The LOTOS Group’s sales of petroleum products on the domestic market

The year 2021 was a rebound year after restrictions were put in place at various stages of the COVID-19 pandemic. Fuel consumption was on the rise as early as March 2021. According to POPiHN data, increase was seen in the consumption of gasoline (9.8%), diesel oil (6.8%), light fuel oil (1%) and aviation fuel (25.1%).

After the 12 months of 2021, the balance of supply and demand on the Polish gasoline, diesel oil and light fuel oil market was negative. The largest deficit, in line with a trend continuing for several years, was recorded in diesel supply. The gap between diesel production and consumption was 4.3 million cubic metres (3.6 million tonnes). In 2021, the Polish market also saw a deficit of gasoline (886,000 cubic metres or 669 thousand tonnes). The light fuel oil market was almost balanced.

An exception to those several-year-long trends was aviation fuel, since its balance was traditionally positive, meaning an excess of production over consumption volumes on the Polish market of 154 thousand tonnes.

Source: In-house analysis based on Polish Organisation of Oil Industry and trade (POPiHN) data.

In 2021, the LOTOS Group held a 32.2% share in the domestic fuel market, a decrease of 1 pp year on year.

Source: In-house analysis based on Polish Organisation of Oil Industry and Trade (POPiHN) data.

Source: In-house analysis based on Polish Organisation of Oil Industry and Trade (POPiHN) data.

Retail fuel sales

In 2021, the share of domestic oil companies in the retail market fell from 32.5% in 2020 to 31% in 2020, that is by 1.5 pp. The share of other POPiHN-affiliated stations in the retail market was 24.2%. Independent operators saw their market share decline from 40.1% to 38.4%. The market share of service stations operated by hypermarket chains remained unchanged at 6.4%.

According to POPiHN, there were around 7.85 thousand service stations on the Polish fuel market at year-end 2021. As in previous years, approximately one third of the stations belonged to Polish companies, 20.1% were owned by international corporations, while 47.8% were owned by independent operators.

In 2021, Unimot (with its Avia stations) joined the organization, which had the effect of increasing the number of Organization member stations to 4323. In the chain of Group-owned service stations, work was under way to optimise the network, which ultimately increased the number of CODO service stations by 2.6% and DOFO stations by 4.5%.

The largest service station chains included:

  • PKN Orlen – 1,819
  • BP – 563
  • LOTOS – 520
  • Shell – 437
  • Circle(K) – 377

Service stations in Poland at the end of 2021

Source: Polish Organisation of Oil Industry and Trade (POPiHN)

Operations on the Polish retail fuel market are conducted by LOTOS Paliwa through: development and management of the CODO (Company Owned Dealer Operated) and DOFO (Dealer Owned Franchise Operated) service station networks.

The company sells:

  • fuels through CODO stations, including Motorway Service Areas,
  • fuels to DOFO stations,
  • non-fuel goods, including food products, through CODO stations,
  • services, including car wash services, through CODO stations.

As at the end of 2021, 520 service stations operated under the LOTOS brand, including:


CODO stations


DOFO stations

The LOTOS Group’s objective is to maximise the utilisation of its resources by enhancing fuel sales and non-fuel revenues.

One of the elements of its strategy is to develop the service station chain at motorways and expressways (Motorway Service Areas). Sales in the Motorway Service Area format will take place at locations where LOTOS Paliwa operates or will launch service stations following successful tenders.

As part of strengthening its position in the strategic segment of highway and expressway stations, in 2021 the Company launched seven new Motorway Service Areas (MSAs).

In 2021, the LOTOS Group strengthened its existing and developed new trading relationships with key customers. Further development of these key customer relationships was supported by the Group’s reliability as a supplier, the services offered and the quality of fuels supplied.

Within individual business units, Grupa LOTOS took steps to maximise profits, focusing on customers with the greatest growth potential and reviewing its geographical structure to exploit the logistics network in an economically viable way.

Seeking and optimising wholesale synergies between Grupa LOTOS S.A. and LOTOS Paliwa were a factor taken into account in defining the scale and scope of business relationships with customers. The aim of the measures was to maximise margins amid growing prices of refinery feedstocks, surging prices of energy carriers and utilities used in refining processes, including prices of CO2 emission allowances, volatile product prices and the rebounding demand for fuels following gradual lifting of COVID-19-related restrictions.

In 2021, the LOTOS Group’s wholesale operations focused on:

  • expanding its business with customers to place the volumes of diesel oil delivered by EFRA Project units;
  • flexibly managing target groups/sales channels in Poland to place fuel products in the most efficient way while ensuring transaction security;
  • consolidating sales within the group of strategic customers;
  • strengthening its position on existing markets,
  • effective implementation of the pricing policy, including, as of December 20th, 2021, under new national regulations enacted in response to rising inflation

The LOTOS Group sells aviation fuel domestically through LOTOS-Air BP Polska. In 2021, LOTOS-Air BP Polska recorded a significant rebound of volumes of the into-plane sales, driven by the gradual recovery of the air transport market in 2021 related to the liberalisation of restrictions on population mobility introduced by governments in 2020 as a countermeasure to the spread of the COVID-19 pandemic. As part of its optimization efforts, the Gdansk refinery produced 57% more jet fuel vs 2020, but still 24% less than in pre-pandemic 2019.

2021 saw continued marketing efforts to build the position of Grupa LOTOS on the LPG market in Poland. Despite the persistent SARS-Cov-2 pandemic, the volume of LPG sales rebounded to pre-2020 levels.

Following full integration of the DCU and HRU, the sales force focused on building the market and Grupa LOTOS’s position as an LPG supplier in the country. These efforts were carried out, among other things, in view of the expected increase in the refinery’s LPG distribution capacity, related to the ongoing modernisation of logistics and production areas.

The steady growth in LPG sales year over year confirms that the measures taken have been effective and need to be intensified going forward.

Production and distribution of lubricants: automotive, industrial and lubricating oils, base oils and automotive fluids are the business of LOTOS Oil Sp. z o.o.

In 2021, LOTOS Oil’s commercial activities focused on strengthening sales in the automotive segment, with particular emphasis on increasing the share of synthetic and semi-synthetic oils for passenger vehicles in total sales. Sales of industrial products are supported by professional oil service.

The Key factors affecting the profitability of the LOTOS Group’s lubricating oil business in 2021 included:

  • availability and prices of raw materials (base oils and enhancing additives),
  • delays in maritime transport and increases in freight rates,
  • with regard to motor oils – further strengthening of relationships with indirect customers (distributors and automotive wholesalers) as well as stepping up direct sales, supported by effective marketing campaigns,
  • in the industrial oils segment – a change in the sales structure from low-margin bulk products to more advanced products generating higher unit margins.

In order to build added value and economies of scale, LOTOS Oil was an active member of the Polish Automotive Industry Association, the Polish Automotive Group Association and the Association of Polish Entrepreneurs in Ukraine. Production and distribution of lubricants: automotive, industrial and lubricating oils, base oils, automotive fluids and car care products are the business of LOTOS Oil Sp. z o.o.

Significant global year-on-year increase, in the second and third quarters of 2021, in prices of base oils, traded with a premium to diesel oil, due to the limited availability of the products caused by the lower utilisation of the refinery capacity in 2020.

The Group subsidiary dedicated to the bitumens business is LOTOS Asfalt Sp. z o.o., a producer and distributor of a broad range of road bitumens, soft road bitumens, modified bitumens (MODBIT, including HIMA highly-modified asphalts), WMAs (warm mix asphalts) for application in badly accessible places (e.g. tunnels) and industrial bitumens. The Company also delivers speciality bespoke products.

In 2021, LOTOS Asfalt Sp. z o.o. was making consistent efforts to retain its position as a leader in speciality bitumens (significant year-on-year increase in sales of both modified and industrial bitumens) and as a leading supplier of road bitumens in Poland. The Company’s bitumen products were sold to support work under a number of road contracts, both in Poland and abroad. In 2021, as in the previous years, the key market for bitumens was Poland. According to the Company’s estimates, its share in the Polish bitumen market in 2021 was close to 47%. Exports, which accounted for approximately 27% of total bitumen sales, were also important for the 2021 performance. The largest interest in the product was again seen in Romania. An important factor behind the Company’s sales performance was the situation prevailing on the road infrastructure market. The year 2021 was a period of busy work in the road sector both at home and abroad. Despite the challenging market conditions faced by European economies due to the pandemic and the macroeconomic environment (including fluctuations in foreign exchange rates, rising commodity prices, disruptions in the global supply chain and growing inflation), the Company achieved its objectives. An opportunity to increase the Company’s sales was provided by temporary supply constraints experienced by competitors, which had a positive impact on the final 2021 results.

In 2021, the Company was also traded in bunker fuels, with vessel operators on the Baltic Sea as its key target market. The objectives pursued in 2021 were to efficiently market marine fuel, that is to maintain sales of MGO, and to further develop alternative low-sulfur (hybrid) bunker fuels. Volatility of feedstock prices created challenging conditions for pursuing the Company’s budget targets in the marine fuel area, affected its ability to serve the market, and as a result drove volumes slightly below the expectations. An opportunity to increase sales of hybrid fuels in the longer term is provided by initiated projects to enhance manufacturing efficiency in this product group.

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