Poland's PKN prefers gas as fuel for new Ostroleka power plant

WARSAW, May 19 (Reuters) - PKN Orlen will only invest in building a power station in Ostroleka in the north east of the country if it uses gas, the state-run oil refiner said on Tuesday.

Earlier in May, PKN Orlen had completed a takeover of state-run utility Energa, which had planned to build a 1 gigawatt coal-fuelled power plant in Ostroleka.

The project, dubbed the last coal power plant in Poland, has been suspended because of financing and climate issues. PKN had planned to continue with the investment but had signalled that it might opt to replace coal with less-carbon heavy gas a fuel.

“We cannot act in isolation from market trends and European Union’s regulatory policies,” Chief Executive Daniel Obajtek said in a statement. “The investment in Ostroleka will be conducted but it has to be based on gas technology.”

Poland generates most of its electricity from coal, but is looking to gradually replace it with less polluting sources, including gas. (Reporting by Agnieszka Barteczko. Editing by Jane Merriman)