The powers that be in Poland are an ambitious lot. Not content with going from poor relation in the EU family to star performer in less than two decades, Warsaw now has designs on becoming a global powerhouse to rival its rich neighbor to the west.   

Thrust into the front line of the war in Ukraine, this nation of 37 million has – like other European countries uncomfortably close, geographically and economically, to Russia – embarked on a two-pronged strategy that seeks to beef up its military and energy capacities. With a single stroke of a pen, earlier this year president Andrzej Duda doubled defense spending from 1.5% of GDP to 3% for 2023, taking it to $30 billion.

Turning to energy, diversifying Poland’s energy mix and suppliers is the name of the game in the post-Ukraine-war landscape. Prior to Russia’s invasion of Ukraine last winter, 60% of the oil and gas consumed in the country came from Russia, a level Warsaw wants to see drop dramatically in the years to come. To be in the best bargaining position when it comes to negotiating with new suppliers, size matters however, which brings us to our latest deal of the year, oil refiner PKN Orlen’s tie up with producer PGNiG.

Pole position
In Poland’s quest for energy independence, major strides were made in November 2022 when the merger between PKN Orlen and PGNiG took place. PKN Orlen is the national leader in the production, transport, refining and sale of petrol products. The company possesses a network of almost 3,000 service stations across Poland, Germany, the Czech Republic, Hungary and Lithuania.

Orlen now has the largest market cap of any Polish company and, in the short term, is aiming for annual turnover in the region of $80 billion

The company's distinctive eagle-head logo may be absent from the pumps in western Europe, but Orlen does have some brand recognition beyond its central European heartland, thanks to the company’s sponsorship of the Alfa Romeo F1 team. For its part, PGNiG is the biggest oil and gas exploration company in central Europe.

How were the powers that be able to bring the two national champions to the alter in double quick time? The fact that the state owns 31% of Orlen and 70% of PGNiG probably had a fair bit to do with it. At the start of 2022, the Polish government also approved Orlen’s acquisition of Gdansk based crude-oil producer, Grupa Lotos.

Welcoming the announcement of the acquisition of PGNiG, the CEO of the new group of some 50,000 staff – which retains the Orlen name – remarked, “Orlen is now the biggest company in central Europe, one of the biggest on the continent and has joined the ranks of the 150 largest companies in the world.”    

According to the firm, the tie up will, “assure energy supply stability, reinforce national security and lead to energy independence for Poland.” Among Orlen’s potential new partners, according to the group, Norwegian energy companies lead the way.  

A result of all this wheeling and dealing is Orlen now has the largest market cap of any Polish company and, in the short term, is aiming for annual turnover in the region of $80 billion, which, if confirmed, will see it rise to the rank of energy industry middleweight, rubbing shoulders with such established names as Petrobras and Enel.