Poland’s Lotos, Azoty form SPV for planned €2.9bn petchem complex

03 December 2013 12:03 Source:ICIS News

LONDON (ICIS)--Polish refiner Grupa Lotos and chemical group Grupa Azoty have signed an agreement to form a special purpose vehicle (SPV) for the creation of their planned petrochemical complex in Gdansk, the two companies said on Tuesday.

The agreement commits Lotos and Azoty to complete feasibility studies for the investment and outlines how as much as zloty (Zl) 12bn ($3.9bn, €2.9bn) of capital expenditure could be raised for it, they added.

The two companies also said that they had signed a preliminary agreement with Polish state-owned infrastructure financing vehicle Polish Investments for Development (PIR), which makes PIR a potential investor in the project that could provide financing of up to Zl 750m.

A final decision would be made in 2014 on whether to go ahead with the investment, which could create 5,000 to 7,000 jobs at the complex that may be built entirely adjacent to Lotos’ refinery in Gdansk on the Polish Baltic Sea coast, they added.

The Polish government, which has controlling stakes in both Lotos and Azoty, is supporting the investment as a means to cut Poland’s chemicals and primary plastics trade deficit which stood at minus Zl 16.7bn in 2012, the companies said.

Centred on an ethylene cracker, the complex would largely provide its output of around 1m tonnes/year to Grupa Azoty, the firms added.

Construction of the complex would take place from 2016-2018 and commercial production would begin in 2019, they said.

“The project solution that we have chosen has an interesting market outlook and the resultant products will be able to find a very wide range of applications,” said Pawel Jarczewski, Azoty’s CEO.

One aim of the ongoing feasibility study is to determine whether the petrochemical complex could be split between the Gdansk site and Tarnow, the southern Polish town that is home to Azoty.

($1 = €0.74, $1 = Zl 3.10, €1 = Zl 4.20)

By Will Conroy