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17.06.2010 PGNiG and Lotos Expand Cooperation

On June 16th 2010, Grupa LOTOS S.A. and Polskie Górnictwo Naftowe i Gazownictwo entered into an agreement on supply of natural gas to the Gdańsk refinery. Its estimated value over the period of five years amounts to more than PLN 2.2bn.

The agreement, concluded for an indefinite term, provides for gas supplies starting from December 2011. In 2012, PGNiG will sell to Grupa LOTOS S.A. 403m m3 of natural gas, while  the target annual volume is 447m m3.

The main objective behind the agreement is to provide network gas to Grupa LOTOS S.A.'s refinery in Gdańsk to replace the fuels currently used, i.e. propane-butane, light gasoline and fuel oil. Change of the fuels used in the refinery will enable Grupa LOTOS S.A. to additionally place on the market as much as 300 thousand tonnes of products (mainly LPG) per year.

"The agreement will provide us with access to a new fuel, that is natural gas, which is not a product of crude oil processing," underlines Mr Marek Sokołowski, Vice-President of the Management Board and Director responsible for production and development at Grupa LOTOS S.A. "Consequently, our refinery will be able to increase the sales of own products, which are in growing demand. Moreover, the environmental aspect of the new fuel is important. By using natural gas we will limit CO2 emissions. Our neighbours will benefit from the implementation of this investment project as well."

"Higher sales of natural gas are the PGNIG's strategic goal. The agreement concluded with Grupa LOTOS is among the largest we have signed in recent years. With this agreement, LOTOS has become one of the five largest purchasers of natural gas from PGNiG," says Artur Bieliński, Gas Trading Department Director in PGNiG. "We believe that our cooperation will continue in the future years, thus enabling further increases in supplies. I would like to add that the agreement would not have been finalised without the intensive involvement of the Management Board of Pomorska Spółka Gazownictwa."

Along with the said agreement, Grupa LOTOS S.A. and Pomorska Spółka Gazownictwa (PSG, member of the PGNiG Group) entered into an agreement on connection to the gas network. Under the agreement, PSG will construct a high-pressure gas pipeline from Kolnik near Pszczółki to Gdańsk, approximately 31 km long, together with accompanying buildings. The pipeline will be used to supply gas to Grupa LOTOS S.A. and to the medium-pressure distribution network of the city of Gdańsk, thus facilitating the connection of new customers and new areas, namely Wiślinka, Przejazdowo and Wyspa Sobieszowska, to the gas supply system. It will also increase the volume of gas received by customers in such Gdańsk districts as Stogi, Przeróbka or Górki Zachodnie.

"Additionally, the investment will enhance the security of gas supplies for Gdańsk by diversifying supply sources and creating capacity reserves for the development of a network supplying gas to individual and industrial customers and to the power companies in the Trójmiasto agglomeration and its surroundings," says Adam Kielak, President of the Management Board of Pomorska Spółka Gazownictwa.

The agreement is a key factor for the implementation of project "Supplies for South-Eastern Gdańsk, including Connection of Wiślinka and Wyspa Sobieszewska to the Gas Supply System". The investment is made in pursuance of PSG's Development Strategy for 2009-2013 and harmonises with the scenario of the company's intensive development. It represents one of PSG's three strategic projects planned for 2010-2015.

With the natural gas volumes specified in the agreement, LOTOS will become PSG's largest industrial customer, driving up the gas volume distributed by the company by approximately 35%.

Marcin Zachowicz, spokesperson for Grupa LOTOS S.A., ul. Elbląska 135, 80-718 Gdańsk, Poland, tel. (+48 58) 308 75 70, (+48) 505 050 454, e-mail: marcin.zachowicz@grupalotos.pl

Joanna Zakrzewska, spokesperson for PGNiG SA, ul. Kasprzaka 25, 01-224 Warsaw, Poland, tel. (+48 22) 691 79 30, (+48) 667 951 263, e-mail: joanna.zakrzewska@pgnig.pl

Katarzyna Wróblewicz, spokesperson for Pomorska Spółka Gazownictwa Sp. z o.o., Oddział Zarządu w Gdańsku, ul. Wałowa 41/43, 80-858 Gdańsk, Poland, tel. (+48 58) 32 63 670, (+48) 609 700 814

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