydrodesulphurisation unit (HON VII), which boosted the plant’s annual diesel oil production capacity by 1 million tonnes. Last year also saw the start-up of Europe’s most advanced PX/PTA unit (paraxylene/purified terephthalic acid), which as of Q2 2011 will enable the Company to expand its petrochemical product mix and ensure more efficient utilisation of gasoline fractions.

PKN ORLEN was also engaged in a number of projects in the upstream segment, and the group of potential partners and exploration sites came to include Ukraine. In addition, the Company made detailed preparations for the launch of the Włocławek power plant construction project. In December 2010, once the environmental impact assessment was completed, a final environmental permit for the project was obtained.

In the retail segment, PKN ORLEN focused its efforts on further increasing its market shares and network optimisation. A major success last year was the acquisition by ORLEN Deutschland of 56 stations from OMV, as a result of which the number of STAR service stations operating within ORLEN Deutschland’s network rose to 571.

The Company’s key operational goals for 2011 include in particular maintaining the crude oil throughput, processing efficiency, sales volumes and market shares at current levels in the context of strong competition and retail margin pressures. Cost cutting efforts will also be continued. The Company plans to implement a more comprehensive turnaround schedule compared with 2010. The schedule covers four major units at the Płock plant and provides for temporary shut-downs of the refineries in Lithuania and the Czech Republic.

In the petrochemical segment, PKN ORLEN will focus on meeting the throughput and sales targets on the new PX/PTA unit and on fulfilling deliveries under contracts for the supply of finished products to customers in Poland and abroad.

Given that the planned sale of the Company’s shareholding in Polkomtel is at an advanced stage, we believe that the transaction will be completed in the first half of 2011. Work on the potential sale of Anwil will also be continued. To obtain more free cash, the Company is looking into the possibility of selling another portion of mandatory crude stocks.

The year 2011 will witness intensive efforts to develop the new upstream and power segments. Exploration work and wells are being planned under all licences held by PKN ORLEN, both on the Baltic Shelf and in the provinces of Poznań (Sieraków) and Lublin. Furthermore, as part of the shale gas project, seismic surveys will be performed and sites for drilling boreholes will be selected (the first such borehole is expected to be drilled late this year). The Company is also well advanced with the work on the construction of a power plant in Włocławek, a project worth PLN 1.5bn. Once the grid connection approval and the essential environmental permit were obtained, the RFP process to select the general contractor commenced. The winner will be announced at the end of Q3 and beginning of Q4 2011. The construction work is to be launched in 2012.

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