Letter from the President of the Management Board

Ladies and Gentlemen, Dear Shareholders,

this past year was full of events that had a major impact on the fuel and energy sector and the global economy at large. As Europe and the rest of the world were recovering from the crisis created by the COVID-19 pandemic, it was clear the recovery was uneven. This was further compounded by the rising tensions across our eastern border, which in February 2022 escalated into a military conflict on a scale not seen in decades.

GRI Disclosures:


  • Goal 7
  • Goal 9
  • Goal 11
  • Goal 12
  • Goal 13


  • 102-14
  • 103-3

The situation we are facing today is unprecedented and requires fast and decisive yet well-thought-out action. We look at it as a new challenge we are ready to handle and overcome. Efficient management, correct diagnosis of the situation, and accurate definition of goals have made the ORLEN Group a leader of change and the inevitable energy transition.

We know how to achieve it for the benefit of the entire Polish economy. The conflict in Ukraine has provided a clear picture in this respect. But we need to redefine the energy mix and implement the changes so that all opportunities are fully harnessed. Strengthening Poland’s energy security and independence is key. We show others how to do it. For the past four years, we have been consistently building a strong, diversified multi-utility group with a rapidly growing low- and zero-carbon energy arm. Today, no one doubts we are headed in the right direction, and our decision to consolidate fuel and energy companies and increase green energy investment made perfect sense.

The merger of PKN ORLEN with Grupa LOTOS and PGNiG, to be finalised later this year, is inextricably linked to the energy security of Poland but also the entire region, including Lithuania, Latvia, Estonia, the Czech Republic, and Slovakia. The formation of a single multi-utility group with annual revenue in excess of PLN 200bn will make massive-scale investment projects possible. Also, it is a chance to significantly improve access to green energy, enhancing our energy independence. With this in mind, we are keeping up the pace and finalising the acquisitions. At the beginning of 2022, we selected four partners in the process of implementing the remedies related to the Grupa LOTOS acquisition. In June, we received the approval of the European Commission to merge PKN ORLEN and Grupa LOTOS. In March, the Office of Competition and Consumer Protection granted the application we filed last year for approval of the PGNiG acquisition.

The projects outlined in the ORLEN 2030 strategy also fit into our goal of ensuring energy security for Poland. Nuclear energy and renewable energy sources are among the key areas setting the course for the ORLEN Group going forward. We invest in onshore and offshore wind farms. We will be the first to build an offshore project in the Baltic Sea, which will be implemented together with Northland Power, our Canadian partner with whom we signed a cooperation agreement in 2021. We aim to commission Poland’s first offshore wind farm by the end of 2026. However, our plans go beyond that. Last year, we partnered with GE Renewable Energy to strengthen our competitive position in securing new licences for offshore wind farms.

We also engaged in the development of the micro modular reactor (MMR) and small modular reactor (SMR) technologies. Last year, we entered into a cooperation agreement with Synthos Green Energy, with which we applied to the Office of Competition and Consumer Protection for clearance to set up a joint venture – ORLEN Synthos Green Energy. In March 2022, our application was approved, which opens the way to developing and commercialising in Poland one of the most efficient, cost effective and safest energy generation technologies.

The projects we have in the pipeline require multi-million spending and we are well positioned to embark on this challenge. Strong diversification of our business has helped us build solid financial fundamentals, giving us a competitive edge. Despite the challenging economic conditions in 2021, the ORLEN Group earned a net profit of more than PLN 11bn, the highest figure on record, unmatched by any Polish company’s performance to date. Earnings before depreciation and amortisation net of the effect of crude price movements on the value of inventories and impairment losses were PLN 14.2bn. Record high operating results were delivered by the Petrochemicals segment, with LIFO-based EBITDA of PLN 4.3bn. Robust performance was once again reported in Power Generation and Refining, which posted LIFO-based EBITDA of PLN 3.7bn and PLN 3.6bn, respectively. As always, strong results were also delivered by our Retail and Upstream segments: PLN 2.9bn and PLN 387m, respectively.

We generated an operating cash flow of PLN 13.3 billion and maintained investment grade ratings: BBB- with a positive outlook from Fitch Ratings and Baa2 with a positive outlook from Moody’s. We consistently reduced our net debt, to PLN 12.3bn at the end of 2021 (down by almost PLN 1bn). We also issued corporate bonds with a total value of PLN 1bn, as well as EUR 500m worth of green eurobonds, the proceeds from which will be allocated to investments in renewables. This benchmark issue of green eurobonds, blazing a trail not only for PKN ORLEN but the entire Polish market, attracted huge investor interest. Additionally, we raised EUR 180m from the European Investment Bank for sustainability projects. Consistent implementation of the growth plans made it possible for us to pay dividend for 2020 in accordance with the strategy, at PLN 3.5 per share. We want to maintain this dividend payout ratio also for 2021, which is consistent with the Management Board’s recommendation.

With our robust and stable financial position, we were able to spend a record-high amount of PLN 9.9bn on investments last year. We designed and developed the largest projects in PKN’s history, which not only support our further dynamic growth, but also, importantly, create new jobs and enhance the economic climate.

We brought on stream Poland’s first and Europe’s largest green glycol production unit at the Trzebinia-based plant. A modern Research and Development Centre was opened in Płock. The construction of a visbreaking unit, which is of strategic importance to the Płock refinery, is proceeding on schedule. According to estimates, once complete, it will add PLN 400m or more to the Group’s annual EBITDA. Last year, we also started the largest petrochemical project in Europe, that is expansion of the Olefins Complex at the Płock production plant. It employs state-of-the-art technologies to ensure, among others, greater energy efficiency, including a 30% reduction of CO2 emissions per tonne of the product. The project is scheduled for completion in the first quarter of 2024, and production is to start in early 2025. The nitrogen fertilizer capacity expansion programme in Włocławek is also nearing completion. This initiative will increase the range of products for the Polish agricultural sector and create new jobs.

We place great emphasis on developing petrochemical production. 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 our position as a leading petrochemical producer in Central Europe. Achievement of this objective will be facilitated by collaboration with Saudi Aramco, our partner in the implementation of remedies related to the acquisition of Grupa LOTOS.

The agreement with Saudi Aramco also means increased oil supplies from non-Russian sources. Last year, we successfully diversified our sources of supply, thus significantly enhancing Poland’s energy security. We continued business relationships with oil producers from outside Europe, including Africa, the Persian Gulf and the US.

We also accelerated investing in technologies of the future, notably those based on hydrogen. Knowing the importance of hydrogen in the power sector, including in transport, we are consolidating our position as a leader in the alternative fuels market. Last year, we launched Hydrogen Eagle, a programme designed to develop an international chain of renewables-powered hydrogen hubs and to build more than 100 hydrogen refuelling stations. The Group deployed its first hydrogen hub in Trzebinia in 2021, with another one being developed in Włocławek and due to start producing green hydrogen in the second half of 2023. Two years later, we intend to launch a hub in Płock to make green hydrogen for industrial and transport applications. All of our planned hydrogen projects are included in the ORLEN Group’s Hydrogen Strategy announced at the beginning of 2022.

This year, we will continue efforts to ensure the ORLEN Group’s further growth and financial stability. I am positive that the hard work and commitment of all our employees, for which I am very grateful, will help us achieve new important goals. And this will translate into even better performance and benefits for the Shareholders.

Daniel Obajtek
President of the Management Board,
Chief Executive Officer

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