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.
Letter from the Vice-President of the Board
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.
Risk and opportunities
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.
Key data 2014
With revenue of ca. PLN 28.5bn in 2014, we rank fourth in the group of 500 largest businesses in Poland.
Integrated Annual Report 2014
Membership in organizations
We are a member of Polish and international trade, business and specialist associations. Through these memberships, we can create a platform for cooperation between energy sector companies, both in Poland and in Europe, actively participate in legislation processes in Poland and in the European Union as well engage in the work on promoting best CSR practices.
Central Europe Energy Partners, CEEP
We are a founding member of CEEP, an international non-profit organization with a regional coverage, registered in 2010 in Belgium, with offices in Brussels and Berlin. CEEP represents energy-intensive companies and the wider energy sector (including oil, gas, coal, power, power networks, renewable energy sources, nuclear energy, etc.) from Central Europe. CEEP’s stated mission is to promote the integration of Central Europe’s energy and energy-intensive sectors within the framework of the common EU energy and security policy applicable to these sectors. The association brings together 25 members from Poland, Lithuania, the Czech Republic, Romania, Croatia and Ukraine. At the end of 2014, CEEP members had a total headcount of around 300,000 employees and total turnover of close to EUR 50bn. CEEP is in advanced talks with potential new members from other Central European countries.
Grupa LOTOS CEO Paweł Olechnowicz serves as Chairman of the CEEP Board of Directors.
European Petroleum Refiners Association, AISBL – FuelsEurope - CONCAWE
In order to improve the EU refining industry’s efficiency and cut operating costs of two large European industry associations CONCAWE and EUROPIA, a single entity was founded with common administration and with two separate yet complementary divisions:
- FuelsEurope, which since June 2014 has been the new name of the European Petroleum Refiners Association (EUROPIA), registered in 1989 in Brussels, which represents pure-play oil refiners from the EU in dealings with EU institutions,
- CONCAWE (Conservation of Clean Air and Water in Europe), founded in 1963 by leading oil companies to carry out detailed and specialist research on environmental, health and safety issues relevant to the oil industry. CONCAWE is currently involved in research related to REACH legislation.
The members of European Petroleum Refiners Association are all the 42 refinery operators located within the European Economic Area. Its mission is to promote economically and environmentally sustainable refining, supply and use of petroleum products in the EU, by providing input and expert advice to EU institutions, Member State governments and the wider community, thus contributing in a constructive way to development and implementation of stable EU policies and regulations.
Polska Organizacja Przemysłu i Handlu Naftowego, POPiHN (Polish Organization of Oil Industry and Trade)
We have been the founding member of the Polish Organization of Oil Industry and Trade since 2003. One of the key objectives of our activity within POPIHN is the sustainable creation and development of a competitive fuel market in Poland, which we achieve by promoting business standards compliant with EU law and equal rights for all participants in the Polish fuel market. These objectives are pursued by initiating own draft bills, as well as providing opinions and comments on draft bills submitted by Polish legislative bodies and on legal acts implementing EU law. Our POPiHN membership allows us to present our stance on various issues directly to members of the parliament, government and government agencies.
Grupa LOTOS has its representatives on the POPiHN management board.
Stowarzyszenie Naukowo-Techniczne Inżynierów i Techników Przemysłu Naftowego i Gazownictwa, SITPNiG (Polish Association of the Oil and Gas Industry Engineers and Technicians)
Through our subsidiaries LOTOS Petrobaltic and LOTOS Terminale we are a supporting member of SITPNiG, an association which furthers the interests of the oil and gas industry and of its members by promoting social value in public projects. The association inspires scientific, technical and organizational projects that benefit the national economy and help deliver environmental protection and sustainable development goals. SITPNiG’s aim is to raise the professional qualifications of its members, advance knowledge, technical culture and environmental awareness, and educate the public on the tradition and history of the oil and gas industry.
Windsor Energy Group, WEG
Windsor Energy Group, which we joined in 2009, is an independent think-tank based in London that addresses issues related to the building of security and order within the international energy sector, with a particular focus on the oil and gas and alternative energy subsectors. WEG consists of former policy makers, ambassadors to oil-producing countries, government advisers, and CEOs of oil exploration and production companies. Our membership in WEG is a vital part of our activities in supporting the development of the European energy sector and advocating the position of energy companies from Central Europe in the EU arena.
Paweł Olechnowicz, President of the Grupa LOTOS Board, is a member of WEG’s International Advisory Panel.
World Petroleum Council – Polish National Committee
We are part of the Polish National Committee. Formed in 1933, the World Petroleum Council is the only international organization which represents all branches of the oil industry. Its main purpose is to facilitate dialogue amongst internal and external stakeholders aimed at seeking solutions to key technical, social, environmental and management challenges. WPC includes 60 member countries, which account for 95% of oil and gas produced and consumed worldwide.
Organizacja Polskiego Przemysłu Poszukiwawczo-Wydobywczego, OPPPW (Polish Exploration and Production Industries Organization)
We are a founding member of the Polish Exploration and Production Industries Organization, whose focus is on representing the Polish upstream industry in the public dialogue on issues concerning the oil and gas sector. OPPPW actively participates in the social dialogue and provides a platform for sharing knowledge and experiences between national and international experts on conventional and unconventional hydrocarbons resources. The organization was established in 2010.
Since 2013, we have been a member of Atlantic Council, a US-based organization promoting constructive leadership and engagement in international affairs in the areas of energy, environment, global economy and economics, as well as cooperation within the Atlantic Community. Through the papers it writes, the programmes it runs and the communities it builds, the Council shapes policy choices and strategies to create a more secure and prosperous world. The Atlantic Council is among the most recognised think-tanks in Washington, known for its extensive experience in the field of transatlantic cooperation, but first and foremost for its effective advocacy policies serving to influence key decision makers.
Business Centre Club, BCC
We have been a member of Business Centre Club since 2000. We focus our work in BCC on initiatives designed to foster development of the Polish economy, create jobs and provide assistance to businesses. We support BCC in creating platforms of communication between different social groups in matters that are key to Poland’s development, placing a strong focus on promoting the idea of corporate social responsibility.
European League for Economic Cooperation (ELEC), the Polish National Section
We have been a member of the European League for Economic Cooperation since 2002. ELEC is a non-governmental organization with a mission to promote economic integration, strengthen the social and cultural identity of European societies and work towards increasing the role of Europe in the international arena.
Paweł Olechnowicz, President of the Grupa LOTOS Board, is a member of the Board of the Polish National Section of ELEC.
Gdański Klub Biznesu (Gdańsk Business Club)
We have been a member of Gdańsk Business Club, an association of entrepreneurs, business owners and CEOs of leading corporations in the Pomerania region, since 2002. The association’s mission is to invigorate the economy in all aspects that have an impact on the financial position of its member companies, as well as to share support in business projects and promote the development of entrepreneurship, infrastructure, culture, education and healthcare for the benefit of Pomerania’s local community.
Paweł Olechnowicz, President of the Grupa LOTOS Board, is a member of the Board of Gdańsk Business Club.
Klub Polskiej Rady Biznesu (Polish Business Roundtable Club)
We have been a member of the Polish Business Roundtable Club since 2005. The Club was founded in 1997 on the initiative of the Polish Business Roundtable, an association of Polish entrepreneurs committed to promoting the economic development and integration of the business community in Poland.
Polskie Forum Akademicko-Gospodarcze, PFAG (Polish Higher Education-Business Forum)
We have been a member of the Polish Higher Education-Business Forum since 2004. The association works to strengthen the links between higher education institutions and business, and to promote innovation and knowledge-based economy. It was founded as a platform for building closer ties between academic circles and business community with the ultimate goal of promoting innovative projects financed with domestic and EU funds. The association is a forum for exchanging views and forming opinions on matters important for the country. People involved in the Forum’s work are representatives of business and leading universities in Poland.
Stowarzyszenie Pomorskie w Unii Europejskiej (‘Pomorskie in the European Union’ Association)
We have been a member of the ‘Pomorskie in the European Union’ Association since 2010. The Association aims to support local government institutions, universities and businesses from the Gdańsk province in the European Union.
Pracodawcy Pomorza (Employers of Pomerania)
Our membership in the organization dates back to 2004. Its main objective is long-term and dynamic economic development of the region and representing the employers’ interests in front of the legislative and executive bodies as well as regulatory and controlling institutions.
CSR advocacy groups
Forum Odpowiedzialnego Biznesu, FOB (Responsible Business Forum)
We have been a strategic partner of the Responsible Business Forum since 2008. The Forum has a mission to promote corporate social responsibility among Polish businesses as a standard that serves to enhance competitiveness, social well-being and environmental protection. It runs projects that contribute to the development of CSR in Poland and engages in initiatives promoting corporate responsibility and sustainable development.
United Nations Global Compact (UNGC)
We have been a member of the United Nations Global Compact since 2009. It is a global policy initiative calling on businesses to align their operations with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption. The organization also supports the implementation of the UN’s general goals, including its Millennium Development Goals. Its members include over 12,000 companies and non-government organizations from 145 countries.
Pracodawcy RP (Employers of Poland)
We have been a member of Employers of Poland since 2004. The association works to further common interests of the business community, supporting initiatives that seek to bolster the role of employers in Poland. By providing opinion on draft legislation, it strives to ensure that both employers and employees can benefit from economic growth, fair and stable employment, job security and social order.
Polskie Stowarzyszenie Zarządzania Kadrami, PSZK (Polish Human Resources Management Association)
In 2014, we joined the Polish Human Resources Management Association as its strategic member. PSZK is Poland’s largest and oldest professional association focused on developing and promoting the highest standards in HR management at corporations and other organizations in Poland. It has established a membership network of HR practitioners, by organizing nationwide campaigns, conferences and meetings with experts on the labour market and human resources management.
Stowarzyszenie Emitentów Giełdowych, SEG (Polish Association of Listed Companies)
We have been a member of the Polish Association of Listed Companies since 2006. Representing companies listed on the Warsaw Stock Exchange, the Association provides advice and expertise on stock market regulation and on rights and obligations of stock market participants. As an expert organisation, it aims to advance and share knowledge to further the development of the capital market and a modern market economy in Poland. It connects listed companies and fosters cooperation in building a civic society.
Polskie Towarzystwo Ekonomiczne, PTE (Polish Economic Society)
We are a member of the Polish Economic Society, an independent, professional association of economic practitioners and theoreticians that has a national reach. Its key objectives are to promote economic knowledge, act as an opinion leader, and enhance the qualifications and seek integration of the economist community.
Klub Polskie Forum ISO 14000 (ISO 14000 Polish Forum Club)
We have been a member of ISO 14000 Polish Forum Club since 1997. One of its goals is to develop and promote initiatives, attitudes and actions contributing to development and promotion of environmental management systems, chiefly those based on ISO 14001 and the EMAS Regulation. The association is also engaged in education on environmental protection and environmental management systems, connects people involved in environmental management, and supports organizations implementing environmental management systems. The Club is an independent organization, and membership is voluntary.
Klub Polskie Forum ISO 9000 (ISO 9000 Polish Forum Club)
We have been a member of ISO 9000 Polish Forum Club since 1993. The association brings together manufacturers and service providers who want to implement, refine and further develop their management and compliance assessment systems based on international ISO 9000 standards for quality management systems, other normative documents relating to organization and management systems and the new approach directives. The Club is an independent organization, and membership is voluntary.
Stowarzyszenie Księgowych w Polsce (Accountants Association in Poland)
We are a member of the Accountants Association in Poland, an association of accounting and finance professionals, which is committed to furthering the development of accounting and financial auditing practice to make sure it reflects the changing reality and meets the requirements of globally recognised standards.
Polska Okręgowa Izba Inżynierów Budownictwa (Polish Chamber of Civil Engineers)
We have been a member of the Polish Chamber of Civil Engineers since 2001. The duties of the Chamber as a professional association are to represent and safeguard the interests of its members, particularly by submitting initiatives to legislative and executive bodies to create proper conditions supporting the construction industry, to protect the role of engineers in the process, and to forge partnerships with other professional and engineering organizations active in the field of construction.