Implementation of Grupa LOTOS S.A.’s strategy – the subsidiary undertaking Petrobaltic to explore the new B8 and B23 reservoirs
Report no. 96/20052006-08-24

In reference to the official Strategy of Grupa LOTOS S.A. to 2012, which was approved in June 2006, the Management Board of Grupa LOTOS S.A. hereby reports that the subsidiary undertaking Petrobaltic (69%-held by Grupa LOTOS S.A.) plans to begin oil production at two new oilfields: B8 and B23, the estimated reserves of which are approx. 16 million cubic metres of crude oil. Both fields are located in the Polish economic zone of the Baltic Sea. B8 oilfield The B8 oilfield is located nearly 68 km from the coast, off the Hel peninsula, and lies 2.1 km below the seabed. The field development plan assumes that crude oil will be produced through three production wells, from a drilling rig located in the centre of the reservoir area. The procedure whereby the company is to obtain an exploitation license is underway; it is expected to be completed in a few weeks. The field is planned to be commercially operational from 2008 for ten years. The surveys and analyses of the B8 reservoir conducted prior to the extended production test revealed that reserves amount to almost 1 million cubic metres of crude oil with more than 100 million cubic metres of natural gas. However, the initial production shows that the reserves of crude oil in the reservoir may be larger than expected. The crude oil and accompanied natural gas extracted from the reservoir will be delivered to the B3 field’s “Baltic Beta” Production Centre via an undersea pipeline of approx. 35 km. Then the separated oil will be delivered onshore by tankers, while the pre-processed natural gas will be delivered by undersea gasline to Elektrociepłownia Władysławowo (CHP plant) to be used in the production of electricity, heat and LPG. B23 oilfield Furthermore, Petrobaltic is preparing to develop a new reservoir named B23 within the area of “Gotlandia” exploration licence, approx. 135 km north off Gdańsk. Geological surveys revealed hydrocarbons reservoir lying approx. 1.6 km below the seabed; the sea depth is 105-125 metres. Based on the surveys, the recoverable reserves are estimated at approx. 15 million cubic metres. Exploration and appraisal wells are planned to be drilled from 2010. If the reserves are confirmed , field development, including extended production test, drilling of production and injection wells will be managed in 2011-2018. In accordance with the current plans, the field will be in production until 2033. Legal basis for the report: Art. 56.1.1 of the Act on Offering – Inside Information.