The updated strategy of Orlen which will be announced in the second half of the year, among others, will refer to the commencement of exploitation.

 

“Next year we will definitely commence exploitation operations”, announces Mr. Jacek Krawiec, President of Orlen. Where the company from Płock will purchase oil deposits will be known only after it gets the money from the sale of the shares in Polkomtel. Orlen owns 24.4 % of the shares of the Plus mobile telephone operator. The value of this shareholding is estimated at PLN 3.9-44 billion. “We are considering various scenarios, for example the acquisition of a company which is already engaged in exploitation. We are monitoring the market all the time and we are looking for opportunities”, declares the head of Orlen. And he adds that the management board attaches a lot of importance to the explorations of shale gas. Exactly such explorations are a very important element of the updated strategy of the corporation from Płock. Mr. Krawiec states that intense work on this document has been going on for some time. “The strategy will be announced in the second half of the year “, he states. This will not be the first strategy of Orlen to discuss the exploitation of oil.

 

The word “upstream” cropped up in the program document of the company from Płock already six years ago when Igor Chalupec was the President. It was assumed in the Orlen strategy announced in the beginning of February 2005 that already in 2007 it would be exploiting 0.4 million ton of the resource and thereafter it would increase the volume to reach 4.3 million ton of oil per annum in 2015. The corporation was to acquire shares in the concessions abroad, mainly in Kazakhstan, Iraq and Russia. Over six years ago, Orlen estimated that outlays required for the implementation of this program would amount at the first stage, i.e. between 2007 and 2009, to approx. US$ 130 million per annum, and for another five years – almost US$ 440 million per year. Mr. Kamil Kliszcz, analyst of DI BRE Bank, believes that the Orlen funds at that time were significantly diminished due to the acquisitions made (the Czech Unipetrol, Lithuanian Możejki) and the borrowing of subsequent loans for exploitation projects just before the crisis could have ended with significant problems for the company. Anyway, Mr. Chałupec had not managed to proceed with such plans. He was dismissed in January 2007, and the new management board of Orlen, headed by Piotr Kownacki, a few months later modified the strategy, minimizing influence on exploitation.  The focus was on organic growth and it seems to be a very good assumption”, assesses Mr. Konrad Anuszkiewicz, analyst of Ipopema Securities.

 

However, he adds that on long-term basis the decision for Orlen not to develop the upstream, was not good. “It is enough to compare the development of the Polish corporation and MOL or OMV. “At the beginning of the century they were comparable companies”, notes the analyst of Ipopema Securities. “Only the acquisition may be crucial for Orlen in this area. It may be concluded from what Mr. Krawiec says that the important if not the most important part of the exploitation plans is related with shale gas. “It is a very appropriate direction of the development”, says Tomasz Chmal, expert from the Sobieski Institute. “Orlen has already taken a good position. Focusing on exploitation domestically is also positively assessed by Mr. Kliszcz. “The political risk in Poland is low, Orlen also knows administrative environment and knows well how to handle it”, says the analyst of DI BRE Bank.  In the opinion of Mr. Chmal it is worth while to combine forces and the company from Płock should look for partners. “The giants around the world do it, so why Orlen should not do it as well?”, says the expert. Anyway, PKN goes exactly in this direction. “Only the co-operation with the experienced partner in the exploration and exploitation of the shale gas deposits will enable the access to the required know-how which is not available not only in Poland but also in Europe. And such partners which may also share the risk with us exist only in North America”, says Mr. Krawiec

 

Source: Parkiet, on page: 1, 2011-05-18, by: Bartłomiej Mayer