Capitals:

Summary of strategy implementation

Summary of Strategy implementation in 2015

Summary of Strategy Implementation in 2015
2) Before impairment losses on non-current assets. In 2015, total impairment losses on non-current assets amounted to PLN (993)m and included primarily impairment losses of PLN (429)m on the ORLEN Upstream Group’s exploration assets in Poland, recognised in Q2 2015, impairment losses of PLN (93)m on the Unipetrol Group’s petrochemical assets, recognised in Q3 2015 due to a breakdown of the ethylene unit in August 2015, as well as impairment losses of PLN (423)m on production assets in Canada, recognised in Q4 2015.

Strategy implementation by segment

Strategy implementation by segment
3) Before impairment losses on non-current assets of PLN (136)m recognised due to a breakdown of the ethylene unit at the Unipetrol Group of PLN (93)m, described above.

Downstream

In the Downstream segment (refining, petrochemicals, power generation), value creation is achieved through extension of the integrated value chain, consistent development of the product portfolio, and increase in the conversion ratio. In this area of operations, in 2015 Unipetrol signed a contract for the construction of a new polyethylene unit (PE3) at the Litvínov plant in the Czech Republic; the new unit will be one of Europe’s most advanced facilities of this kind. PKN ORLEN continued to pursue two large power generation projects: completion of the construction of the 463 MWe CCGT plant in Włocławek and launch of the construction of the 596 MWe CCGT unit in Płock, both aimed to bring benefits from industrial cogeneration.

PKN ORLEN also makes consistent efforts to improve key efficiency indicators, optimise the organisational structure and restructure assets in order to ensure operational excellence of the segment. Steps taken in 2015 in this area included upgrade of the fractional distillation unit DRW IV, bringing the CHP plant in Płock into compliance with the environmental standards applicable as of the beginning of 2016, and full implementation of a four-shift work schedule.

As part of its strategy, PKN ORLEN has launched Poland’s first open competition to find innovative solutions for improving the energy efficiency of production processes (utilisation of low-temperature heat).

Value creation initiatives undertaken in the Downstream segment helped achieve LIFO-based EBITDA of PLN 7.8bn in 2015, with capex of PLN 2.2bn allocated to the segment.

Refining capacity utilisation [%]1)

 

Olefins production capacity utilisation [%]1)

 

Decrease caused by breakdown of the ethylene unit at the Unipetrol Group in August 2015.

1) Refining capacity utilisation and olefins production capacity utilisation are presented as the 2016–2017 average to offset the impact of one-off events, including longer maintenance shutdowns.

Share of the Polish fuel market [%]

 

LIFO-BASED EBITDA [PLNbn]

 

*) Strategic goal for 2014-2017

Retail

Value creation in the Retail segment is achieved through the development of the network of modern CODO service stations, development of the DOFO channel, as well as growth in fuel sales in the Group’s home markets (Poland, the Czech Republic, Lithuania, Germany) and higher non-fuel sales. As at the end of 2015, the ORLEN Group operated a network of 2, 679 service stations, which in the Retail segment posted a 2.7% year-on-year increase in sales volume.

In the Retail segment, PKN ORLEN continues to introduce new products and services and launch new Stop Cafe and shop formats under the ORLEN brand. In 2015, test and preparatory work was underway to implement a new format of shops at service stations and steps were taken to further leverage the potential of the loyalty scheme. In the Czech Republic, further growth was seen in fuel sales volumes, but also in non-fuel sales, driven by the development of the Stop Cafe chain.

Value creation initiatives in the Retail segment contributed to the segment’s EBITDA of PLN 1.5bn. Capex allocated to the segment amounted to PLN 0.4bn.

Growth in the share of fuel sales in home markets [%]1)

 

1) Poland, the Czech Republic, Lithuania, Germany.

Non-fuel margin growth [index]

 
 

LIFO-BASED EBITDA [PLNbn]

 

*) Strategic goal for 2014-2017

Upstream

The Strategy for 2014−2017 provides for sustainable asset growth in the Upstream segment, both in Poland and abroad, to be achieved through focusing on the most promising unconventional hydrocarbon areas and further development of conventional projects. In pursuit of its Strategy in the Upstream segment, in 2015 PKN ORLEN acquired productions assets in Canada (100% of shares in Kicking Horse Energy) and in Poland (100% of shares in FX Energy). Having completed these transactions, the ORLEN Group has oil and gas 2P reserves totalling 97Mboe, and its average daily output in 2015 was 7, 100 boe, with the average daily production in Q4 2015 reaching 7, 300 boe. Integration of ORLEN Upstream Canada with the ORLEN Group and exploration projects in Poland were also continued in line with the schedule.

Hydrocarbon production [Mboe per year]

 

Hydrocarbon reserves [Mboe]

 
 

EBITDA [PLNbn]

 

*) Strategic goal for 2014-2017

See also

ORLEN Group's business modelThe ORLEN Group and its environment

see more

Outlook 2016+Our ORLEN Strategy

see more

ORLEN Group – Key events in 2015Our operations in 2015

see more

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