Orlen weighs whether to keep funding the Mažeikiai upgrade as Fąfara says the investment will never pay back

In brief

• Orlen is weighing whether to fund completion of a deep conversion unit at its Mažeikiai refinery in Lithuania.
• CEO Ireneusz Fąfara says the investment will never pay back; abandoning it could lead to closing the plant.
• Sources put the remaining funding gap at 600 million to 700 million dollars.

Funding decision on the Lithuanian refinery

Orlen is analysing whether it makes sense to spend more on finishing the bottom-of-the-barrel (BoB) deep conversion unit at Mažeikiai, the company's refinery in Lithuania. Chief executive Ireneusz Fąfara told PAP Biznes on Tuesday that the extra outlay under review is very large (Orlen rozważa celowość dalszego finansowania inwestycji w Możejkach. Potrzeba jeszcze nawet 700 mln USD – Puls Biznesu) (Fąfara: Inwestycja w Możejkach nigdy się nie zwróci. Orlen analizuje scenariusze – Bankier.pl).

The alternative under consideration is to abandon the project. Fąfara has said openly that the investment will never pay back, and that dropping it would raise the risk of closing the Lithuanian plant (Prezes Orlenu: "ta inwestycja nigdy się nie zwróci". Ważą się losy rafinerii – Business Insider Polska).

Estimated funding gap

According to sources close to the company, the project still lacks between 600 million and 700 million dollars. Unofficial figures put the shortfall at the same range, and one report puts the amount needed to finish the work at up to 700 million dollars.

Key figures

| Item | Amount (USD) | |---|---| | Funding gap, lower estimate | 600,000,000 | | Funding gap, upper estimate | 700,000,000 |

What happens next

No final decision has been announced. Orlen is still weighing the cost of completion against the consequences of closing a refinery that depends on the unit to remain competitive. The outcome will determine whether the company puts hundreds of millions of dollars more into Mažeikiai or accepts the risk of shutting it down.