OREANDA-NEWS. March 22, 2010. A meeting was held today between the Chancellor and the Minister of Energy of the Republic of Lithuania, representatives of the Polish Ministry of Treasury and the PKN ORLEN’s Management Board. The goal of the meeting was to discuss the possibility of taking decisions by the Lithuanian authorities that would allow improving ORLEN Lietuva’s operations in the area of logistics. It was another attempt of the Polish side made within the last three years with respect to this matter. The proposal presented by the Polish representatives, which aimed at improving the profitability of ORLEN Lietuva, has not gained the support of the Government of Lithuania.

During discussions, PKN ORLEN presented solid postulates indicating a number of possible options, expecting indicative decisions to be taken by the representatives of the Lithuanian authorities.

- We presented the current situation of ORLEN Lietuva, indicating the necessity of urgent improvement of logistics in the field of pipeline and rail transportation. It was another meeting, during which we presented a few possible scenarios, which could lead to the solution. Unfortunately, once again we have not received any solid and biding statements from the Lithuanian representatives with respect to the operational control over Klaipedos Nafta – said Sіawomir Jкdrzejczyk, Vice-president of PKN ORLEN’s Management Board, who was representing PKN ORLEN.

Given a difficult situation in the refining industry, PKN ORLEN makes decisions ensuring improvement of the profitability of the Lithuanian assets trying to secure its stable and safe development. Logistics of crude oil and products remain the key element to be improved. The objective of PKN is to gain operational control over the terminal in Klaipeda and to build a product pipeline from the sea terminal to the refinery. In parallel, PKN ORLEN aims at reducing the rates of rail transportation and claims to restore direct railroad connection between Mazeikiu and Riga, which was dismantled by the Lithuanian Rails. Lithuanian authorities declared to resolve the issue of missing railroad connection within next few months.

- The meeting did not meet our expectations. We did not expect any special privileges, unjustified support or help from the Lithuanian authorities. We only expected to remove barriers impacting our operations and secure reasonable standard market conditions for our business. Unfortunately, similarly to our previous discussions, which have been ongoing for the last three years, once again our proposals were not accepted – Sіawomir Jкdrzejczyk added.

The first discussions on the issues of logistics with representatives of the Lithuanian authorities were launched by PKN in 2006. Constant lack of agreement in discussions for three years now, and lack of solid declarations from the Lithuanian authorities in consecutive rounds of discussions force to reflect on the future of ORLEN Lietuva. The refinery is the only producer of fuels in Lithuania, and one of the biggest employers and contributors to the Lithuanian budget.

- The result of today’s meeting means that we have to analyze other scenarios for ORLEN Lietuva. Our priority is to improve the profitability of our assets and to increase the value of PKN ORLEN Group. We will make adequate decisions within the next few months – said Jacek Krawiec, President of PKN ORLEN’s Management Board.

The issue mentioned recently by representatives of the Government of Lithuania regarding an expected guarantee from PKN ORLEN to remain a long-term strategic investor of Orlen Lietuva is a big surprise. The Lithuanian authorities consciously withdrew from influencing ORLEN Lietuva by execution of the put option, which forced PKN ORLEN to buy out the remaining shares. The execution of the put option resulted in the expiration of the Shareholders Agreement between PKN ORLEN and the Lithuanian government. Thus the Government of Lithuania cannot influence ORLEN Lietuva’s shareholding structure.