Description of activity

Grupa LOTOS S.A. is a vertically integrated petroleum concern, conducting its activity in the field of crude oil extraction and processing as well as distribution and sale of wide range of petroleum products. It operates on the wholesale and retail markets. The employment in the capital group amounted to nearly 4900 employees at the end of June 2009, and its consolidated sales revenues in 2008 exceeded PLN 16 billion, having increased 24% in a year. Through the subsidiary companies - Petrobaltic and LOTOS Norge, the firm is also operating on the Baltic Sea and the Norwegian continental shelf, where it conducts oil exploration and extraction. Within the framework of currently implemented Programme 10+, the Gdańsk Refinery is increasing its oil processing capacity, from the present 6 million tonnes of crude oil per year to 10.5 million tonnes per year. In autum 2009, the construction of the second CDU/VDU distillation unit is due to be completed. After completing the whole investment process in 2010, the oil processing volume will increase by 75%. In July 2009, the diesel oil hydrodesulfurization (HDS) unit was put into operation as the first production unit built within the framework of Programme 10+. The HDS unit will allow LOTOS to increase the target production of diesel oil (which is in short supply on the European market) by 2.5 million tonnes per year. According to its strategy objectives, the Company plans to increase its share in the domestic fuel market up to 30% by 2012. Grupa LOTOS S.A. is a leader on the domestic market of asphalts, lubricating oils and paraffins. LOTOS Oil holds more than 29% of the Polish engine oil market. It holds a nearly 32% market share in the domestic oil extraction. The whole of the extracted oil is processed in the Company’s plant in Gdańsk. LOTOS Asfalt is a leader in the sales of road asphalts in Poland and holds a nearly 40% share on the road asphalt’s market in Lithuania. LOTOS Parafiny is one of the biggest paraffin producers and distributors in Europe. LOTOS Tank strengthens its position on the monopolised market of aircraft fuels in Poland. In June 2009, it completed its first aircraft fuel base at the Gdańsk airport. LOTOS Kolej is one of the three largest railway carriers in Poland. The oil processing products – lubricating oils, asphalts, petrol, aircraft fuel, candles and paraffins and many more - find their way to most countries of Central and Eastern Europe. Moreover, Grupa LOTOS S.A. has entered the Norwegian market, where it holds 10 licences and develops its oil exploration and extraction activities. Grupa LOTOS S.A. is the second petroleum company to get a direct access to oil deposits outside the Polish borders.