Lithuanian refinery in Mažeikiai, the construction of which lasted from 1972 to 1984, had many owners after the restoration of independence. In 1998-2002 it was managed by the American company ‘Williams’, and later by the Russian company ‘Yukos’.

In the composition of the Polish company
Several potential buyers from Russia, Kazakhstan and Poland showed interest in acquiring the refinery in 2006 due to the ‘Yukos’ bankrupt. After several months of talks the proposal from Polish company ‘PKN Orlen’ was found as most lucrative and was chosen. On 9th June 2006 the then Minister of Economy of Lithuania Kęstutis Daukšys and Vice Minister of Economy Nerijus Eidukevičius signed the sale documents. The buyout was finalized on 15th December 2006.

‘Orlen’ bought 84.36 percent of Mažeikiai refinery shares (30.66% from the Lithuanian state and 53.7% from ‘Yukos‘) and paid more than 2.3 billion US dollars. In 2009 ‘Orlen’ became the owner of ‘Mažeikių nafta‘ (100%) which became ‘Orlen Lietuva‘.The network of petrol stations ‘Ventus‘ belonging to the refinery was renamed as ‘Orlen Lietuva‘ too. ‘Orlen’ has 26 petrol stations in Lithuania and makes 3.5 percent of retail fuel market.

Currently, ‘Orlen Lietuva‘ maintains a system of pipelines with a length of approx. 500 km. Two pump stations near Biržai and Joniškis are incorporated in this system, as well as pipelines to the Mažeikiai rafinery and oil port in Butingė and a pipeline going to Ventspils in Latvia.

Years of loss
After buying the rafinery in Mažeikiai, ‘Orlen’ had to invest in it almost 4 billion dollars. Almost 1.5 billion of these were allocated for reconstruction and modernization.

The device for desulfurization of gasoline by catalytic cracking was put into use in ‘Orlen Lietuva‘ in 2007. Catalytic cracking together with gasoline reforming constitutes in contemporary refinery are two basic facilities supplying the ingredients to compose gasoline. Two years later new device for hydrogen production was opened and a new device for degassing and sulphur granulation was introduced too.

The greatest renovation of Mažeikiai refinery in the company‘s history was carried out in 2012.

The establishment suffered a loss of 94 million US dollars in 2013. In 2014, the loss amounted up to 119 million dollars.

According to the media, ‘PKN Orlen‘ was thinking what to do with the company group ‘Orlen Lietuva‘ that was recording the highest losses. If not the support of the company, Mažeikiai refinery would have great difficulties in functioning. The company was looking for an investor. There were even talks that one of Kazakh companies that wanted to buy the refinery in 2006, could be a potential buyer. But ‘PKN Orlen‘ denied theses speculations. Instead, talks were lead with Lithuanians.

Reasons to rejoice
After years of losses the refinery became profitable. The financial results improved a lot thanks to effective actions of the company and a favourable macro environment.

In 2015 ‘Orlen Lietuva‘ earned 237 million US dollars of net profit, while the entire group ‘PKN Orlen‘ earned 720 million euro of net profit. The results of a refinery in Mažeikiai looked very optimistic on this background.

President of ‘PKN Orlen‘ Wojciech Jasiński, elected in December 2015, described the results of ‘Orlen Lietuva‘ as wonderful. In this situation ‘Orlen’ authorities decided that the possible sale, closure, or even temporary work stoppages of Mažeikiai refinery are unlikely to be considered if the refinery manages to keep good results.

Best year since 2006
2015 was the best year in the history of Mažeikiai refinery since it was bought by ‘PKN Orlen‘. Joint-stock company ‘Orlen Lietuva‘ managed to achieve good results thanks to extremely favourable macroeconomic conditions. ‘Nevertheless, we should remain vigilant, as our activity is permanently at risk, therefore the situation could deteriorate,‘ said Ireneusz Fąfara, President of ‘Orlen Lietuva‘.
‘Orlen Lietuva‘ implemented a strategy enabling to fully adapt to market changes. Thanks to it, the establishment is able to maximize its capacity in favourable macroeconomic conditions and to reduce the powers during the unfavourable market situation.

Refinery in Mažeikiai has processed 8.486 million tons of petroleum last year. It is 13 percent more than in 2014. The refinery was working an average of 83 percent of its processing capacity in 2015.

Effective export to Ukraine
Polish concern ‘PKN Orlen‘ is not going to sell its Lithuanian company ‘Orlen Lietuva‘. This was confirmed by the Polish Minister of Economic Development Mateusz Morawiecki at the beginning of 2016. According to him, the company effectively exports its production to Ukraine, where it already occupies 10 percent of Ukrainian market. The Minister also stressed that the building of a pipeline supplying products from the Mažeikiai refinery to the Klaipėda port should be considered. Now all exported production is being transported to Klaipėda by rail. ‘Orlen Lietuva‘ exports a lot of its production through Klaipėda - this makes about 50-60 percent of cargo of the handling company ‘Klaipėdos nafta‘.

Largest tax payer in Lithuania
‘Orlen Lietuva‘ has been the largest tax payer in Lithuania for several years. According to the data of the State Tax Inspectorate, the company has paid 309.764 million euro in taxes in Lithuania in 2015. The demand for fuel has significantly increased in the past year, the company has achieved excellent profitability ratios, but paid much less taxes then in 2014 (384.579 million euro). ‘Orlen’ is followed by such giants of the Lithuanian market as ‘Philip Morris Baltic‘, ‘Okseta‘, ‘Maxima LT‘, ‘Sanitex‘, ‘Statoil Fuel & Retail Lietuva‘, ‘Mineraliniai Vandenys‘.

Good signs for the future
It has to be underlined, that ‘Orlen Lietuva‘ has achieved such good results in 2015 despite the difficulties regarding products‘ logistics. The disputes between ‘Orlen’ and Lithuanian National Railways has been ongoing for years.

It has to be mentioned, that European Commission examines the activity of Lithuanian Railways in terms of restricting competition in the Lithuanian and Latvian markets. Among others, it concerns the dismantling of a nearly 20-kilometer stretch of tracks between Mažeikiai and Latvia. The decision in this matter may be announced yet this year and the possible fine for the railways may amount up to 50 million euro.

According to the experts, the agreement between ‘Orlen’ and Lithuanian Railways is possible, especially having in mind that the Government of Lithuania is making far-reaching pledges. This derived from the statement of the Lithuanian Prime Minister Algirdas Butkevičius, who said that ‘Orlen Lietuva‘ is a strategic investor in Lithuania and the question of the refinery is very important for the Lithuanian government. It may be a good sign for the future and the situation of the refinery ‘Orlen Lietuva‘ in Mažeikiai may improve significantly.