LOTOS Petrobaltic S.A. has signed a contract for the conversion of its drilling rig into a production unit. The consortium of the project's contractors consists of companies controlled by Polska Grupa Zbrojeniowa S.A. (Energomontaż – Północ Gdynia and Nauta Shiprepair Yard) and a domestically-owned shipyard, Crist.

Upstream activity

LOTOS Petrobaltic S.A. has signed a contract for the conversion of its drilling rig into a production unit. The consortium of the project's contractors consists of companies controlled by Polska Grupa Zbrojeniowa S.A. (Energomontaż – Północ Gdynia and Nauta Shiprepair Yard) and a domestically-owned shipyard, Crist.

The conversion is an important part of the project for the development of the B8 field, which is co-financed by commercial banks and the Polish Investments government programme. Over the period until 2015, the project will require capital expenditure to the tune of PLN 1.8bn.

- I am glad that the work on the new platform will be done by Polish engineers. Shipyards of the MARS group have proved that they have the skills and resources necessary to handle the project. Several dozen new jobs may be created by the consortium companies in connection with the contract. The partnership forged by LOTOS with Polish shipyards is an example of business collaboration that creates added value for the national economy. Increased crude oil production will enhance Poland's energy security and enable Polish specialists to keep their jobs - noted Włodzimierz Karpiński, Minister of the State Treasury.

So far the Petrobaltic rig has been used for drilling in search of hydrocarbons under the Baltic Sea. Now the unit will be adapted for production work, as drilling equipment and systems will be dismantled and replaced by oil and gas production and separation equipment. Conversion will also include replacement of the platform's legs, expansion of the pontoon and hotel facilities, as well as construction of process modules.

- The conversion of the Petrobaltic rig is key for the implementation of our future CAPEX projects associated with hydrocarbon production in the Baltic Sea, which, I hope, will benefit the entire economy. The project is a milestone for our B8 field development programme, which will help increase domestic oil production - emphasised Paweł Olechnowicz, President of the Management Board of Grupa LOTOS S.A. - But at the same time, it is also an excellent opportunity for Polish shipyards to extend capabilities and secure new orders in the offshore sector.

Energomontaż – Północ Gdynia and Nauta are companies of the MARS Shipyards & Offshore Group owned by Polska Grupa Zbrojeniowa S.A. In addition to Polish defence companies and new technologies, shipyards and companies from the offshore sector are important assets of Polska Grupa Zbrojeniowa.

- I am very glad that the MARS Shipyards & Offshore Group’s shipyards have won the contract applying the concept of close cooperation with domestically-owned companies. The contract award process was a demanding one, and proved the Group’s high competences in the area of constructing and upgrading complex structures. It bodes well for subsequent civil engineering projects and planned upgrading of the Polish navy in which, as I hope, the MARS Group will be actively involved - said Wojciech Dąbrowski, President of the PGZ S.A. Management Board.
- The conversion of the offshore rig is part of the Group’s strategy whose one of the core objectives is to enhance cooperation and integrate business activities. It is the ability to offer the combined potential, experience and capabilities of the MARS Group companies that is the source of our strength - commented Piotr Słupski, President of the Management Board of MS Towarzystwo Funduszy Inwestycyjnych S.A.

The B8 field is located in the Polish economic zone of the Baltic Sea, approximately 70 km north of Jastarnia. Commercial production from the field is expected to be launched late in 2015.

The LOTOS Group (“Group”) is a vertically-integrated oil company whose business is material to Poland’s energy security. The LOTOS Group operates in exploration, production and crude oil processing, as well as in sale and distribution of a wide range of petroleum products. The Group is successful on wholesale and retail markets. Its shares have been listed on the Warsaw Stock Exchange since June 9th 2005.

PGZ S.A. is to ultimately consolidate more than 30 companies operating in the defence, shipbuilding, offshore and new tech sectors of industry, with an annual turnover in the range of PLN 4.5bn and over 16,000 employees. The ongoing consolidation process will lead to the establishment of one of the largest defence concerns in this part of the world.

MARS Fundusz Inwestycyjny Zamknięty (MARS Closed-End Investment Fund) is managed by MS Towarzystwo Funduszy Inwestycyjnych. Its portfolios include majority interests in 12 non-public companies, including those operating in the shipbuilding and repairs and offshore production industry, as well as companies whose main assets comprise real properties. The Fund's four portfolio companies − MSR Gryfia, Nauta, Energomontaż-Północ Gdynia and Energop − form the MARS Shipyards & Offshore Group. It is an integrated group providing a wide array of top-quality services, ranging from ship repair and conversion, through construction of new civil and naval ships, to production of steel structures used in the offshore, energy and petrochemical sectors.

Communication Office, Grupa LOTOS S.A., ul. Elbląska 135, 80-718 Gdańsk, Poland, tel. (+48 58) 308 87 31, (+48 58) 308 83 88, (+48 58) 308 83 55, e-mail: media@grupalotos.pl
 Public Relations Office, PGZ S.A., ul. Książęca 4, 00-498 Warsaw, Poland, tel. (+48 22) 583 87 28, e-mail: media@pgzsa.pl

MS Towarzystwo Funduszy Inwestycyjnych S.A., ul. Nowy Świat 6/12, 00-400 Warsaw, Poland, tel. (+48 22) 583 84 92, e-mail: press@mstfi.pl

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