Orlen Unipetrol’s Strategic Restart of Litvinov Ethylene Unit and Its Impact on Refining and Petrochemical Margins

Orlen Unipetrol’s Litvinov ethylene unit has emerged as a focal point of scrutiny in Central Europe’s refining and petrochemical sectors. The Czech subsidiary of PKN Orlen, a key player in the region, has faced a series of operational setbacks at its Litvinov site, including a technical fault in the main ethylene compressor in August 2025, which forced a shutdown of the Steam Cracker and reduced fuel and petrochemical output [1]. These disruptions, compounded by a prior power failure in July 2025 and an unexploded World War II bomb discovered in 2024, have delayed the unit’s full restart and raised questions about its impact on regional margins and competitiveness.

Strategic Expansion and Operational Challenges

Orlen Unipetrol’s ethylene unit at Litvinov has undergone significant upgrades to bolster its capacity. The steam cracker, originally commissioned in 1979 with a 545,000-ton-per-year ethylene output, was expanded to 585,000 tons per year with the addition of an 11th furnace in 2022 [2]. Further investments, including the €410 million Polyethylene 3 unit, have increased high-density polyethylene production to 270,000 tons annually [3]. These expansions align with the company’s broader strategy to capture a larger share of the global petrochemicals market, particularly as European refiners pivot toward renewables and circular economy principles.

However, the path to operational stability has been fraught. A controlled disposal of the unexploded bomb in August 2024 forced a temporary shutdown of the refinery and petrochemical operations, followed by a cooling system malfunction in July 2025 that triggered a force majeure declaration [4]. The August 2025 compressor failure further underscored the fragility of the unit’s infrastructure, with Unipetrol acknowledging that a full restart could take months due to the need for detailed damage assessments and regulatory collaboration [5].

Margins and Regional Competitiveness

The operational turbulence at Litvinov has had tangible effects on refining and petrochemical margins. According to a report by Central European Chemical Market News, Orlen Unipetrol’s refining margins in Q3 2025 outperformed MOL’s despite the latter’s access to discounted Russian crude [6]. This margin advantage is attributed to Orlen’s diversified feedstock strategy, which includes imports from Saudi Arabia and the North Sea, as well as its ability to maintain higher utilization rates at its Kralupy refinery [7].

In the petrochemical segment, however, the picture is more nuanced. While Orlen Unipetrol’s ethylene unit has historically operated at 81% utilization in Q4 2023 (up from 49% in Q2 2023) [8], recent outages have likely eroded this efficiency. Meanwhile, MOL and Slovnaft face their own challenges: MOL’s petrochemical EBITDA declined by 41% in 2023 due to lower margins, while Slovnaft is phasing out Russian crude dependency, reducing its reliance from 95% to 60% by 2024 [9].

The broader market context complicates the outlook. European refining margins, as tracked by OMV, are projected to average $6 per barrel in 2025, down from $7.15 in 2024, reflecting weak diesel demand and overcapacity [10]. For Orlen Unipetrol, the restart of the Litvinov ethylene unit could mitigate some of these pressures by restoring petrochemical output and leveraging its expanded capacity. However, the unit’s repeated failures highlight the risks of over-reliance on aging infrastructure in a sector increasingly shaped by sustainability mandates.

Strategic Implications for Investors

Orlen Unipetrol’s strategic investments in recycling and hydrogen projects—such as its goal to produce 20% of petrochemical output from recycled materials by 2030—position it to navigate the transition to a low-carbon economy [11]. Yet, the immediate challenge lies in stabilizing the Litvinov ethylene unit. A successful restart would not only restore production capacity but also reinforce Orlen’s competitive edge in Central Europe, where refining margins are expected to remain volatile.

For investors, the key variables will be the timeline for the ethylene unit’s full restart and the company’s ability to maintain margin resilience amid regional headwinds. While Orlen’s operational discipline and strategic foresight suggest a favorable long-term outlook, the recent technical setbacks underscore the importance of monitoring maintenance schedules and regulatory developments.

Source:
[1] Orlen Unipetrol is forced to seek help from the state to meet diesel demands due to a Czech refinery shutdown, [https://energynews.oedigital.com/refined-products/2025/08/20/orlen-unipetrol-is-forced-to-seek-help-from-the-state-to-meet-diesel-demands-due-to-a-czech-refinery-shutdown]
[2] REFINERY NEWS ROUNDUP: European refiners focus on renewables and move away from crude, [https://www.spglobal.com/commodity-insights/en/news-research/latest-news/crude-oil/100721-refinery-news-roundup-european-refiners-focus-on-renewables-move-away-from-crude]
[3] Petrochemicals, [https://raportzintegrowany2022.orlen.pl/en/operating-segments/operating-segments-in-2022/petrochemicals/]
[4] Orlen Unipetrol shuts PP plant amid refinery outage, [https://www.argusmedia.com/en/news-and-insights/latest-market-news/2598812-orlen-unipetrol-shuts-pp-plant-amid-refinery-outage]
[5] Unipetrol: Litvinov ethylene plant restart likely to take months, [https://www.ogj.com/refining-processing/petrochemicals/article/17245130/unipetrol-litvinov-ethylene-plant-restart-likely-to-take-months]
[6] Central European chemical market news March 2024, [http://www.cirec.net/LatestIssue.aspx?m=03&y=2024]
[7] Orlen sees refining margins weakening, [https://www.argusmedia.com/en/news-and-insights/latest-market-news/2600517-orlen-sees-refining-margins-weakening]
[8] Orlen Unipetrol enters the segment of mechanical waste recycling, [https://www.plasticportal.eu/news/orlen-unipetrol-enters-the-segment-of-mechanical-waste-recycling]
[9] CIREC News February, [http://www.cirec.net/LatestIssue.aspx?m=02&y=2023]
[10] REFINERY NEWS ROUNDUP: Change of ownership in focus in Europe, [https://www.spglobal.com/commodity-insights/en/news-research/latest-news/refined-products/021125-refinery-news-roundup-change-of-ownership-in-focus-in-europe]
[11] ORLEN Unipetrol enters the segment of mechanical waste recycling, [https://www.plasticportal.eu/news/orlen-unipetrol-enters-the-segment-of-mechanical-waste-recycling]