Poland’s Orlen denies reports that sale of Lotos assets to Saudi Aramco was below market value

Warsaw-listed Polish fuels and energy giant Orlen last week denied charges that it had sold assets in peer Lotos to the Saudi Arabian giant Saudi Aramco at below market value.

Polish media uncovered a report by the state audit body NIK, which said that Orlen’s divestment of some Lotos assets following a merger with the company was carried out markedly below Lotos’ market value. 

According to TVN24, a US-owned broadcaster, NIK said in its report that the divestment brought Orlen just PLN2.2bn (€500mn) instead of PLN9.4bn that was the value of the assets in Lotos at the time of the merger, completed in 2022.

The report is not public and NIK has not commented on the revelations by TVN24. NIK began working on the report in 2022, having complained in the meantime that Orlen obstructed the work. 

Orlen denies accusations contained in the report by TVN24 although it did not deny the existence of a report by NIK. 

“The sale of a portion of Lotos' assets, as a result of implementing remedial measures prescribed by the European Commission, was conducted in line with the market valuation of these assets, fully complying with legal provisions and under the supervision of state authorities,” the company’s management board said in a statement.

“[NIK’s] allegations regarding the Orlen-Lotos merger are unfounded," Orlen also said.

The Commission cleared the takeover in 2021 pending Orlen’s meeting a list of conditions, such as divesting a 30% stake in the Lotos refinery in Gdansk as well as the sale of 80% of its fuel stations, and offloading both Orlen and Lotos fuel terminals to a third party.

Orlen sold the stake in the Gdansk refinery to Saudi Aramco, which also bought Lotos’ wholesale subsidiaries Lotos SPV 1 and Lotos-Air BP Polska. 

Hungary’s state-controlled oil and gas firm MOL bought Lotos’ retail operations, while Polish company Unimot bought fuel terminals as well as two asphalt production plants.

Poland’s recently sworn-in government pledged to look closely at the Orlen-Lotos merger.

"We are investigating these matters and we will draw legal and organisational consequences,” Prime Minister Donald Tusk told reporters on January 24.

Meanwhile, sweeping changes in Orlen’s management board are looming, as the company’s extraordinary shareholders’ meeting is due on February 6, According to the meeting’s agenda, the State Treasury, which holds a 49.9% stake in the company, will propose changes in Orlen’s supervisory board, a typical move before replacing executives.