ORLEN Considers Optimization or Suspension of the Olefin III Project Amid Rising Costs and Delays

ORLEN is currently analyzing only two options regarding the expansion of the Olefin III Complex, which is being carried out at the Production Plant in Płock – optimizing the project, stopping the project or temporarily suspending it. The conclusions from the audits and verification of business assumptions of the Olefin III investment in light of the results of petrochemical market analysis, macroeconomic situation, and project profitability do not justify continuing this investment in its current scope. Realizing the scope and cost of this variant indicates an increase in investment expenditures and project-related costs to approx. PLN 45-51 billion and a delay in completion by another 3 years.

– The investment in its current scope, taking into account its constantly increasing costs, a distant implementation date and the lack of promising prospects for the petrochemical sector in Europe, has no business justification and cannot be continued. We have committed that our business decisions will be well thought out, rational and transparent. Therefore, we have thoroughly analyzed all scenarios for this investment, particularly the variant left by the previous management and drawn conclusions from them– says Ireneusz Fąfara, President of the ORLEN Management Board.

With the support of external advisers, the group is currently analyzing two scenarios regarding the Olefin III investment. These are: optimization of the project in terms of production capacity and use of current units, or stopping the project in its current form or its temporary, partial suspension.

The concept of continuing the project in its current scope will no longer be subject to further analysis. Estimates from renowned, external advisers indicated that this scenario would require an increase in investment expenditures and project costs to PLN 45-51 billion, taking into account the necessary infrastructure and contractual, macroeconomic, and market forecasts.

It should be emphasized that the outlays planned at the investment decision stage did not include the full scope of the accompanying infrastructure necessary for the functioning of the complex. They were also not properly estimated later, when in June 2023 the projected cost of the Olefin III investment rose more than three times to PLN 25 billion, and the implementation date was delayed by three years, despite the fact that the high-margin petrochemical product line, such as phenol and aromatic derivatives, was eliminated from the project.