Polish energy giant Orlen eyes acquisition of troubled fertilizer plant from Azoty

State energy giant Orlen has signed a letter of intent regarding the acquisition of a nitrogen fertilizer plant from Poland’s largest chemicals group, Grupa Azoty, which is also partly state owned.

Orlen wants to complete the process by the end of the year and, if it does so, it will be another major acquisition by the conglomerate, which has been taking over state competitors at a rapid pace in recent years in a bid to become a global player.

“We see great synergies here – technological and operational,” said Orlen’s CEO, Daniel Obajtek, announcing his firm’s intention to take over the Zakłady Azotowe plant in Puławy.

Grupa Azoty, which is the EU’s second-largest producer of fertilisers, has been recently struggling due to high gas prices and the unfavourable competition environment resulting from the easing of import restrictions for fertilizers following the outbreak of the war in Ukraine.

The supplier of gas, the key raw material for fertiliser production, to the Puławy plant is Orlen.

Azoty, in which the Polish state has a 33% stake, reported a net loss of over 555 million zloty in the first quarter of 2023, of which the Puławy plant was the largest contributor. In the same period last year, Grupa Azoty had a profit of over 880 million zloty.

The company’s CEO, Tomasz Hinc, said that the possible sale of the Puławy plant to Orlen could provide the funds that Grupa Azoty needs to spend on climate and energy transition.

“Puławy is a very large, energy-intensive plant that also needs to make an energy transition in order to continue to function effectively in the European market, and this is a process that requires expenditure,” said Hinc, quoted by the IBSnews agency.

“Any action that accelerates the transformation of the Azoty Group’s plants and the implementation of the ‘Green Azoty’ strategy is taken very seriously by the Group’s management,” he added.

Following the announcement, Azoty’s shares rose and the company closed the session up 2.71% day-on-day.

Main image credit: Grupa Azoty press pack

Alicja Ptak

Alicja Ptak is senior editor at Notes from Poland and a multimedia journalist. She previously worked for Reuters.