LOTOS reports record-high volumes of production
OREANDA-NEWS. In the first quarter of 2016, LOTOS produced over 2.5 million barrels (ca. 350 thousand tonnes) of oil equivalent (boe), which translates into a daily production volume of almost 30 thousand boe. To compare, production in the first three months of 2015 amounted to some 1 million boe. Three-fourths of the volumes come from fields in Norway, while the balance was produced in the Baltic Sea and in Lithuania.
After the Sleipner portfolio acquisition in December 2015, a significant growth in the annual production volume, compared with 2015, was expected. The first quarter of 2016 confirms these calculations.
“Wider access to our own oil and gas reserves is written into the LOTOS Strategy,” emphasises Pawe? Olechnowicz, President of Grupa LOTOS S.A. “Despite unexpected market changes, we have managed to successfully pursue our key strategic objective. I believe we will go from strength to strength, supporting the company’s development and thus prudently pursuing Poland’s energy security goals.”
Poland’s energy security, diversification of supplies and extension of the margin chain of the LOTOS refinery, with a benefit to the entire Polish economy, offer a strong case for constant development of the LOTOS upstream segment.
“The situation on the crude oil market naturally prompted a review of numerous exploration and production projects all over the world,” comments Zbigniew Paszkowicz, Grupa LOTOS S.A. Vice-President and Chief Exploration and Production Officer and LOTOS Petrobaltic CEO.
“We have again confirmed that LOTOS can be flexible, as best evidenced by the successfully implemented changes in the B8 field development project, confirming its viability in the new, more challenging conditions. Similar changes are being made in the project to develop the B4 and the B6 gas fields, currently being prepared for the construction phase”.
Despite rapid changes in the macroeconomic conditions, including a significant decline in crude oil prices (over 60% in the past 1.5 years), LOTOS Petrobaltic managed to profitably put the B8 field on stream (on September 30th 2015), using an offshore rig acquired in 2014. The additional production volume from this field has a positive effect on the company’s financial position.
Norway: a direction to diversify supply sources
Currently, LOTOS is mainly involved in mature production projects, operating on the Baltic, North and Norwegian Seas, which are safe for the upstream business. In 2016, the company produced crude oil mainly from the Baltic and Lithuanian fields, and natural gas mainly in Norway.
LOTOS Norge Exploration&Production, a subsidiary of LOTOS S.A. operating since 2007, holds interests in 27 exploration and production licences on the Norwegian Continental Shelf. In seven of them it is the operator, i.e. the main company developing the field. Besides Poland, Norway is the second strategic direction for LOTOS: it is geopolitically safe and legally stable, but first and foremost it is located close to Poland and able to ensure effective diversification of strategic energy supplies, such as crude oil and natural gas.
Thanks to acquisition of working interests in licences on the Heimdal (2013) and Sleipner (2015) fields, LOTOS increased its daily production in Norway to 23 thousand boe, which, together with the launch of production from the B8 field, helped deliver its 2011?2015 strategy. Furthermore, thanks to the cash flows generated by hydrocarbon production on the Heimdal and Sleipner fields, LOTOS has effectively used the Yme tax asset, recovering its investment in the project.