The “Stabilisation and Secure Development” strategy

The key objectives of the Grupa LOTOS Strategy are the Group’s stabilisation and sustainable growth.

As Poland’s leading company and a major energy group, Grupa LOTOS S.A. strives to position itself as:

a producer of premium quality fuels and chemicals, with the optimal degree of vertical integration
a provider of specialist logistics and maintenance services
a leader of innovative implementations within its core business

designed to promote sustained growth in Grupa LOTOS S.A. shareholder value.

The Company pursues five strategic objectives:

effective use of assets throughout the value chain: including optimum use of production licences, further technological optimisation of the refinery, launch of new products and alternative fuels, and commitment to quality;
consistent and repeatable reduction of operating expenses and optimisation of margins along the value chain;
readiness to develop and embrace innovation based on dedicated funding, an advanced model of cooperation with research institutions and creative engagement of employees;
flexible response to risks, perceived also as potential business opportunities;
commitment to fostering and developing talent within the organisation, improving safety and security (across OHS, infrastructure, and IT), and coherent standards of corporate social responsibility.

2020 was a challenging year marked by volatility. On the one hand, it set negative records in the history of the oil and gas markets. The pandemic and consequent lockdowns caused oil demand to fall on an unprecedented scale, creating an unfavourable macroeconomic environment. Since early 2020, 14 refineries have announced permanent closures.

On the other hand, the pandemic situation confirmed the strong flexibility and competitiveness of our refinery, which maintained stable and continuous operations throughout the year (with a 96.8% capacity utilisation rate). The energy transition and the supporting environmental and regulatory changes, bound to shape strategic development directions in the coming years, also gained strong momentum.

Karol Plewa

Strategy Office Head

The Strategy is to be pursued within two time frames. In 2017–2018, the main goals were to stabilise cash flows, reduce debt, and effectively implement the ongoing investment projects.

In 2019–2022, the Company plans to pursue a new investment programme based on development of selected production assets, building an efficient upstream asset portfolio, further organic expansion of the retail chain and implementation of innovative projects.

As at the date of issue of this report, the Company was involved in work related to the planned acquisition of Grupa LOTOS S.A. by PKN Orlen S.A.

Set of key metrics to assess the implementation of the Grupa LOTOS Strategy for 2017–2022:

doubling of annual average LIFO-based EBITDA in 2019–2022,
reduction of net debt/LIFO-based EBITDA to or below 1.5,
capital expenditure at PLN 9.4 billion over the entire Strategy period,
acquisition and maintenance of 2P crude oil and natural gas reserves at¹ over 60 million boe, with an average annual hydrocarbon production volume in 2019–2022 at 30-50 thousand boe/d,
increase in the number of service stations to 550,
low accident rate (LTIF²<3).

⁽¹⁾zasoby 2P – pewne i prawdopodobne wg klasyfikacji SPE
⁽²⁾LTIF – ang. Lost Time Injury Frequency

Our capitals

Implementation of the strategy in 2020

The “Stabilisation and Secure Development” strategy

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