Polskie Inwestycje Rozwojowe S.A. has executed its first investment project financing agreement with LOTOS Petrobaltic S.A.

On Monday, October 7th, Polskie Inwestycje Rozwojowe S.A. (PIR) and LOTOS Petrobaltic S.A. (LPB) signed an agreement on the financing of an investment project to develop the B8 crude oil field in the Baltic Sea. The project is to be carried out by a special purpose vehicle, with LPB holding a production licence for the field.

"The investment in the B8 development project has an average risk exposure profile, as PIR only invests in low- or medium-risk projects, which usually fall within the realms of infrastructure or private equity funds. The kinds of high-risk projects that are typical of venture capital, are out of question", stresses Mariusz Grendowicz, President of Polskie Inwestycje Rozwojowe S.A

Development work on the B8 field so far has been financed by LOTOS from internally generated funds. The agreement provides for the establishment of a special purpose vehicle (SPV), a wholly-owned subsidiary of LPB, to carry out the remaining work on the B8 field. This includes the conversion of the LPB's drilling platform into a production unit, the preparation of subsea infrastructure, and the drilling of the last injection wells before the field comes on-stream.

 "The launch of commercial production from the B8 field is planned for the end of 2015. We estimate the field's reserves at 3.5 million tonnes of crude oil. LOTOS Petrobaltic expects to produce approximately 220 thousand tonnes of crude oil per annum from the field”, notes Zbigniew Paszkowicz, President of LOTOS Petrobaltic S.A. and Vice-President, Chief Exploration and Production Officer, of Grupa LOTOS S.A.

"Our involvement in the B8 field production project in the Baltic Sea is fully consistent with the goals of Polskie Inwestycje Rozwojowe S.A., and I'm very happy that PIR's first project will also help to increase the diversification of Poland's energy sources”, says Mariusz Grendowicz, President of PIR.

Once the final agreements are signed, the project will be co-financed by third parties, including PIR and commercial banks.

“The upstream segment is viewed by LOTOS as its strategic priority until 2015. As part of the 'Effective and Rising 2013-2015' programme, the Baltic Sea will be the focus of LOTOS Petrobaltic’s operations. According to available geological data, potential crude oil reserves in the company’s Baltic licence areas are estimated at 30m tonnes, and making optimum use of these assets will allow us to improve Polish energy security. We are delighted to be working with Polskie Inwestycje Rozwojowe, and we appreciate their input,” pointed out Paweł Olechnowicz, CEO of Grupa LOTOS S.A.

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Polskie Inwestycje Rozwojowe (PIR S.A.) was established as part of the Polish Investments programme, which aims to secure financing for long-term, profitable infrastructural ventures in Poland. PIR S.A., which strives to stimulate GDP growth and create jobs, was registered on June 19th 2013.
PIR S.A. is a capital investor and a mezzanine finance provider for infrastructural investments, which focuses on Poland’s growth priorities as set forth in official documents presenting the economic and development strategies adopted by the Council of Ministers. The investments executed by PIR S.A. are compliant with the company’s Investment Policy. All investments undergo a commercial analysis, carried out in several stages. PIR S.A.’s operations are complementary to the offers of entities representing the commercial financial sector. Only endeavours which are profitable to PIR S.A. may receive financing under the Polish Investments Programme, as the company operates on market terms, as an entity supplementing the debt market with additional services.
PIR S.A. promotes best business practices and functions as a competence centre for infrastructural ventures and project financing, while also endorsing the highest ethical standards in investing.

Contact details:
Bridge Sp. z o.o.
Magdalena Wróbel
m.wrobel@bridge.pl
Tel. +48 22 565 48 86
Mobile: +48 662 003 559

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At present, LOTOS Petrobaltic S.A. holds four production and nine exploration licences in the Baltic Sea. Last year, the company produced nearly 190 thousand tonnes of crude oil and 21m Nm3 of natural gas from under the Baltic. The B3 field, which is currently in production, will be operational until 2026 and, thanks to the launch of the unmanned PG-1 platform, production in the period is expected to remain stable at 100 thousand tonnes annually.
At the same time, LPB and CalEnergy Resources Poland are working together to establish the feasibility of developing and beginning production from the Baltic B4 and B6 natural gas fields. If the results are positive, commercial production is expected to commence in 2016/2017. The estimated aggregate production output of both fields is approximately 250m Nm3.
Furthermore, as part of their work with PGNiG, the company is involved in development of onshore licences in Kamień Pomorski and Górowo Iławieckie.

Contact details:
Communication Office, Grupa LOTOS S.A., ul. Elbląska 135, 80-718 Gdańsk, Poland, tel. (+48) 58 308 87 31, (+48) 58 308 83 88, (+48) 58 308 83 55, e-mail: media@grupalotos.pl