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The Warsaw Voice » Special Sections » August 29, 2012
Special Section: LOTOS
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Market Position of Lotos Group Companies
August 29, 2012   
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Lotos Paliwa—dynamic development of petrol station chain
Lotos Paliwa is the leading company in the Lotos group responsible for the development and effective management of the company’s petrol stations. Lotos outlets offer excellent quality fuels which has a certified quality management system complying with the ISO 9001 standard. The quality of Lotos fuels has long exceeded national and European requirements. All the types of gasoline and diesel fuel produced by Lotos have much less sulfur than the maximum amount permitted by current European standards. The Lotos chain has 370 petrol stations conveniently located in cities and along major highways. The company also invests in building stations along freeways and expressways as part of the Traveler Service Points network and is successfully developing its economy network called Lotos Optima, which is extremely popular among Polish motorists.

Lotos Paliwa also has a quality management system certified by PCBC SA for wholesale trade and delivery of petrol and diesel fuel for road vehicles to petrol stations and for wholesale trade in light heating oil.

Currently Lotos’ petrol stations network is the fastest developing in Poland. Apart from launching a new, economy petrol station format, the company is opening new-look stations in its premium segment, with a changed color scheme and a broader range of catering options. The entire premium outlets network, currently accounting for half the fuel stations, will be given an image revamp within two years. Lotos expects that the changes at premium stations will increase profits and the group’s slice of the pie in terms of retail sales.

Lotos Oil—leader on Poland’s oil and lubricant market
Lotos Oil is a leader in its sector, with an almost 30-percent market share. Every driver both at home and abroad is familiar with Lotos motor oils. Their quality and reliability mean they are the product of choice for the most discerning customers, making Lotos the best-known brand on the Polish oil market. Lotos Oil offers not only top-quality motor oils but is also developing its professional lubricating oil service as an integral part of its range of services. Serwis Olejowy (Oil Service) helps customers introduce new procedures and techniques, guaranteeing safe operation of machinery.

Lotos Oil boasts a quality management certificate under the AQAP 2110 system. This means that Lotos Oil SA products meet NATO requirements and criteria for military suppliers and companies from this sector. Lotos oils have received the Consumer’s Golden Laurel title for the best Polish motor oils.

The company is notching up significant sales growth in all its major international markets, chiefly in the European Union, Central Asia and the Middle East. However, the fastest growth is visible in exports to countries neighboring Poland. Lotos oils and lubricants are sold to more than 45 countries around the world.

Lotos Asfalt—leader on Poland’s asphalt market
Lotos Asfalt is a leading supplier of asphalt in Europe and a leader in the sale of the most technologically advanced modified asphalt, Modbit (modified bitumen), on the domestic market. The company focuses its operations on making and selling asphalt and road emulsions. The company holds certificates confirming that it observes the highest quality standards in management as well as production processes and services provided. Both the road asphalt and asphalt emulsions have been redesigned to comply with national standards. At the same time, the company has adapted its new products to the requirements of the European market. The asphalt the company has offered for many years is used successfully in the construction of roads and freeways by well-known construction companies in Poland and around Europe. Such products were used in the construction of the A1, A2 and A4 freeways and on many national highways and road infrastructure projects all over the country. Lotos Asfalt received the Market Innovation Leader 2012 title, an award granted by the Dziennik Gazeta Prawna daily, confirming the company’s position as one of the most innovative businesses in Poland.

Lotos Kolej—second-largest rail carrier in Poland
Lotos Kolej is a rapidly developing railway operator 100-percent owned by Grupa Lotos. Its core task is to provide a comprehensive railway service to companies forming Lotos holding. However, the high quality of its services, an open attitude, flexibility and attractive transport services make Lotos Kolej a valued partner for many external businesses. The company’s market share in Poland is already above 7 percent. At present the company has the most modern fleet of locomotives in Poland. In the future it plans to continue adding rolling stock using advanced technological solutions and to increase the number of new-generation locomotives.

Lotos Kolej has an advanced IT system, essential in transport management, called the Railway Logistics System (SLK). Among other things, it enables train monitoring in real time via GPS devices and tracking of deliveries from sender to recipient; it also facilitates transport management and cost analysis. In addition, the SLK enables data on the working time of railway staff to be monitored on a continual basis.

Lotos Petrobaltic—exploration and extraction
Through its Lotos Petrobaltic company, Grupa Lotos is the only Polish company to be involved in upstream operations in the Polish economic zone on the Baltic Sea. Lotos Petrobaltic has been linked to Grupa Lotos since 2005 and operates in Poland, Lithuania and Norway.

Exploration and production operations in Poland are conducted in seven exploration concession areas (Gaz Północ, Gaz Południe, Gotlandia, Łeba, Rozewie, Sambia W and Sambia E) and four production concessions (B3, B8, B4, B6). On the Baltic Sea, Lotos Petrobaltic conducts production from deposit B3 and is working on developing deposit B8. The company operates in Polish maritime areas covering about 29,000 sq km.

Crude oil production is also conducted in Lithuania, through the AB Lotos Geonafta company based in Gargzdai, Lithuania, which is 100-percent owned by Lotos Petrobaltic.

Intensive work also continues in Norway, through Lotos E&P Norge (Lotos Exploration and Production Norge AS), a company established in 2007 and based in Stavanger, Norway.

Strategic goals in upstream operations are carried out under the following development guidelines:
- Continuing operations in the Baltic Sea, on the Norwegian Continental Shelf and in Lithuania;
- Showing an interest in partly developed deposits or ones in the final stage of development, with the aim of launching extraction quickly;
- Joining promising projects and obtaining new licenses, including on land;
- Seeking development opportunities in niche areas, for example getting involved in drilling and extraction in Lithuania;
- Focusing mainly on regions posing low and moderate risk in seeking hydrocarbon deposits, including shale gas.

The importance of the drilling and extraction segment is growing every year. Apart from extracting and managing deposits on the Baltic in the Polish economic zone, the company plans to take part in a program of searching for inland oil and gas deposits in Poland, including a search for unconventional deposits. Its priorities include seeking a prospective partner to work with in order to speed up exploration activity and effectively utilize gas licenses.

From the moment Lotos took over extraction company AB Geonafta in 2011, the group has also been intensifying its presence in Lithuania, where six production boreholes have been drilled.

There are also plans to monitor other areas with an eye to projects involving low and moderate risk in North Africa and countries in the Caspian Sea basin as well as Central and Eastern Europe.

In 2011, total oil production stood at 227,100 tons, of which:
- 78,100 tons was extracted in Lithuania
- 149,000 tons was extracted in Poland.

The crude oil reserves of the Lotos Petrobaltic group classified as category 2P amount to 6.9 million tons (53.5 million barrels) and those classified as category 2C total 1.4 million tons (10.8 million barrels). Its category 2P natural gas reserves total 500 million cubic meters, and category 2C reserves total 6.4 billion cubic meters.
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