Orlen CEO on investment in refinery: It is a trap set for the management board

Orlen CEO Ireneusz Fąfara announced during a press conference on Thursday that a decision on the future of the investment in the Olefiny III complex will be made before the publication of the updated strategy, planned for December 2024. So far, Orlen has invested around PLN 12 billion in this project.

Management trap

Fąfara stressed that Orlen is still analyzing the future of the investment, but needs more time for a final decision. According to him, starting construction, the cost of which has risen to PLN 25 billion, was ill-advised and is now a “trap” left by the previous management.

In June 2023, the then management of Orlen announced that the cost of building the complex would be around PLN 25 billion. The cost increase was justified by, among other things, the war in Ukraine, sanctions, rising prices of materials, the disruption of supply chains and limited availability of resources.

Costs are rising

In March 2024, the new Orlen management board, after conducting impairment tests of assets in the petrochemical segment, decided to include impairment losses in the amount of PLN 10.2 billion in the financial statements for 2023 due to the high costs of the investment in Olefiny III.

President Fąfara noted that three scenarios regarding the future of the investment are being considered: continuation, suspension or temporary suspension. “The decision we will make will be rational and safe,” he assured.

Orlen’s results

According to the financial report published on Wednesday, in the first half of 2024 Orlen achieved revenues of PLN 151.8 billion, net profit of almost PLN 2.8 billion and EBITDA of almost PLN 12.3 billion.

The company reported that despite growing macroeconomic pressure, the Orlen Group ended the second quarter with an operating profit of EBITDA LIFO (excluding the effect of regulations) of PLN 11.3 billion, which represents an increase of 8 percent year on year.