Poland's two oil refiners PKN Orlen (PKN.WA) and Grupa Lotos (LTS.WA) should merge within three to five years as part of a larger tie-up with a European oil major, Lotos Chief Executive Pawel Olechnowicz told the daily Parkiet in an interview published Tuesday.
Poland 's two oil refiners PKN Orlen (PKN.WA) and Grupa Lotos (LTS.WA) should merge within three to five years as part of a larger tie-up with a European oil major, Lotos Chief Executive Pawel Olechnowicz told the daily Parkiet in an interview published Tuesday.

"If we don't find a way to function as one entity, someone will figure out a way to do it for us," Olechnowicz told the daily.

The executive said in his view, a straight merger of Orlen and Lotos wouldn't be enough as the merged entity would have very limited upstream exposure.

"What's needed is a big partner, which has its own extensive crude oil extraction operations. I think we have three-to-five years to find such a solution," he said.

Olechnowicz said he personally would favor a major European oil company as an investment partner, but didn't specify a particular candidate.

In the early 2000's, there was extensive public speculation about a regional merger between Orlen, Hungarian oil and gas company MOL Nyrt. (MOL.BU), and Austria's OMV AG (OMV.VI), which owns a minority stake in MOL.

However, MOL resisted a tie-up with either OMV and Orlen, which then chose to focus and on expansion in Germany, the Czech Republic, and Lithuania

Poland's State Treasury controls a 58.8% stake in Lotos and is also the largest shareholder in PKN Orlen, where its 27.5% stake and additional indirect holdings via state-owned companies give the treasury effective control over Orlen's supervisory and management boards.

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