ORLEN Południe and PGNiG to develop biomethane production business in Poland

7 May 2021

ORLEN Południe, an ORLEN Group company, and Polish Oil and Gas Company (PGNiG) have signed a letter of intent to strengthen cooperation in the development of renewable energy sources. The companies plan to set up a special purpose vehicle that will invest in the development of a network of biomethane plants. Using agricultural and waste substrates and residues from the processing industry, state-of-the-art plants would produce environmentally friendly biomethane which could be used in the industrial or power generation sectors.

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 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.

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