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* Strategy pegs total investments in 2013-17 at PLN 22.5 bln
* Plans dividend yield of up to 5 pct
* Pegs avg annual adjusted EBITDA at PLN 6.3 bln
* General Electric to build PLN 1.1 bln power block
By Pawel Bernat and Adrian Krajewski
WARSAW, Nov 30 (Reuters) - Poland's top refiner PKN Orlen said on Friday it would invest more than the company is worth in energy production and shale gas exploration over the next five years, sending its shares down sharply.
The state-controlled company, which is worth 20 billion zlotys (6.4 billion euros), said it planned to spend 22.5 billion zlotys between 2013 and 2017, with a focus on shale gas exploration and energy production.
PKN shares fell more than 2 percent, the biggest decline on Friday of any of the blue-chip stocks on the Warsaw bourse. The company announced it would resume paying dividends, but that was not enough to ease market concerns.
"Part of the market was may be scared by the planned investment scale," Ipopema Securities analyst Konrad Anuszkiewicz said.
PKN, together with Poland's gas monopoly PGNiG, is at the forefront of the country's drive to tap its shale gas resources. PKN expects its annual gas production to rise from zero to 161 million cubic metres by 2017.
Shale gas is a strategic priority for the Polish state, which is anxious to reduce its dependence on energy imports from Russia. But some people in the sector say that, from a commercial point of view, shale gas carries big risks.
"In the coming years we expect our operating cash flows to be high and we believe that we'll be able to combine dividends with investments," PKN's deputy head Slawomir Jedrzejczyk said.
The refiner has not paid dividends since 2008. It now sees its dividend yield at up to 5 percent, with the joint dividend payout in the five years to come at no higher than 5 billion zlotys.
Jedrzejczyk told a call with analysts that the market should expect the dividend from its 2012 profit in the range of 0-2 zlotys per share, which pegs the payout at up to 855 million zlotys.
PKN wants to close this year with investments of around 2 billion zlotys, rising to 3.6 billion in 2013 - the first year of the group's new strategy.
The refiner added it reached an agreement with General Electric to build its new gas-fired power block in Wloclawek for 1.1 billion zlotys. It plans for the plant to be finished in three years.
PKN also forecasts this year's EBITDA core profit - employing the LIFO (last-in, first-out) inventory accounting method which strips out the effect of oil reserves revaluation -at around 5.1 billion zlotys.
In the five years to come, the group expects average EBITDA LIFO of 6.3 billion zlotys, 58 percent more than in the years 2008-2012.