Wiesław Prugar, member of the Orlen management board: Transformation through increased production

At the first panel of the fair, and actually within the conference on gas, on the occasion of which we also meet here, there were mentions of geopolitics, that it may affect the role of gas, reshaping the opinions that were common in recent years. In your opinion, what will be the role of gas in the coming years? Perhaps considering you've been in this business for quite a few years now, the role of gas, I would say, will remain unchanged. The scale of use of this fuel may change in the coming decades. It seems to me that from a rational point of view, we should use this fuel for energy transformation, for a holistic view of its possibilities and also its effects on society. Therefore, this complementary role, supplementing the transition from coal to more or less emission sources, such as gas-based power generation or supporting the power grid when we lack electricity from photovoltaics or wind turbines, that is the role we see, and we also show this in ORLEN's strategy. This is also what we deal with at the Chamber of Gas Industry, to emphasize this role of gas. We do not see, let's say, any drastic change in the philosophy of our business, but it seems to me that from a regulatory point of view, we too quickly believed that we could completely do without this fuel in the future, in the near future. I will only remind you that in 2024 alone, the upstream and gas segment accounted for 70% of the ORLEN Group's EBITDA. This will also be an important element in the coming years.

Yes, this segment, gas and supply, as we call it today in the strategy, is still a very large contributor. It's about 36% of the entire concern, in this new version after the mergers. So a much larger organism, and our role is still significant. It seems to me that it will be so for many more years. Let's also remember that ORLEN is not only a large consumer of gas, consuming about 20% of the country's total demand, but also a very large consumer of other hydrocarbons that are sometimes rarely talked about, namely crude oil, which is 38 million tons, so the role of Upstream is most significant and will remain so.

We have several core business areas where we operate, or geographical areas where we operate. Certainly, Poland is our primary market. Here, of course, there is much discussion about development possibilities, whether Polish resources can continue to be exploited economically. We showed in the strategy that we believe production in Poland will be maintained, and we may even see a slight increase in the coming years up to the strategic horizon. Undoubtedly, we will continue to develop in Norway. There we already have a significant influence. We produce over 100,000 barrels of oil equivalent per day. Am I saying that correctly? So these are the two main directions of action. We are in many other places in the world. The strategy clearly defined that we must examine these various jurisdictions from the point of view of the validity of continuing to use these locations in terms of what ORLEN today needs and expects from the Upstream segment. We will do this, we have a set time for it, also defined by the strategy. We will make appropriate decisions. Certainly, we must also think about various other new directions for this period of 20 to 30 years. We signaled this a bit in the strategy, that we are looking for places where exploration risk is, let's say, limited, and at the same time resources are very large, and we are talking broadly about the North American continent, for example, because we already import large amounts of gas in the form of LNG to Poland. We have the capabilities for this. It seems to be a rational approach. A non-European market with large resources and low exploration risk, namely technology that allows for shale drilling and mass production, allows us to rationally, with reduced risk, look for a potential market. Whether it will be so, I don't know. It requires further work and analysis, but these are the assumptions we have adopted.

This seems to me, again, from the point of view of an engineer or a person managing this business, very rational, because transformation requires capital. Companies must generate this capital somewhere. Therefore, rationalizing the balance sheet, from which elements we generate capital that serves transformation, is rational. And it's true, all large companies show that in the next five years, significant revenues, or the main part of these revenues that will serve the development of companies, come precisely from production. This was also evident during the large CERAWeek conference in Houston, where there was much talk about transformation, but companies also emphasized that to implement these transformation projects, capital is needed, and gas and oil can play a large role in this.