Opportunities

Equally important for our business are the regulations and customers’ expectations concerning   the use of bio-derived components in refined and petrochemical products and the digitalisation of production, which helps to optimise plant operations.

We identify trends that will significantly change the fuel industry in the 2030+ perspective.

Global changes, which have a growing, yet unpredictable impact on the world around us, have been gathering pace in recent years. To respond to those changes, the ORLEN Group is consistently adapting its business model across all segments, focusing on:

With integrated production assets in three Central European countries, over 30 million tonnes of various crude oil types processed every year, and a portfolio of more than 50 refined and petrochemical products, the ORLEN Group is perfectly placed to further expand its Downstream business.

Key activities in the Downstream segment over the period covered by the 2019−2022 strategy are aimed at ensuring security of feedstock supplies, further improvement of the operational excellence, and strengthening of the Group’s market position.

In the area of feedstock supply security, the ORLEN Group seeks to further diversify its oil supply sources, secure natural gas supplies and build competitive advantage based on low-carbon energy. The Group’s refineries in Poland, the Czech Republic and Lithuania are continuing their efforts to improve effectiveness, capture synergies through greater integration, and increase flexibility in response to market and regulatory challenges. Staying in the lead on home markets (e.g. by expanding the product range), implementation of an operational programme for biofuels (construction of production facilities, operational adjustments and development of R&D projects) and investment in extending the petrochemical value chain are the pillars for the reinforcement of the ORLEN Group’s market position.

The growth drivers in the Retail segment will be the modern service station chain, ensuring unique buying experience, and further operational excellence improvement.

PKN ORLEN is expanding its network of company-owned and franchise-operated service stations. The Group also plans to drive store and food sales and further upgrade its facilities, and is preparing to launch alternative fuel sales. In Poland, a charging stations project is being implemented, which is expected to enable electric vehicle drivers to cross the whole country by major communication routes. About 39 charging stations were put into operation by the end of 2019. A total of 150 locations have been selected along transit routes and in cities where charging stations are to be constructed by the end of 2021.

By undertaking a number of initiatives, the Retail segment is being transformed to provide customers with unique purchasing experience. We are launching new products and services and developing customer service channels by leveraging our competitive advantages and business experience (large and dense network of service stations and a sizeable customer base). In the coming years, we intend to further develop the upgraded Stop Cafe 2.0 food and beverage outlets. At the end of 2019, there were more than 558 in operation, and the concept was gaining popularity among customers. Tailored and flexible offering (based on big data) and development of the loyalty scheme towards e-commerce will help increase customer satisfaction. PKN ORLEN also seeks to retain its leading position in the home markets and enhance operational excellence by ensuring optimal management of its product range, food offering and services, as well as to improve cost efficiency, customer service processes and station management.

Growth of the Upstream segment has helped us build an asset portfolio which may be further developed. In previous years, PKN ORLEN took a number of steps to increase its production potential in Poland (acquisition of two licences from Deutsche Erdoel AG, entering into a joint operating agreement with PGNiG, securing new licences from the Ministry of Environment, and acquisition of FX Energy) and Canada (acquisition of the first Canadian subsidiary TriOil Resources, followed by two other transactions: purchase of Birchill Exploration and Kicking Horse Energy). In 2019, the Group reported hydrocarbon production in excess of 18.2 thousand boe/day and 2P reserves of 197.4 mboe, having built assets that facilitate an effective, further increase in output and a constant improvement of the effectiveness of expenditures incurred.

Under the current 2019−2022 strategy, the ORLEN Group intends to build value in the Upstream segment through cautious continuation of the current efforts, i.e. increasing production in Poland and Canada and further improvement of operational excellence and financial strength. The ORLEN Group will closely watch and flexibly respond to developments in the oil and gas market. Consistent improvement of key performance indicators (e.g. better well economics, optimised scope of work) and synergies within the segment in Poland and Canada (e.g. transfer of know-how from Canada, one of the most technologically advanced oil and gas markets) are key elements for the operational excellence improvement in the Upstream business.

The ORLEN Group’s innovation management model brings together all aspects of the Group’s strategy and the innovations themselves are understood to mean much more than development and implementation of new products or services. We pay attention to product, process and sales innovations. Projects of crucial importance are those relating to our current value chain. Because of the role of intellectual capital in modern economy, we put strong focus on advancement of staff skills and competence. We consistently build our team of experts, especially in the area of R&D, and develop a system to support our leaders. In addition, as part of the strategic development directions we chose to follow, we decided to create a strategic research agenda, deploy innovation acquisition tools (accelerator and CVC fund) and begin closer cooperation with startups.

The innovation strategy relies on external and internal innovations supported with an advanced management model. To stimulate external innovation, the ORLEN Group carries out projects facilitating cooperation as part of an external ecosystem of innovations, successful application of state-of-the-art commercial solutions and use of special tools for project implementation. Internal innovations mean streamlining of the technological and organisational processes, developing the portfolio of R&D projects, and tapping synergies within the ORLEN Group. PKN ORLEN is consistently pursuing its R&D strategy through the construction of a Research and Development Centre, expected to serve as a a platform for collaboration with the scientific and business communities.

The ORLEN Group supports a culture of innovation to fully benefit from internal and external innovations. Innovation is promoted as the desired attitude across the organisation, and the dedicated decision-making process for innovative projects ensures ability to flexibly respond to market needs. What is more, in 2019 projects were under way to develop a knowledge-based organisation and unleash the internal potential in order to foster culture of innovation. Examples include the continued in-house programme to support innovation among employees, intended to encourage our staff to put forward their ideas and to enable identification of highly-innovative solutions (ORLEN Insight – a knowledge-sharing platform, Opportunities Market – a project platform, an in-house platform ORLEN Idea, and a competition for the most innovative project of the year).