Grupa LOTOS S.A. - Annual Report 2010

In 2010, functions in the marketing area were allocated as follows:

• The sales force located at Grupa LOTOS was responsible for sales of engine fuels to international companies, sales of aviation fuels, exports and intra-Community supplies of petroleum products, as well as purchases of feedstock, production inputs and goods for resale.
• The business of LOTOS Paliwa was the retail sale and wholesale of engine fuels and liquefied petroleum gas (LPG) on the domestic market.
• LOTOS Tank was engaged in the sale of aviation fuels on the domestic market.
• The business scope of LOTOS Oil included the production and distribution of lubricants: finished oils, automotive and industrial lubricants, as well as trade in base oils produced by Grupa LOTOS. Additionally, the company sold car-care products – automotive fluids – and expanded its offering to include plasticizer products (TDAE).
• LOTOS Asfalt produced and sold road and industrial bitumens, emulsions and binders, trading also in heavy fuel oil.
• The business of LOTOS Parafiny was the production and sale of high-quality paraffin and a wide range of paraffin mass and paraffin articles for the retail market.
• LOTOS Kolej organised and provided railway transport services to companies of the LOTOS Group and to third parties (mainly transport of petroleum products).

In line with its new strategy, the LOTOS Group’s efforts in the marketing area will focus on further development of the sales force, based on the expanded distribution network and efficient product logistics, as well as rapid development of the trading business in the area of crude oil and petroleum products.

The specific objectives set for the individual areas of the marketing segment are as follows:

Fuels

The objective is to maximise the economic effect by flexibly controlling the product flows and further strengthening the market position:

• to uphold a 30% share in the domestic fuel market,
• to achieve sales exceeding the Gdańsk refinery’s fuel production capacities by 15%.

Chain of petrol stations

The objective is to continue to rapidly develop the nationwide chain of LOTOS petrol stations, as a fully controlled and highly effective distribution channel by:

• securing a 10% share in the domestic retail market by the end of the time horizon covered by the strategy,
• expanding the chain of petrol stations and enhancing sales through the existing chain.

Other petroleum products

In the category of lubricating oils, the objective is to retain the lead of the Polish market, while in other product categories – to achieve the optimum economic effect by leveraging the available resources and market conditions.

Supply chain optimisation

In order to maximise its integrated margin, the LOTOS Group will focus on making optimum use of its assets and coordinating the key areas of the supply chain: planning, procurement, production and distribution.

Crude oil supplies

Thanks to its newly expanded processing capacities, the LOTOS Group will continue its policy aimed to diversify the routes and sources of crude oil supplies by:

• maintaining access to the sources of crude oil supplied via pipelines and by sea,
• flexibly selecting the types and routes of crude oil supplies, so as to maximise the integrated margin,
• intensifying its presence on the international oil market,
• increasing the share of its own production in crude oil supplies.