Orlen profits rise on upstream gains, Czech Unipetrol falls into loss

Polish energy group Orlenannounced that it increased net profit by almost three-quarters in the second quarter of this year. While refining margins (downstream) weakened and the company had to write down part of the value of its assets, strong performance in oil and gas production (upstream) more than offset these losses.

Operating profit (EBITDA LIFO) reached PLN 7.7 billion (more than CZK 47 billion), despite write-downs of PLN 1.5 billion. The upstream division improved significantly, returning to profit after last year's windfall tax.

The group's energy and consumer business also performed better thanks to higher gas and electricity sales. By contrast, refining and petrochemical operations reported lower profit.

Arbitration and position in Czechia

Orlen also had to set aside more than PLN 200 million due to an arbitration ruling in favour of Russia's Gazprom, allowing it to retroactively increase gas prices. Since 2022, when it acquired Polish gas monopoly PGNiG, the company has been involved in several arbitration disputes with Gazprom. These concern the prices of Russian gas from the 2017–2022 period. However, Orlen argues that it cannot pay Gazprom because of international sanctions. Further arbitration proceedings over gas prices for subsequent periods are still under way.

Orlen operates on the Czech market through Orlen Unipetrol. It runs refineries in Litvínov and Kralupy and is the country's largest fuel supplier. However, Unipetrol reported a significant loss last year, mainly because profits in its processing and refining segment have slowed. Unipetrol was also negatively affected by a recent disruption to electricity supplies. Together with Lithuania, the Czech market is one of the key pillars of the group's international expansion.

Outlook

The company expects its full-year operating profit in 2025 to exceed its 2024 result. Orlen is also continuing its long-term strategy, which includes developing low-carbon and renewable sources alongside traditional production and refining.

Its targets include increasing renewable capacity to 12.8 GW, expanding energy storage capacity and commissioning small modular reactors (SMRs) with a capacity of 0.6 GW.

The company is also working to modernise the distribution grid in central and northern Poland, for which it has secured co-financing from the European Investment Bank. In the Czech context, the rebranding of Benzina filling stations under the Orlen brand was also recently completed. According to Seznam Zprávy, the move cost around CZK 450 million.