On August 14th 2018, the CEOs of both companies Daniel Obajtek and Mantas Bartuska signed a Memorandum of Understanding to expand cooperation between the Polish oil refiner and LR. The event, which also marked the inauguration of work on restoring the railway connection between Mažeikiai and Renge, was attended by the Lithuanian Transport Minister Rokas Masiulis.
In the MoU signed in Mažeikiai Orlen Lietuva, the Orlen Group’s Lithuanian subsidiary, declared it would continue to use the services of Lithuanian Railways. The parties also committed to expanding their collaboration so that it covers freight transport towards the Polish border. The volume of goods moved by Orlen Lietuva along that route is to increase by several hundred thousand tonnes, from the current 600,000 tonnes. This will enhance the Orlen Group’s operational flexibility as well as security of fuel supplies in the Baltic States and Poland.
“Orlen Lietuva plays a strategic role in the region. It needs to grow to fully harness its potential. The decisions and commitments made today to strengthen our collaboration demonstrate we have a shared vision for the future of Mažeikiai. Close cooperation between PKN Orlen and our Lithuanian partners should benefit the businesses of all parties involved,” said Daniel Obajtek, CEO and President of the PKN Orlen Management Board. Mr Obajtek further noted that the strong relationship currently enjoyed by the two companies reflects the relations between Poland and Lithuania. “A constructive environment is a major factor in doing business. We have received strong support on this front owing to the openness and understanding of the Prime Ministers Mateusz Morawiecki and Saulius Skvernelis”.
“The Memorandum of Understanding we have signed today is our shared success. For Lithuanian Railways it guarantees a strong and lasting relationship with Orlen Lietuva as one of its key customers. For the refinery the priority is to have access to quality logistics services. Therefore, both parties want to seek new areas for collaboration and work out mutually beneficial arrangements,” said Mantas Bartuska, the Lithuanian Railways CEO.
“I am delighted to see that our partnership has just got stronger and new opportunities have opened up. The Renge issue, which has long marred the relations between our countries, is being resolved. Lithuania has pledged to rebuild the tracks and today it has reaffirmed this commitment,” said the Lithuanian Transport Minister Rokas Masiulis.
The chiefs of PKN Orlen and Lithuanian Railways Daniel Obajtek and Mantas Bartuska laid the first rail of the reconstructed section of tracks between Mažeikiai and Renge in Latvia. A decade after the line was dismantled, the refinery is to regain access to the shortest delivery route to transport its products to Latvia and Estonia. As declared by the Lithuanian carrier, the first cargos should be dispatched by the end of next year. It is an important development as up to 20% of the Mažeikiai refinery’s production is northbound.
PKN Orlen is also considering investing in a project to modernise its Lithuanian refinery. Options to increase its throughput capacity and, thus, improve its operational efficiency in a volatile macro environment are being analysed. These preliminary efforts are geared towards upgrading the units to a deeper conversion process. In July, based on the results of analyses carried out so far, a basic engineering design and licensing contract was signed with the selected contractor for a vacuum residue hydrocracker to be built at the Lithuanian refinery. Achieving a higher conversion rate is key to increasing its fuel yields from crude refining.