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In September, LOTOS's model refining margin amounted to USD 7.86/bbl, hitting the highest monthly level so far this year. This year-on-year margin increase is chiefly attributable to lower crude oil prices and a growing Brent-Urals differential.

Refining activity

In September, LOTOS's model refining margin amounted to USD 7.86/bbl, hitting the highest monthly level so far this year. This year-on-year margin increase is chiefly attributable to lower crude oil prices and a growing Brent-Urals differential.

Compared to September 2013, the margin posted by LOTOS is 73% higher. The September 2014 refining margin is also nearly twice as high as the lowest margin posted this year in May, when it amounted to USD 4.09/bbl.

The margin rose chiefly on the back of the growing Brent/Urals differential and crude oil prices falling faster than those of petroleum products. Given the favourable prices of individual products, LOTOS benefits from its product yield as the high conversion ratio of the Gdańsk refinery makes it possible to match the output to domestic demand and export capabilities.

Following the completion of the 10+ Programme in 2011, LOTOS upgraded the Gdańsk refinery, increased its annual processing capacity from 6 to 10.5 million tonnes and expanded the product slate. Upgrade and expansion of the Gdańsk refinery as part of the 10+ programme made it possible to produce higher quantities of high-margin products from each processed barrel and process crudes requiring more advanced technology.

In addition, in the coming years LOTOS plans to construct a delayed cocking unit with associated infrastructure. The Company estimates that its refining margin will go up by additional USD 2/bbl after this project is delivered. This will be achieved primarily on the back of a lower share of heavy petroleum products in LOTOS's total output, which will be replaced by more profitable liquid fuels.

For more information on how LOTOS calculates its margin go to: http://inwestor.lotos.pl/en/1440/investors/model_refining_margin

Communications Office
Grupa LOTOS S.A.
ul. Elbląska 135,
80-718 Gdańsk,
tel. 58 308 87 31, 58 308 83 88, 58 308 83 55,
e-mail: media@grupalotos.pl