June 5, 2020 / 5:04 PM / a month ago

PKN offers to sell Lotos stake in BP JV to allay EU concerns, says source

FILE PHOTO: The logo of PKN Orlen, Poland's top oil refiner, is pictured at a petrol station in Warsaw, Poland April 25, 2019. REUTERS/Kacper Pempel/File Photo

BRUSSELS (Reuters) - Poland’s biggest refiner PKN Orlen (PKN.WA) has offered to sell bid target Lotos’ (LTSP.WA) stake in a joint venture with BP to allay EU antitrust concerns about a takeover of its smaller rival, a person familiar with the matter said.

The offer also includes a pledge to supply jet fuel to the joint venture LOTOS - Air BP Polska (LABP) with access to PKN’s storage capacity with the aim of creating a viable competitor to state-owned PKN, the person said.

PKN is seeking to acquire at least 53% of Lotos, in which Poland holds a 53.19% stake. EU competition enforcers, however, said the deal may lead to higher prices and lessen competition in Poland, the Czech Republic, Estonia, Lithuania, Latvia and Slovakia.

That prompted PKN’s offer to the European Commission early last month to sell Lotos’ share in LABP, a joint venture set up in 2013 dealing with the supply, logistics, and sales of aviation fuel in Poland.

The company subsequently offered to increase on a yearly basis the amount of jet fuel to be supplied to LABP. Other concessions include access to jet fuel storage capacity for three airports.

PKN also offered to build a new jet fuel import terminal at an airport, the source said.

PKN’s package covers the wholesale fuels market, retail supply of fuels and supply of jet fuel, bitumen and lubricants, areas singled out by the Commission when it launched a full-scale investigation into the deal in August last year, other people told Reuters last month.

PKN wants EU regulators to take the impact of COVID-19 into consideration when assessing the deal and efforts by Poland to comply with EU climate goals.

The Commission, which has set a July 22 deadline for its decision, and PKN were not immediately available for comment.

Reporting by Foo Yun Chee; Editing by Elaine Hardcastle

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