xlsx Trading conditions update for the refining sector in April 2017

To make the impact of external factors on the LOTOS Group's performance easier to evaluate, Grupa LOTOS presents a set of macroeconomic data reflecting the market conditions in Europe's refining sector, such as:

- Brent Dated prices, which serve as a benchmark for other crudes offered on the European markets
- Brent Dated/Ural Roterdam price differentials,
- Ural Rotterdam prices, which serve as a basis for calculating the Company's model refining margin,
- crack margins on petroleum products, which comprise the model barrel of products obtained by processing crude oil at the Company's Gdańsk refinery and serve as a basis for calculating the refining margin of Grupa LOTOS S.A.,
- EUR and USD exchange rates

The relation between the two currencies affects the LOTOS Group's performance as the prices of crude oil and certain products are quoted in USD, and also because some of the Group's debt is denominated in these currencies.

As its main feedstock, Grupa LOTOS S.A. uses Russian REBCO crude (Russian Export Blend Crude Oil), also referred to as the Ural crude. Compared with the global Brent benchmark, REBCO is a heavier crude with higher sulfur content, and yields more middle distillates (diesel oil, aviation fuel).

Brent Dated represents light, sweet crude produced in the North Sea; its price is determined with reference to crudes such as Brent, Forties, Oseberg and Ekofisk. Other crudes present on the European market are priced using Brent Dated differentials.

REBCO (a Russian crude benchmark) is a blend of several crude types used domestically or exported. Russian crude is a medium sour crude with approximately 32 API* gravity and sulfur content of approximately 1.6%.

The feedstock's parameters are the reason behind the discount against the Brent crude benchmark. The difference in prices between the two types of crude is called Urals-Brent differential (USD/bbl). If Ural prices drop relative to Brent prices (and the spread increases), the refining margins earned by Grupa LOTOS go up.

* API gravity – crude oil density measure developed by the American Petroleum Institute (API). The higher the API gravity, the lighter the crude oil. Light crude oils have API gravity of 38 or more, whereas heavy crude oils – of 22 or less. Crude oils with API gravity between 22 and 38 are generally referred to as medium.