Letter from the Chairwoman of the Supervisory Board

Dear Stakeholders,

Last year featured considerable change on the petroleum market and placed limitations on businesses due to the coronavirus pandemic. Despite that, thanks to flexible management, the Lotos Group may brag about having a stable financial position.

In 2021 production effectiveness was strengthened and further investment plans were introduced. Thanks to reliable partners we were able to achieve the targets of energy transition with greater efficacy. Here it is worth mentioning that the Lotos Group is consistently becoming greener. Last year it diminished its CO₂ emissions by approximately one-third.

The Gdańsk refinery is one of the most modern refineries in Europe and thanks to its strategic location on the sea, it can underpin further diversification of supply. In total in 2021, the Lotos plant converted 9.9 million tons of crude oil and produced some 11 million tons of refinery products. What is also important for the entire industry is the fact that the Polish fuel market, following the second shutdown, rebounded versus 2020 and posted an upward leap in fuel consumption of 7%.

The complicated modernization process of our refinery is also worthy of mention. The facility was refurbished in a new partial approach, ensuring above all the uninterrupted performance of our commercial obligations. The first stage of work was completed in May of 2021. The second stage was carried out this year. An important piece of information from last year was most assuredly the selection of the general contractor and the launch of the Hydrocracking Oil Block project. On top of that, the fourth rail filler started to operate on the plant’s premises. This makes it possible to fill 6 thousand tons of fuel a day. The world’s first UCO Pure filtration treatment installation also appeared in the refinery.

Finally, in 2021, the Lotos Group, its management board and employees witnessed important changes pertaining to the acquisition process by PKN Orlen.

These changes are bringing us closer to the formation of a single merged multi-energy concern. The key element was the consent expressed by the Extraordinary Shareholder Meeting of the Lotos Group for reorganization and the conditional consents for the transfer of assets subject to the remedial measures prescribed by the European Commission. This is a clear signal that investors perceive the purpose of creating a strong entity in the region. Another important event was the integration of the refinery complex as part of the company doing business as Lotos Asfalt, which transpired in early November. This highly complex process was run smoothly thanks to the involvement of many experts and the involvement of employees, including the management.

Even though we are referring to last year’s events, it would be difficult not to reflect on the tragedy we have been observing beyond our eastern frontier. We are all shaken up by the ongoing armed conflict in Ukraine. It has shown not only that we Poles are capable of uniting to help people who need it the most in a given moment. It has also shown that today it is necessary to diversify supplies and safeguard the national interest by using state capital. Now we know that it is possible to build energy security precisely with the participation of partners such as PKN Orlen and Saudi Aramco.

I believe that despite the many challenges we face, we can gaze into the future with complete optimism that the path we have chosen will produce benefits for our employees, shareholders, business partners, partners, clients and the entire economy.

Yours faithfully,

Beata Kozłowska-Chyła
Chairwoman of the Supervisory Board, of the Grupa LOTOS

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