DOWNSTREAM: PRODUCTION (REFINERIES)
Among the ORLEN Group’s major competitors in Central and Eastern Europe are:
- Grupa Lotos of Gdańsk − Poland’s second largest refinery;
- Mitteldeutschland refinery at Leuna/Spergau, member of the Total Group, located in south-eastern Germany about 150 kilometres from the Polish-German border, currently Germany’s most advanced refinery;
- PCK refinery in Schwedt, located north-west of Berlin, about 20 kilometres from the Polish-German border, owned by global oil companies (Shell, BP, Eni, Total and Rosneft);
- Slovnaft refinery, an integrated refining and petrochemical group with a leading position in the Slovak Republic, located near Bratislava, about 350 kilometres south of the Polish-Slovak border;
- Mozyr refinery, a leading refinery in Belarus.
Throughput capacities of ORLEN’s main CEE competitors [million tonnes per year]
Source: In-house analysis.
DOWNSTREAM – WHOLESALE OF PETROCHEMICAL PRODUCTS
Europe’s production capacities for high-density polyethylene (HDPE) and low-density polyethylene (LDPE) are currently at approximately 14,000 thousand tonnes per year. The largest polyethylene producer is Lyondell Basell Industries, with annual production capacities of approximately 2,170 thousand tonnes (including a 50% share in BOP, controlled jointly with PKN Orlen), the owner of polyethylene production assets in Germany, France and Poland. The runner-up is Sabic, with annual production capacities close to 1,590 thousand tonnes and asset base in Germany, the Netherlands and the UK. Third in the list is Ineos Olefins & Polymers Europe, capable of producing around 1,580 thousand tonnes per year and having assets in Belgium, France, Germany, Italy and Norway. Other major players include Total Petrochemicals, Borealis and ExxonMobil.
In the case of polypropylene, Europe’s annual production capacities are at around 11,500 thousand tonnes. The largest polypropylene producer is Lyondell Basell Industries, with annual production capacities of approximately 2,330 thousand tonnes (including a 50% share in BOP), the owner of polypropylene production assets in Germany, France, Italy, Spain, the UK and Poland. The runner-up is Borealis, capable of producing around 1,845 thousand tonnes of polypropylene per year and operating assets located in Belgium, Germany, Austria and Finland. Other major players include Total Petrochemicals with annual production capacities of approximately 1,430 thousand tonnes and assets in Belgium and France, as well as Sabic with 1,110 tonnes per year and asset base in the Netherlands and Germany. The total share of BOP and the Unipetrol Group in Europe’s polyethylene and polypropylene production capacities is approximately 4% each.
Europe’s PTA production in 2014 was about 2,551 thousand tonnes, while the nominal production capacity is 4,106 thousand tonnes per year. PTA in Europe is used primarily to produce PET granulate for the manufacturing of plastic food-grade bottles (around 87% of Europe’s production volume) and polyester fibres (around 5% of Europe’s production volume). European market is currently home to 7 PTA producers. 2014 saw the winding-up of Lotte Chemical UK’s production plant with the nominal production capacity of 525 thousand tonnes per year. Europe’s largest PTA producers are: BP Chembel NV of Belgium with nominal annual production capacity of 1,400 thousand tonnes, Artlant of Portugal capable of producing 700 thousand tonnes per year, and PKN ORLEN with annual production capacity of 600 thousand tonnes of PTA. In total, those three account for more than 69% of Europe’s nominal PTA production capacities. However, Artlant’s actual output in 2014 was considerably lower than its nameplate capacity due to long shut-down periods; the re-launch of production is scheduled for the third quarter of 2015. The ORLEN Group’s share of Europe’s nominal PTA production capacities in 2014 was 15%, and ORLEN was the only European producer having its own PTA production facilities fully integrated with paraxylene production. Apart from the revamping of Indorama Rotterdam’s PTA units scheduled for the end of 2015 and the beginning of 2016 (250 thousand tonnes per year), Europe’s planned investments in PTA production capacities will be mainly in Russia: OJSC TANECO (210 thousand tonnes per year – in 2017), Etana (750 thousand tonnes per year – in 2018) and GPT/UPC JV (600 thousand tonnes per year – in 2018). 2014 also saw the launch of new PET plants in Europe: JBF Belgium (390 thousand tonnes per year) and Lotte UK (385 thousand tonnes per year).
Europe’s nameplate PCV production capacities are 8,045 thousand tonnes per year. Leading European PVC producers include Ineos Chlor – Vinyls, SolVin and Kem One, holding 22%, 15% and 10% of Europe’s nominal production capacities, respectively. With annual capacity of 475 thousand tonnes, the estimated share of the ANWIL Group in Europe’s total production capacities amounts to approximately 5%.
Europe’s annual production capacities for ammonium nitrate are approximately 12,649 thousand tonnes. The product is used mainly as a fertilizer in agriculture, and its largest producer is Grupa Azoty, holding 18% of the market (according to Fertilizers Europe). Other major players include Yara and Azomures with market shares of, respectively, 15% and 9%. In terms of production capacities, the ANWIL Group, capable of producing 485 thousand tonnes of ammonium nitrate per year, ranks 9th, with a market share of 4%.
With a network of 2,692 service stations in the premium and economy segments, the ORLEN Group is the undisputed leader on the fuel market in Central and Eastern Europe. In Poland, our service stations operate under the ORLEN brand in the premium segment and under the BLISKA brand in the economy segment. In the Czech Republic, we use the Benzina Plus and Benzina brands, respectively, and in Lithuania − the ORLEN and Ventus brands. On the German market, our service stations operate mainly in the economy segment, using the STAR brand.
According to the Polish Organisation of Oil Industry and Trade (POPiHN), in 2014 there were more than 6.5 thousand service stations operating in Poland, and the ORLEN Group’s share of the total number of service stations grew by another 0.9 pp, to reach 27.3%. Our main competitors in Poland include foreign players such as Shell, BP, Statoil, and Lukoil, jointly holding 21.6% of service stations, as well as Grupa Lotos with a market share of 6.8%. The share of foreign companies and Grupa Lotos inched up by 0.4 pp and 0.3 pp, respectively.
Service station networks in Poland as at December 31st 2014
Source: In-house analysis based on POPIHN data.
The ORLEN Group’s share of Poland’s retail fuel market
Motorway Service Areas
Poland’s developing road system offers an opportunity for expanding the Group’s network with service stations build as part of service areas next to motorways and expressways. As at the end of 2014, 62 Motorway Service Areas operated in Poland. Of these, 23 belonged to the ORLEN Group, the undisputed leader with a 37% share in the total number of motorway and expressway service stations currently in operation.
Source: In-house analysis.
Germany has one of the largest and most mature retail fuel sales markets in Europe. STAR, managed by ORLEN Deutschland GmbH, is the largest service station network in the economy segment in this country (with 559 service stations currently in operation). In 2014, the ORLEN Group’s share of the German retail market for the first time exceeded 5.9%.
The ORLEN Group’s share of Germany’s retail fuel market
ORLEN Deutschland GmbH’s major competitors include international networks Aral, Shell, Esso, Total, and JET.
Service station networks in Germany as at December 31st 2014
Source: Analysis by ORLEN Deutschland.
The ORLEN Group manages the largest service station network in the Czech Republic (339 locations). Successful operations of Benzina contributed to the higher share of the Group in the Czech retail market, which grew from around 12.2% to 15.0% of the total number of service stations.
Service station networks in the Czech Republic as at December 31st 2014
Source: Analysis by Benzina.
The ORLEN Group’s share of the Czech retail fuel market
On the Czech market, the second largest network of service stations is operated by the Hungarian MOL Group comprising Slovnaft, Lukoil, Agip, and Pap Oil networks, and other important market players include OMV, Shell, and Euro Oil.
With 26 service stations currently in operation, the ORLEN Group held 3.6% of Lithuania’s retail market as at the end of 2014.
The ORLEN Group’s share of the Lithuanian retail fuel market
The ORLEN Group’s main competitors in that segment in Lithuania are Lukoil, Statoil, and Neste.
Service station networks in Lithuania as at December 31st 2014
In 2009−2012, unconventional hydrocarbons exploration, focusing especially on shale gas, developed rapidly in Poland. 2012 saw the peak of exploration activities, with more than 20 E&P companies operating on the market and 24 exploration wells drilled within just one year.
According to data available as at December 31st 2014, there were 146 valid and effective licences issued by the Minister of the Environment for the exploration and/or appraisal of gas and oil deposits in Poland. Based on the Ministry of the Environment’s information, as at December 31st 2014, 67 exploration wells had been drilled in search for shale gas by gas and oil exploration and appraisal companies operating in Poland, including ORLEN Upstream, Lane Energy, PGNiG, Marathon Oil, BNK Petroleum, San Leon Energy, Talisman Energy, Chevron Corp., ENI, ExxonMobil, and Wisent Oil & Gas/Petrolinvest. A number of operators terminated their exploration projects in Poland following a revision of their strategies or decision to concentrate on more promising exploration plays elsewhere in the world.
Around the same time, foreign E&P companies across Europe also decided to withdraw from exploration projects in other European countries (in Lithuania, Romania, Bulgaria, Hungary, Sweden) or put their operations on hold (in Ukraine). Considering the outcome of the exploration and appraisal work performed to date, as well as the risk profile of shale gas projects in the context of low crude oil prices, we can expect that E&P companies will seek to further reduce their exposure to most cost-intensive and high-risk exploration projects as much as possible.