Consolidation of giants attracts attention

The answer to tough times is a strong multi-energy conglomerate – these are the conclusions of a discussion of mergers in the energy industry.

Publikacja: 08.09.2022 20:16

Participants in the debate “A strong multi-energy conglomerate ORLEN as an impulse to accelerate the

Participants in the debate “A strong multi-energy conglomerate ORLEN as an impulse to accelerate the energy transition”

Foto: materiały prasowe

The 31st Economic Forum is facing energy challenges like never before. This is a consequence of Russia’s actions and the war in Ukraine.

In Poland, energy issues include the challenges and consequences of the emergence of a multi-energy conglomerate with PKN Orlen at its centre. During the discussion in Karpacz on this topic, another theme also emerged, i.e. how the new corporation will face not only the challenges of the merger, but also the energy transition.

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– Mergers are expected to result in the building of a natural hedge, an adequate exposure of capital to carry out the energy transition. Zero-emission doesn’t only apply to the energy sector, but is also needed in petrochemical industry and refineries. Reducing carbon emissions improves the competitiveness of our products. Without it, there will be no strong company and no strong economy, said Daniel Obajtek, CEO of PKN Orlen, in a speech before the discussion.

Merger and a crisis

Iwona Waksmundzka-Olejniczak, president of PGNiG, spoke about the consequences of the merger between PKN Orlen and PGNiG in the context of the current European gas crisis during the debate.

– Let’s take an example from European entities, such as Total, Shell, and BP. These entities have been diversifying their revenue sources for many years. The current situation is unpredictable and evolving. It requires a strong entity that has something to offer. And which has the potential to invest, to cope in these difficult times. PGNiG’s role is to ensure that domestic gas demand is met, that’s what all the company’s efforts are currently directed at – energy security. A strong entity also has a strong negotiating position, noted CEO of PGNiG.

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As she emphasised, the issue in this context is not only the price of raw materials, but also their availability. She also noted that this merger offers new opportunities in terms of raw materials and their availability.

– Many foreign partners have a positive perception of customers who are not only able to receive gas feedstock, but also oil feedstock. That’s why I’m once again returning to building a large, multi-energy conglomerate that is capable of achieving its long-term goals in these difficult circumstances. These include transition aims, bringing about a large product mix, the development of low-carbon projects, accentuated Iwona Waksmundzka-Olejniczak during the discussion.

She also noted the importance of mergers precisely in the current difficult times.

– In the current environment, this merged entity will strengthen the country’s energy security. All these activities are aimed at putting Poland in a better negotiating position and in a better position when it comes to securing raw materials, said Iwona Waksmundzka-Olejniczak.

Benefits of consolidation

The debate in Karpacz revolved around the various consequences of creating a multi-energy conglomerate (both in terms of PKN Orlen and PGNiG, as well as Lotos Group) – for example, financial issues, integration of organisational cultures, and future prospects.

The panellists also considered the implications of the merger in terms of gas availability in the coming years.

– Other European countries have built security by consolidating their assets around a single entity. This strong entity, so strongly diversified, is the basis for building security. We talked about the strategies of the entities that are merging. They must allow them to survive, but they must also look to the future, to the long term. We mentioned large development funds for innovative, zero-emission investments. The upstream, mining strategy is also very important. The merged PGNiG entity has a strong domestic mining segment, but above all, it is strong when it comes to overseas, stressed the CEO of PGNiG.

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– We refer to Norway – assets that are expanding year on year, thus building the position of our Norwegian company, which is becoming a partner for further expansion and asset development. As for Orlen, after the acquisition of Lotos, the assets in Norway will also be consolidated into one upstream area. We are talking about the synergy and benefits of the merger. For example, there are assets in Canada that are in PKN Orlen’s portfolio, and there are PGNiG’s foreign concessions, such as in the United Arab Emirates, Libya, or Ukraine. A new joint strategy focused on optimisation and expansion is the answer, in part, to the question of how we must secure ourselves in the long term, argued Iwona Waksmundzka-Olejniczak.

In conclusion, Maciej Małecki, secretary of state at the Ministry of State Assets, spoke about the context of the whole situation. – We were aware that Russia, after the collapse of the USSR, only briefly exchanged tanks for oil and gas pipelines. This was most explicitly stated by Lech Kaczyński. But the entire PiS (Law and Justice) party community, formerly PC, put Poland’s independence from Russian energy supplies at the centre, he stressed.

The report, “Technologies for Energy,”prepared by the Startup Poland Foundation in cooperation with PGNiG Ventures and Microsoft, was also presented in Karpacz. The authors point out that the energy transition will not happen without a digital revolution.

The discussion accompanying the presentation of the report, attended by representatives from the scientific community and representatives of business, referred, among other things, to such trends as the change of philosophy in energy production, cyber security in the energy sector or ways of developing energy innovations, especially on issues, such as green hydrogen or energy storage.

rp.pl

The 31st Economic Forum is facing energy challenges like never before. This is a consequence of Russia’s actions and the war in Ukraine.

In Poland, energy issues include the challenges and consequences of the emergence of a multi-energy conglomerate with PKN Orlen at its centre. During the discussion in Karpacz on this topic, another theme also emerged, i.e. how the new corporation will face not only the challenges of the merger, but also the energy transition.

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