ORLEN Group 2016 Integrated Report

We seek to consistently reduce the energy consumption of the ORLEN Group’s production units, thus fostering operational excellence.

1. RAW AND OTHER MATERIALS USED IN PRODUCTION

 In its refining and petrochemical operations, the Group processes various raw materials and semi-finished products. However, crude oil is the principal raw material for production. Among other inputs are biocomponents and other chemicals.

Table: Materials used in 2016

TABLE: CRUDE OIL CONSUMPTION

Crude oil, a non-renewable resource, is purchased for all ORLEN Group refineries as part of an integrated procurement process handled by PKN ORLEN, which purchases oil from external suppliers.

Other materials used in our plants include natural gas, biocomponents and semi-finished products, exchanged mainly between the refinery and the petrochemical plants (they are not primary feedstock).

2. RECYCLED MATERIALS USED AS INPUT MATERIALS

The ORLEN Group recycles effluents and reuses water. Recycling involves recovering and reprocessing of waste materials to obtain raw materials for the same or other applications. By reusing waste materials, Group companies reduce consumption of new raw materials, which enhances process efficiency and helps protect natural resources.

Recovery and reuse of waste materials also reduce the overall amount of generated waste. Reusing energy materials and energy carriers is part of efficient energy management. The principal goal of the recycling activities is to maximise the amount of reused materials, with a minimum energy spending on their processing.

In 2016, PKN ORLEN’s Płock Production Plant recovered 0.03% of slops in the wastewater treatment process and reprocessed them in the distillation unit. Moreover, 21% of treated wastewater was used to produce industrial water and water for fire-fighting purposes.

Waste raw materials and heat were also reused at other ORLEN Group companies.

• Basell Orlen Polyolefins reused 2.07% of heat recovered from production (from steam) for water heating purposes.
• ANWIL reused 7.25% of PVC SX from effluents, 2.14% of river water, and 0.74% of brine in its production processes.
• ORLEN Eko reused 2.05% of heat recovered from flue gas to produce steam.
• ORLEN Południe Trzebinia production plant recovered: in its CHP plant − 6.4% of condensate from paraffin production relative to steam carrier production, and in its fractional distillation unit DRW III − 0.2% of waste generated in the company’s wastewater treatment plant, 0.5% of slops, 38.1% of heat from the W-2 column fractions, 4.2% of water, and 17.6% of steam condensate relative to consumption of industrial water.
• ORLEN Południe production plant in Jedlicze reused in production processes 0.33% of slops in the fractional distillation unit and 0.58% of slops in the waste oil regeneration unit. It also used 14% of steam condensate in the CHP plant.
• ORLEN Lietuva reused 98% of water (e.g. in circulation cooling systems), 88% of effluents to produce process water, 0.13% of slops, and 69.76 tonnes of waste in re-refining process, and recovered 79.7% of heat from steam.
• Spolana reprocessed 7.7% of condensate from heat production, reused 58.9% of effluents in production, transferred for reuse: 0.8% of waste paper and 0.3% of plastics, and recovered 33.9% of heat and 97.6% of hydrogen. Moreover, 99% of cooling water, representing 38.5% of all the water abstracted by the company, is re-circulated.

3. PRODUCT AND SERVICE LABELLING

Obligations of the ORLEN Group companies to provide information on the potential hazards associated with specific products by using special signs and labels originate from international and EU laws. The scope and division of responsibilities of the ORLEN Group companies are defined in internal regulations.

The key tool used to determine the required type of labelling is safety data sheets, prepared in accordance with the EU REACH regulation. Safety data sheets contain information on product labelling based on the CLP classification and warning stickers related to hazards involved in transport (if required).

Safety data sheets are mainly a source of information on products used for industrial and professional applications. In the case of products marketed directly for use by general consumers, such information is provided by ORLEN Group companies by appropriate labelling of product packaging.

Labels on product packaging compliant with CLP regulation contain, in addition to pictograms, standard hazard statements and precautionary statements.

Given the wide range of applications for ORLEN Group products, labels on product packaging also meet detailed requirements provided for in specific legal provisions applicable to detergents, fertilizers, etc.

As the requirement to communicate hazards and safe use instructions are imposed by law, the signs included in safety data sheets and on product packaging are checked for regulatory compliance by competent state authorities (such as the State Sanitary Inspection (SANEPID) or the National Labour Inspectorate).

4. BENZENE, LEAD AND SULFUR CONTENT IN FUELS

TABLE: Benzene, lead and sulfur content in liquid fuels, by company

PKN ORLEN S.A.

ORLEN  POŁUDNIE

ORLEN Lietuva

Česká Rafinérská a.s.

 All types of liquid fuels that are finished (final/commercial) produced and marketed by PKN ORLEN and the ORLEN Group companies meet the legal, regulatory and regulatory requirements for benzene, lead and sulfur content. More information is available at www.orlen.pl/EN/ForBusiness/Pages/default.aspx.

VOLUMES OF BIOFUELS PRODUCED AND PURCHASED MEETING THE SUSTAINABILITY CRITERIA

In order to protect the environment, and in view of the national requirements to ensure a minimum share of biofuels in transport, the ORLEN Group used over 699 thousand tonnes of methyl esters and more than 225 thousand tonnes of bioethanol.

All biofuels used by the ORLEN Group in all its markets met the sustainability criteria specified in the RES Directive and Fuel Quality Directive.

TABLE. VOLUMES OF BIOFUELS PRODUCED AND PURCHASED MET THE SUSTAINABILITY CRITERIA

^* The purchased volumes of biocomponents was used to blend fuels for the Czech, German and other markets
^**The volumes include biofuels produced by ORLEN Południe.

5. MANAGEMENT APPROACH IN THE AREA OF ENERGY

Our strategy for the Energy area is to create value through operational synergies with the Refining and Petrochemical business of the Downstream sector. In 2016, the ORLEN Group reduced its energy intensity by nearly 1pp (yoy).

The key focus is on developing modern industrial cogeneration as a source of electricity and heat for production assets, as well as the pursuit of new projects based on innovative technologies, including Renewable Energy Sources. At the ORLEN Group, we are committed to continuous efforts towards operational excellence in such areas as production process optimisation, distribution losses and the improved efficiency of process units. Our strategic vision in the Energy area is to transform the ORLEN Group from an energy consumer to an energy producer. All activities required to achieve the stated objectives are carried out with due regard for the environment and local communities.

Key projects in the Energy area:

• Włocławek CCGT Plant − commissioning and launch of commercial sale of electricity
• Płock CCGT (combined-cycle co-generation gas turbine) Plant– construction
• Obtaining white certificates as a part of the initiative to improve energy efficiency
• X-Selling – project implementation
• Testing of pilot photovoltaic panels at service stations and pilot LED installation at the CHP plant in Płock
• Implementation of ISO 50001- compliant Energy Management System
• GAHE (Active Energy Trading Platform) – implementation work on the Czech and Lithuanian markets

In 2016, the energy saving measures led to the following reductions in energy consumption:

• Electricity – 16,242 MWh
• Heat in steam – 102,753 GJ

The savings were calculated based on data from PKN ORLEN, Unipetrol and ORLEN Lietuva. The main criterion in selecting the reporting companies was their business materiality for the Energy area. The figures comprise the Energy area exclusively, i.e. CHP and CCGT units.

The table sets forth companies with the highest consumption and production figures (PKN ORLEN, ANWIL, Unipetrol, ORLEN Lietuva). The figures exclusively comprise the Energy area, i.e. CHP and CCGT units.

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