The European Commission granted conditional approval last week for the merger of PKN Orlen and Lotos, Poland’s two main oil companies and lubricant suppliers.
The approval depends on full compliance with a number of commitments offered by Orlen, including a promise not to violate anti-monopoly rules in the fuels and lubricants industry and other markets, the EC said in a news release.
“Access to fuels [and lubricants] at competitive prices is important for businesses and consumers alike …. PKN Orlen assures 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 in Poland and the Czech Republic,” said Margarathe Vestager, vice-president in charge of the EU’s competition policy.
Orlen said the negotiated conditions guarantee the possibility of creating a larger international company not only in the energy sector, but in areas such as mining, production, logistics, retail and wholesale. The company expressed confidence that the merger will strengthen its position in price negotiations with outside contractors coming from the United States, the Middle East and Russia and ensure energy security in Poland, the Czech Republic, Estonia, Lithuania, Latvia and Slovakia.
“It will ensure fuel and energy security of Poland and the countries of Central and Eastern Europe as well as optimization of logistics in the distribution of finished products. All of this will translate into price stability for customers,” Orlen said in its July 14 new release.
Among the commitments offered by Orlen to get clearance by the commission are divestment of a 30% stake in Lotos’ refinery in Gdansk, divestment of nine fuel storage depots, divestment of 389 filling stations, or approximately 80 percent of the Lotos network, and to supply these stations and depots with finished products such as fuels and lubricants, and others.
“This is a historic moment for both concerns and the Polish economy,” said Daniel Obajtek, head of the management board of PKN Orlen. “By combining the potential of both companies, we are able to meet the challenges of the energy transformation, because a low-carbon economy requires investments of billions.”
According to the letter of intent to purchase, state-run Orlen is ready to buy at least 53 percent of Lotos, in which Poland holds a 53.19 percent stake.
In February 2018, Orlen oil first expressed its intention to acquire competitor Lotos. The merger would include Lotos’ petrochemicals business, including its network of fuel stations and lubricants marketing operations.
Poland consumed 226,000 metric tons of lubricants in 2019, according to the Polish Petroleum Industry and Trade Organization.