December 12, 2024 [Reuters]- Poland’s Orlen announced scaled back plans for its Olefins petrochemical project on Wednesday, pushing back output until at least 2030 and aiming to cut its estimated cost by as much as a third.

Begun in 2021, costs were on course to reach six times original estimates with the company having spent 12.6 billion zlotys ($3.10 billion) as of the end of September.

Delays have prompted several write-downs and a state audit revealed heavy losses.

“This is the best one of the bad decisions we could make,” Orlen’s CEO Ireneusz Fafara told a press conference.

Shares in Poland’s largest oil and gas firm were down 2.8% as of 1011 GMT, lagging the Warsaw WIG20 blue chip index, as analysts assessed the spending still to be made.

“Ultimately, the refiner wants to spend extra 21.4 billion zlotys… with EBITDA contribution of 550-800 million, which we see as negative due to project’s limited internal rate of return”, said Trigon analyst Michal Kozak.

Its revamped plan, dubbed “New Chemistry”, sets the total cost at 34 billion zlotys, down from 45-51 billion expected previously, Orlen said in a statement.

Output of olefins, a chemical compound used in producing chemical and polymer products such as plastics, detergents, adhesives and food packaging, will not start until 2030 at the earliest, it said, six years later than originally planned.

The company added that the revamp will free up 15 billion zlotys for investment that will help the refiner increase its competitiveness.

It now plans to hold talks with contractors in the coming months to lay out a revised timetable for the project, with a new schedule and budget to be published by the end of next September.

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