CMS law firm advised PKN ORLEN on the construction of the Olefins III petrochemical complex – the largest petrochemical investment in Europe in the last 20 years and the largest petrochemical project in Central and Eastern Europe.
On 22 June this year, PKN ORLEN signed a contract with the contractor for the basic installations (ISBL) included in the Olefiny III complex, which is a consortium of the Korean company Hyundai Engineering Co., Ltd. and the Spanish company Técnicas Reunidas S.A. The finalisation of the investment, valued at approximately PLN 13.5bn, is planned for 2024 and the commencement of production for early 2025. The complex will be built in Plock on an almost 100-hectare area.
Global trends show a gradual decrease in demand for refinery products, with a growing demand for higher margin petrochemicals. The new Olefiny III complex will produce petrochemical products needed for the production of everyday items, including cleaning products, hygiene and medical products, as well as car parts, household appliances and electronic devices or synthetic fibres. The Olefins III project will increase the actual production capacity of the plant in Płock by about 60% thanks to, among other things, construction of a new steam cracker and modernisation of some of the production installations. The investment is also expected to reduce carbon dioxide emissions per tonne of product by 30%.
Currently PKN ORLEN enjoys a 5% share in the petrochemical market in Europe. The new investment is to enable it to increase its share and join the ranks of the largest petrochemical producers, such as Dow, Sabic, Ineos and BASF. The PKN Orlen Group manages six refineries in Poland, the Czech Republic and Lithuania, and has mining operations in Poland and Canada.
The scope of CMS law firm's work on the new investment included: (i) preparation and subsequent execution of a tender for the selection of a FEED contractor (preliminary design) for the ISBL portion of the Olefiny III project, (ii) preparation of a draft EPCC contract and then conducting negotiations with the bidders up to the conclusion of the EPCC contract, and (iii) negotiation with the licensors presented by the EPCC bidders of the relevant licence agreements for obtaining the technological processes necessary for the execution of the ISBL part of the Olefiny III project.
Comprehensive legal advice was provided by an interdisciplinary team of lawyers supervised by Marcin Bejm, managing partner of the energy and infrastructure projects team, and led by Michał Andruszkiewicz, counsel. The team consisted of Jan Radziuk (who was engaged in all key aspects of the contractor selection process and agreeing the contract package), Paweł Ura, Anis Ben Amer, Szymon Klimkowski, Marta Tarkowska and Weronika Stelmaszyk, Aleksandra Kuźnicka-Cholewa (IP issues), Agnieszka Skorupińska and Wojciech Szopiński (environmental issues), Piotr Nowicki and Maciej Brezdeń (tax issues) and Jakub Wieczorek (issues related to financing).
CMS law firm's energy and infrastructure projects team is also advising on the largest chemical investment to date in Central and Eastern Europe, worth USD 1.8bn, carried out by Grupa Azoty, i.e. the Police Polymers project.