PiS Authorized Saudi Oil Deal Despite Concerns Over Poland's Energy Security [EXCLUSIVE]

On November 18, 2022, the Business Insider news portal published an article revealing previously unknown details about the Polish-Saudi oil deal signed earlier this year: "Two important clauses have disappeared from the contract for the purchase of shares in Lotos (Gdańsk Refinery) from Saudi Aramco: a provision forbidding the Saudis for three years to sell the acquired shares in Lotos, and a clause giving Orlen a pre-emptive right to acquire them". The article concludes: "Once the deal is signed, Saudi Aramco will be able to immediately sell the shares to another investor".

When asked to clarify the issue, Orlen responds with angry statements, claiming that the assets acquired by the Saudis are protected by Polish law. The Ministry of State Assets (MSA), which oversees state-owned companies, says pretty much the same.

Both Orlen and MAP cite the Act on Control Over Certain Investments. It is supposed to protect the assets of strategic companies from being taken over by entities that, by virtue of their connections, may threaten national security, including energy security. This includes, for example, Russian companies.

However, according to "Wyborcza’s" investigation, the Polish government simply bypassed the Act on Control Over Certain Investments.

In a May 2021 interview with the public radio channel one, Orlen’s CEO Daniel Obajtek responded to allegations that the future buyer of Lotos' assets could later sell them to the Russians by saying: - Certain agencies are trying to scare the public by saying silly things.

At the same time, he noted: - We will cooperate with the Russians.

Bypassing regulations on foreign investments

On November 30, Orlen signed a so-called "definitive share purchase agreement" with Saudi Aramco- one of the final stages of the transaction. Orlen’s shares in Lotos were sold for less than $500 million.

The Saudis bought a 30% stake in the Gdańsk Refinery, 100 % of the fuel wholesaler, and 50% stock in aviation fuels. Orlen and the Ministry of State Assets once again assured us that the Act on Control Over Certain Investments protects Lotos' assets from a hostile takeover.

But this is not true. The law was bypassed or even blatantly violated. The head of Poland’s Office of Competition and Consumer Protection (OCCP), the controlling body responsible for its application, confirms that.

The Act on Control Over Certain Investments was passed on July 24, 2015, at the end of the PO-PSL government. The current government has amended it twice: in 2020 and 2022. The amendments did not affect the main objectives: the law is intended to protect strategic companies from having their assets seized, in whole or in substantial part, by entities that could threaten national security.

The act lists more than a dozen protected economic areas and companies. The part of the Gdańsk Refinery sold to the Saudis falls into as many as five categories: gasoline production, diesel fuel, storage, transmission, and wholesale.  

The transaction should have looked like this: Saudi Aramco (through its representative in Poland) should inform the OCCP of its intention to acquire a stake in the Gdńsk Refinery. Aramco would then provide the OCCP with all information regarding its capital, connections, liabilities, etc.

Before issuing a decision, the OCCP must seek the opinion of a body called the Consultative Committee. Each of its 22 members must have access to classified information (this authorization is granted by the Internal Security Agency). Only after a positive recommendation from the Committee, the OCCP can greenlight the transaction.

However, "Wyborcza" has found that neither the OCCP, MAP, nor any other state institution consulted the Committee. This constitutes a violation of the aforementioned law. In fact, the Saudi deal was not considered fully secure. This was confirmed by the institutions responsible for the sale of Lotos and compliance with the law.

"Saudi-Russian relations are as warm as the weather in Riyadh"

In June 2022, four months after Russia's invasion of Ukraine, when the world imposed harsh sanctions on Russia, Saudi Arabia's Energy Minister Abdulaziz bin Salman and Deputy Prime Minister of the Russian Federation Alexander Novak held a conference at a forum in St. Petersburg. The Saudi prince said at the time: "Saudi-Russian relations are as warm as the weather in Riyadh". Temperatures in the country's capital this month range between 31 and 41 degrees Celsius. 

Saudi Aramco's relations with Russia and its companies have a long history. Aramco is a state-owned corporation, so its relationships with foreign entities are also of a state nature. Especially those with Russia, because the entire Russian oil and gas industry is also controlled by the state and its special services. It is an instrument of that country's imperialistic policy.

***

Every day, 400 journalists at Gazeta Wyborcza write verified, fact-checked stories about Polish politics and society, keeping a critical eye on the ruling camp’s persistent assault on democratic values and the rule of law; the growing cultural tension between religious fundamentalism and human rights; and the ongoing Russian invasion in Ukraine. Our journalists are on the front lines in 32 Polish cities, reporting from the streets, hospitals, and courtrooms about issues that move public opinion.

We decided to make our service available to everyone free of charge in order to provide access to high quality journalism for expats and English speakers interested in Polish affairs.

The access to information should be equal for all.