Polish special services have initiated an investigation into Orlen Trading Switzerland, a subsidiary of the state-controlled Polish refiner Orlen (PKN.WA). The focus of the probe revolves around potential violations of sanctions concerning oil imports from Russia and Iran. The inquiry, as reported by broadcaster Radio Zet, marks the latest in a series of challenges faced by the company.
The company was engaged in controversies when Orlen took over Lotos.
The investigation underscores the gravity of the situation, as violations of sanctions related to oil imports could have serious legal and financial repercussions for Orlen Trading Switzerland and its parent company, Orlen. Such violations can lead to hefty fines, damage to the company’s reputation, and potentially even legal action against individuals involved.
The scrutiny from Polish special services highlights the importance of compliance with international sanctions regimes, especially in sensitive areas such as oil imports from countries under sanctions. Orlen Trading Switzerland will need to cooperate fully with the investigation and take steps to ensure compliance with all relevant sanctions laws and regulations to mitigate any potential fallout from the probe.
Allegations against Orlen
The investigation follows allegations that Orlen engaged in artificially lowering prices ahead of the 2023 election and sold assets below fair value to acquire a smaller peer. However, Orlen has vehemently denied any breach of sanctions. The company’s ongoing scrutiny also coincides with claims that the previous nationalist Law and Justice (PiS) administration exerted political influence over state-controlled entities.
Financial Impact
Orlen made headlines by announcing a substantial write-down of 1.6 billion zloty (approximately $403.82 million) on the value of Orlen Trading Switzerland (OTS). This move significantly impacted the group’s 2023 profit and raised further questions about the company’s financial stability.
Shifting Strategies
In August 2023, Orlen’s use of tankers previously carrying Russian crude to Asia sparked concerns regarding adherence to EU and G7 price caps for Russian oil. At the time, Orlen asserted that all their activities, including crude oil delivery, were in line with applicable sanctions.
Despite earlier denials of involvement in Russian oil shipments, Orlen adjusted its strategies amidst geopolitical pressures. The company shifted focus to purchases from Middle Eastern, U.S. crude, and Asian fuels. Notably, Orlen was once one of the largest buyers of Russian crude oil for its refineries in Poland and Lithuania.
Chief Executive’s Perspective
Last summer, PKN Orlen’s Chief Executive Daniel Obajtek drew attention when he likened the act of losing Russian oil to forfeiting $27 million per day due to the price difference between Russian oil and alternative supplies. Obajtek clarified that despite the changes, PKN Orlen continued to make strategic purchases.
As the investigation unfolds, the spotlight remains on Orlen’s actions, financial decisions, and compliance with international sanctions.
