Aramco, PKN Orlen seal deal for Gdańsk refinery partnership

Nov. 30, 2022
Saudi Aramco has completed its purchase of a joint ownership stake in PKN Orlen's 10.5-million tonnes/year refining complex in Gdańsk, Poland.

Saudi Aramco has completed its purchase of a joint ownership stake in Polski Koncern Naftowy SA’s (PKN Orlen) 10.5-million tonnes/year (tpy; 210,000-b/d) refining complex in Gdańsk, Poland.

As part of the transaction finalized on Nov. 30, Aramco acquired a 30% equity interest in the Gdańsk refinery and a 100% stake in the site’s associated wholesale business, the joint-venture partners said in separate releases.

PKN Orlen will retain a 70% stake in Gdańsk and remain the refinery’s operator.

While the parties did not immediately reveal the value of Aramco’s purchase price for its stake in Gdańsk, PKN Orlen said in a June 2, 2022, presentation Aramco’s acquisition would amount to about $1.15 billion, or nearly $256 million.

Alongside finalizing the refinery partnership, the companies also signed an agreement under which PKN Orlen, Aramco, and Aramco’s majority-held Saudi Arabian Basic Industries Corp. (Sabic) will assess the technical and economic feasibility of jointly developing a potential petrochemical project at Gdańsk that—first revealed in July 2022—would involve construction of an integrated chemical complex at the refinery consisting of a large-scale mixed-feed steam cracker and downstream derivatives units.

The companies additionally finalized a crude oil sales agreement under which Aramco will supply about 45% of PKN Orlen’s total crude oil feedstock requirements for its overall refining system that—following the operator’s merger with Grupa Lotos in August 2022—includes seven refineries with a combined crude processing capacity of 46 million tpy.

On Jan. 12, 2022, Mohammed Al-Qahtani—senior vice-president of Aramco’s downstream business—said the then-proposed supply agreement would involve delivery of about 400,000 b/d of Arabian crude into PKN Orlen’s system.

Ongoing partnership

The late-November transactions between the companies follows PKN Orlen’s earlier announcements of proposed future cooperation agreements with Aramco, all of which were contingent upon official completion of the PKN Orlen-Grupa Lotos merger.

In a June presentation to investors, PKN Orlen confirmed a series of planned undertakings with Aramco that—in addition to the Gdańsk refining-petrochemical plans and crude supply agreements—were to include:

  • Implementation of Aramco technology to optimize refining and logistics at PKN Orlen manufacturing sites.
  • Implementation of Aramco and Sabic technologies at PKN Orlen refineries to achieve deeper conversion of crude volumes required for petrochemical operations.
  • Additional, unidentified investments with Aramco into petrochemical production.
  • Partnership with Aramco on projects involving production and transportation of green hydrogen and ammonia, as well as reduction of carbon footprints at refining and petrochemical sites.
  • Increased partnership on technology research and development activities.

In 2016, Aramco began delivering PKN Orlen crude oil supplies under the operator’s first long-term supply agreement with a Mideast Gulf producer, Al-Qahtani said.