“We are enhancing the ORLEN Group’s competences and position in the RES market. By joining forces with PGNiG, we are developing a new business line – biomethane production. The large potential of this clean, environmentally-friendly fuel, which may become a source of green hydrogen, will allow us to achieve our strategic business objectives and effectively contribute to the energy transition of Poland’s economy,’ said Daniel Obajtek, President of the PKN ORLEN Management Board.

The letter of intent signed by ORLEN Południe and PGNiG provides for the possibility of cooperation mainly in the acquisition and construction of biomethane facilities, development of biomethane production technologies, and production and use of biomethane in various areas of the companies’ operations. The projects would be implemented by an SPV established by ORLEN Południe and PGNiG, in which the two companies would hold a 51% and a 49% interest, respectively. Its establishment must be approved by the President of the Office of Competition and Consumer Protection.

“The integration of PGNiG’s and PKN ORLEN’s resources, knowledge and experience will provide a significant and much-needed incentive to the development of the biomethane market in Poland. The SPV will allow both partners to grow their competences along the entire value chain. This cooperation fits perfectly with PGNiG's plans to reduce the emissions intensity ratio of Poland’s gas sector and to dynamically grow trading in green gases,’ said Paweł Majewski, President of the PGNiG Management Board.

The new biomethane production business line will be developed by the ORLEN Group and the PGNiG Group by constructing their own biogas plants and acquiring existing facilities. In December 2020, ORLEN Południe acquired an existing biogas plant located in Konopnica, the Rawa Mazowiecka municipality. In January, the company purchased two plots of land in the municipality of Ryn with the intention to construct its own facility. In March, it finalised the purchase of an agricultural biogas plant in Wojny-Wawrzyńce, the Szepietowo municipality. The company plans to expand those facilities and transform them into plants producing biomethane that would be injected into the distribution network and could potentially be also used to produce green hydrogen.

The PGNiG Group is interested, among other things, in purchasing biomethane from its producers and transmitting biomethane mixed with natural gas via distribution networks. To this end, PGNiG has developed a quality standard for biomethane that can be fed into the network, conditions for connecting a biomethane plant to the network, and a distribution agreement template.

The letter of intent was signed following an analysis performed by the companies, concerning production of biogas to be subsequently upgraded to biomethane. The objective is to create a business environment and scientific and technological facilities for the development of a network of biomethane plants, each of which will produce approximately 4 mcm of biomethane per year.