ORLEN Halts Misguided Olefins III Project
The ORLEN Management Board has decided to halt the Olefins III project after determining that the actual implementation costs would have exceeded the initial estimates by sixfold. This decision is expected to save the company approximately PLN 15 billion. The funds will be redirected towards projects that sustainably enhance the competitiveness of both the company and the Polish economy. Irregularities related to the capital investment process have been reported to the prosecutor’s office. Additionally, ORLEN is considering pursuing a compensatory claim against former management board members, enabled by a recently adopted resolution of the General Meeting.
A comprehensive review of the costs and terms of constructing the Olefins III complex, conducted for the first time since the project’s inception, revealed that the project was not financially viable. An analysis of the preparation and execution process, overseen by Daniel Obajtek’s management team, uncovered numerous irregularities, including unrealistic assumptions that ignored market conditions, as well as issues with schedules and implementation technologies. Among other findings, significant design and technical problems were identified in the ISBL installations, which directly impacted the project’s implementation.
The original cost of the project was estimated at PLN 8.3 billion. In 2023, the then management tripled the projected expenditure to PLN 25 billion, while simultaneously scaling back the scope of the project by excluding the most promising advanced chemicals. The actual cost of the project, including the construction of critical infrastructure needed for the plant’s operation, would have climbed to as much as PLN 51 billion.
The decision to halt the project is the most prudent course of action, limiting potential losses caused by the misguided decisions of the previous management.
To mitigate the adverse economic impact of the Olefins III project, ORLEN plans to repurpose the existing infrastructure as the foundation for its New Chemicals (Nowa Chemia) project. Built on revised technological, operational and business assumptions, the initiative will include a state-of-the-art facility for monomer production and expanded sales capacity in ethylene oxide and glycols, styrene and the C4 fraction, with volumes to be optimised to meet market demand. Starting around 2030, the New Chemicals project will take over the functions of the current Olefins II facility and will remain operational throughout the lifecycle of the Płock plant.
