Poland's PKN Orlen Investing $1.3 Billion on Petrochemical Capacity Expansion

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Poland's leading oil corporation, Polski Koncern Naftowy (PKN Orlen) (Plock, Poland), has announced plans to invest more than $1.3 billion on doubling the capacity of its 800,000-ton-per-year petrochemical plant. The capacity expansion will be carried out during a five year period. The expansion will increase the production of both Teraphthalic acid and Paraxylene by 600,000 tons per year. The final products from the petrochemical complex will be supplied to the country's chemical sector. PKN Orlen is now focusing on becoming one of the primary petrochemical suppliers in Poland.

PKN Orlen is one of the largest refining and petrochemical companies in Central Europe. The company operates seven refineries--four in the Czech Republic, one in Lithuania and three in Poland. PKN Orlen also has a strong presence in the petroleum distribution sector with 2,700 retail outlets serving customers across the Czech Republic, Lithuania, Germany, Poland and Hungary. The products are sold under several brand names that include Bliska, Orlen and Petrochemia Block in Poland, Benzina in the Czech Republic, Orlen and Star in Germany, and Ventus and Orlen Lietuva in Lithuania. PKN Orlen has 69 subsidiary companies and employs over 23,000 people across Europe.

PKN Orlen's investment comes at a time when most Central Eastern European countries are facing a big slowdown in their economies. Like other countries, Poland has also experienced the effects of the global economic slowdown. The manufacturing industry, which contributes around 30% to the GDP, is experiencing a decline in demand and exports. The Polish prime minister's office recently estimated that the country's GDP will grow between 2.1% to 3.1% in 2009. In June 2008, the Finance Ministry had announced an estimated GDP growth rate of 3.7% for 2009, a revised figure from the original 4.8%. Poland's Monetary Council reduced the interest rate by one percentage point to 5%. With regulated prices, the country hopes to maintain inflation in 2009 at a rate of 3.5% or less. An economic stabilization package of $30.5 billion has also been announced by the Polish government, $20.5 billion of which will be used towards inter-bank market regulation and to develop methods making it easier for Poland to receive funds from the European Union.

The GDP growth in Central Eastern Europe as a whole is expected to decline to 4.3% in 2009, compared with the projected GDP growth to 5.8% made in June 2008. Countries such as Ukraine, Hungary, Bulgaria and Romania are largely dependent on external financing from private investors, and the International Monetary Fund (IMF) (Washington, D.C.) indicates that these investments will come down 50% in 2009. The IMF has already sanctioned a loan of $16.5 billion to Ukraine to immediately improve the country's economic stability. Hungary's GDP growth in 2009 is projected to be 0.8% to 1.1%. In October 2008, The IMF released $25 billion to Hungary, making the country one of the first in Central Eastern Europe to seek assistance from the organization. Germany's capital goods industry is experiencing a slump in demand, and according to the research consortium CESIFO Group (Munich, Germany), Germany's economy is not expected to stabilize until 2010. The GDP growth rate in 2009 is expected to fall 2.2%, and the unemployment rate will be around 8%.

Poland's economy is not considered to be as open as some of its European neighbors. With the financial meltdown looming large in Europe, however, the trade relations that Poland shares with most European nations, particularly Germany, Hungary and the Czech Republic, make impact on the Polish economy and GDP inevitable.

View Project File - 82000079 82000081 82000082 82000097 82000098 82000118

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.