LOTOS closed the first quarter of 2013 with revenue of PLN 7.2 billion, a decrease of 8.4% year on year. This follows strong pressures on the financial results from the appreciating  stronger US dollar, the maintenance shutdown of the Company's Gdańsk refinery, the impact of the so-called grey market for fuel in Poland, as well as a lengthy winter.

Since the beginning of 2013 the US dollar has appreciated by more than 5.5%. This has had a negative effect on the LOTOS Group's operations and on the revaluation of its debt, which lies predominantly in the dollar.

Additionally, after the first two months of 2013, consumption of motor fuels in Poland fell 6.9% (7.6% gasoline, 5.6% oil). This is partly due to the economic downturn, but is mainly attributable to the development of a grey market for fuels, which the Polish Organisation of Oil Industry and Trade estimates at 6%-7% (for diesel).

- The oil market has always had a strongly seasonal character, with the first quarter generally characterised by lower sales and reduced demand - explains Paweł Olechnowicz, CEO and President of Management Board at Grupa LOTOS S.A. - On March 29th, the planned maintenance shutdown of our refinery began, which had an almost immediate impact on Q1 results. Throughout March we sold less products, some of which went to the tanks as a reserve anyway, to support sales in April, during the shutdown.

On May 10th the Gdańsk refinery will resume full processing and production operations. In addition to the routine maintenance work carried out during the shutdown, LOTOS has already completed several investments designed to increase the production capacity of individual installations and to reduce costs. These will further optimise the refinery's work and have a positive effect on sales in the coming quarters.

Ultimately, LOTOS ended the first quarter with operating profit and net profit at PLN -25.6m and PLN -147.3m, respectively.

Agreement in Norway and development of Baltic Sea gas projects

An important development in the first quarter of the year was the conclusion of an agreement on removal of the faulty platform from the Yme field in Norway, and the payment of USD 470m compensation by the platform's owner, SBM Offshore, to the consortium operating the concession. LOTOS E&P Norge received 20% of the amount. It should be noted that as a result of the agreement, LOTOS has the option to pursue an alternative development concept for the field, or to divest itself of its interest in the Yme license. Another milestone in the exploration and production segment was CalEnergy Resources Poland's accession to Baltic Gas, a special purpose vehicle set up by LOTOS Petrobaltic. This will enable implementation of the investment agreement signed in October 2012 on cooperation in the development of the B4 and B6 gas fields in the Baltic Sea, the recoverable reserves of which are estimated at 4bn m3.

Effects of winter and the grey market

In Q1 2013, utilisation rate in Gdańsk refinery was at 89.8%, about 3 percentage points up on Q1 2012, while the volume of processed crude was relatively flat year on year. However, the downstream segment's performance in the first quarter of 2013 was affected by prolonged winter and the development of the grey market.

Retail growth

Q1 2013 saw an 8.6% increase in the LOTOS station network's share of the domestic retail market. This is primarily the result of the network's intensive development since 2011: in the first quarter of this year alone, LOTOS opened a further 10 stations (including seven LOTOS Optima stations in the economy segment). At present, LOTOS Optima stations are present throughout the country. It should also be noted that non-fuel sales account for a significant part of the LOTOS network's revenue.

JET sales also up

In Q1 2013, LOTOS increased production and sale of its JET aviation fuel, by 38.5% year on year. This was helped by the launch, in January of this year, of aviation fuel sales at Chopin Airport in Warsaw, which serves nearly 40% of all passenger air traffic in Poland. In May 2013, sales of aviation fuel 'at the wing tip' will commence at Kraków's John Paul II airport.

Communications 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