The past year ushered in a series of challenges for the companies in the fuel sector. The decisions made by us have demonstrated that we are able to take rapid steps to adapt to a demanding environment and ensure the desired profitability for our projects.
The segmental management model we have implemented enhances management efficiency, delivering cost and revenue synergies across the organization.
2014 ushered in a series of challenges for the companies in the fuel sector. The decisions made by the LOTOS Group have demonstrated that we are able to take rapid steps to adapt to a demanding environment and ensure the desired profitability for our projects.
The key factor that had a strong impact on both the global and Polish petroleum markets in 2014, with significant consequences for the LOTOS Group’s performance, was the price of crude oil, which also determined the price of petroleum products.
The LOTOS Group’s Strategy is designed to strengthen our position as a strong, innovative and efficient business which plays a major role in ensuring national energy security.
Our operations consist in crude oil production and processing, as well as wholesale and retail sale of petroleum products, among which are: fuels (unleaded gasoline, diesel oil and light fuel oil), heavy fuel oil, bitumens, aviation fuel, naphtha, propane-butane LPG and base oils.
At the LOTOS Group, we identify a range of diverse risks, which may affect all areas of our business. The key risks in terms of their impact on our operations are the financial risks as well as risks affecting the exploration and production area. In the analysis of the risks, we also factor in issues related to sustainable development.
With revenue of ca. PLN 28.5bn in 2014, we rank fourth in the group of 500 largest businesses in Poland.
34. Carbon dioxide (CO2) emission allowances
The CO2 emission allowances for 2013-2020 presented below account for allowances granted pursuant to the Regulations of the Council of Ministers, as well as for other free allowances allocated by the European Commission.
Number of free CO2 emission allowances for 2013-2020 and actual CO2 emissions:
|in thousand tonnes||2013||2014||2015||2016||2017||2018||2019||2020||Total|
|Allowances allocated under the National Allocation Plan (1)||1,766||1,688||1,652||1,613||1,576||1,540||1,505||1,461||12,801|
|Actual CO2 emissions||1,745||1.875 (2)||-||-||-||-||-||-||3,620|
(1) The number of free CO2 allowances in 2013–2020 as part of the National Allocation Plan (NAP) under the Regulation of the Council of Ministers of March 31st 2014 (Dz.U. of 2014, item 439) and the Regulation of the Council of Ministers of April 8th 2014 (Dz.U. of 2014, item 472), containing a list of installations covered by the greenhouse gas emission allowance trading system along with the number of allowances allocated to them. The figures also account for additional free emission allowances from the European Commission reserve, allocated in connection with the expansion of the refinery's production capacities following the introduction of natural gas to produce hydrogen.
(2) CO2 emissions, calculated based on the production data for the installations covered by the emission trading scheme. The data for 2014 will be subject to verification in accordance with Art. 59 of the Act on Trading in Greenhouse Gas Emission Allowances of April 28th 2011.
As at December 31st 2014, based on the limit of allowances for 2014 to be allocated under the EU ETS system and the actual volume of emissions, the Group reported a deficit of allocated CO2 emission allowances, and therefore recognised a PLN 2,784 thousand provision in 2014 (December 31st 2013: PLN 1,527 thousand). The PLN 1,257 thousand effect of the provision on operating profit (after reversal of the provision of PLN 1,527 thousand recognised in the previous reporting period) was disclosed under other expenses (see Note 9.4)
Moreover, to cover the deficit, in 2013 the Group acquired 923 thousand of CO2 emission allowances (EUA, ERU), valued at PLN 23,430 thousand, which were disclosed in its statement of financial position under Other intangible assets (see Note 15).
In total, the Group was allocated 1,766 thousand of CO2 emission allowances for 2013, while the Group’s actual CO2 emissions in the period totalled 1,745 thousand tonnes.
For information on the risk related to prices of CO2 emission allowances, see Note 32.2.
The Notes to the consolidated financial statements are an integral part of the statements.
(This is a translation of a document originally issued in Polish)
- Financial highlights - consolidated the LOTOS Group
- Consolidated Financial Statements for 2014
- Auditor’s opinion
- Auditor’s report
- Management's discussion and analysis
- Interactive LOTOS Databook