Poland’s Orlen to put its Lithuanian refinery in the black in 2010

PKN Orlen, one of Central Europe’s largest refiners of crude oil, plans to restore the profitability of its Lithuanian subsidiary Mazeikiu Nafta in 2010.

This is our priority for this year, Jacek Krawiec, Orlen president told a news conference in Warsaw. He added that the situation of Mazeikiu refinery has remained unchanged. ‘We have not received any formal offers concerning Mazeikiu oil’ he said. According to Krawiec, Orlen managements is mulling the possibility of acquiring a strategic partner. The potential sale of Mazeikiu Nafta or acquiring a potential partner follows a dispute with the Lithuanian government on Klaipedos Nafta. PKN Orlen would like to build an oil pipeline from Mazeikiai to Klaipeda, which would significantly lower the costs of fuel exports and improve the profitability of the Mazeikiu plant. But Orlen wants to manage Klaipedos Nafta while tje Lithuanian government is against privatizing the plant, the Polish News Agency (PAP) reports. PKN Orlen reported a consolidated net profit of PLN 1.3 million PLN in 2009, compared with a loss of PLN 2.5 million in 2008, according to figures provided during the news conference.

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ECONOMIC MONITOR

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• ● In December 2009 and January 2010, as in previous months in the second half of 2009, the Polish economy stood out against other countries in terms of GDP growth. Poland’s economic growth was higher than projected and higher than in other European countries.
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• In 2009 construction output increased by 3.7%.
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• Retail sales increase in most product groups.
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• On the Warsaw Stock Exchange, stock prices were very volatile in January 2010.
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• At the end of December 2009 the registered unemployment rate (claimant count rate) amounted to 11.9% versus 11.4% in November.
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• At the end of January the president signed the 2010 budget bill into law. The bill was adopted by the parliament on December 18.
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• In the fourth quarter of 2009 the Polish economy turned out to be more resistant to the global crisis than had been projected and than the economies of Polish neighbours, something which boosts optimism in forecasts for 2010 and the next years.
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Retail sales up again in June
Retail sales growth in nominal terms accelerated in June to 6.4% y-o-y from 4.3% y-o-y in May. The increase was higher than expected. In real terms, retail sales growth accelerated to 4.5% y-o-y from 2.0% y-o-y. June was a consecutive month with retail sales figures stronger than expected, which indicates that consumption is recovering after it slowed significantly at the beginning of the year. Private consumption is driven by an improvement on the labour market coupled with a rise in disposable incomes. In Q2 2010 retail sales grew by around 3% y-o-y in nominal terms and around 1% y-o-y in real terms. On the basis of retail sales and industrial production data, it can be estimated that the GDP growth rate was close to 3%.

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