Environmental impact

When considering our environmental impacts, at the LOTOS Group we are especially concerned with gas emissions, which are the most critical source of environmental nuisance, both for the immediate environment of our plants and other areas located further away. The approach to emissions of greenhouse gases, including carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), fluorinated hydrocarbons (HFC_s), perfluorinated hydrocarbons (PFC_s) and sulphur hexafluoride (SF₆), is becoming an increasingly more important element of the assessment whether a company operates in accordance with the principles of sustainable development and corporate social responsibility. Recently, we have also seen a wave of increased stakeholder interest in these issues, especially after the 19th edition of the Conference of Parties (COP19) organized by Poland, during which representatives of many countries from around the world were discussing the risks entailed by climate change, as well as ways of preparing for and possibly counteracting such change.

At Grupa LOTOS, given that we participate in the EU Emissions Trading Scheme and have a sense of our material contribution to the country’s climate policy, we attach great importance to all issues related to the emissions of greenhouse gases as a result of the processes taking place in our installations. In all our projects we consistently stick to the policy of taking into consideration and implementing the Best Available Technologies for our processes.

CO₂ is the only greenhouse gas discharged from Grupa LOTOS’ installations. As in the previous year, we did not take continuous measurements of carbon dioxide emission volumes, but instead used a methodology based on calculating those volumes.

2013 was the first year when the manner of monitoring emission volumes of carbon dioxide and other greenhouse gases was centrally regulated – by the EU. This centrally imposed methodology compelled us to introduce some modifications in our approach to the assessment of measurement uncertainty and risk involved in the monitoring process. The consumption of input fuels and materials classified as main streams, namely fuel gas, natural gas and fuel oils, is measured using the most advanced and accurate Coriolis mass flowmeters, which guarantee that the highest accuracy standards are met. In turn, analyses of the parameters (calculation coefficients) of those fuels and materials are performed by an accredited LOTOS Lab laboratory. There was a slight change in the reference calculation coefficients we use for certain smaller streams of fuels and materials. We consult these, as well as any other, changes in the method of monitoring carbon dioxide emissions with a reputable, accredited EU ETS verifier.

The Diesel-powered internal combustion engines of the energy generation system, the steam boilers and crane engines are all sources of greenhouse gas emissions. On the Baltic Beta platform, gases are emitted by the turbines running on gas separated from crude oil. An additional source of greenhouse gas emissions comes from the gas flared on the platform. On the Baltic Beta platform, most excess gas is compressed and returned to shore where it is used for powering other turbines, hence flaring is reduced to a minimum. All the gas produced on the ‘Petrobaltic’ platform is burned in flare stacks, which are designed to minimise the emission of harmful substances. All of its CO₂ emissions come from the combustion of natural gas and fuel oil in the generation of electricity and heat.

Natural gas extracted from under the Baltic Sea bed does not contain any chemical compounds or substances which could produce emissions of any greenhouse gases other than CO₂ during combustion. The methane which is a component of fuel gas is burnt up and is not emitted into the atmosphere. Other products of gas separation (liquefied petroleum gas (LPG) and natural gas condensate (NGC)) do not contain greenhouse gases and do not produce emissions of any gases other than CO₂ when used by end users.

LOTOS Geonafta’s hydrocarbon production operations in Lithuania generate relatively low emissions of harmful substances, which is why no emissions monitoring is undertaken there. As for LOTOS Norge, in 2013 it did not conduct any operations which could be a source of greenhouse gas emissions.

CO2 emissions in 2013	Unit.	Volume
LOTOS Petrobaltic*	tonne	17,599
Energobaltic	tonne	11,784

Emission volumes including offshore activities.

During the overhaul shutdown performed at the refinery in 2013, we introduced a number of low-emission improvements, which have contributed positively to our performance.

Type of CO₂ emissions in Grupa LOTOS [thousands of tonnes per year]

Type of emission	2011	2012	2013
Direct	2,045	1,979	1,689
Indirect	365	400	373
Total	2,410	2,379	2,062

A reduction in emissions of carbon dioxide and other pollutants into the atmosphere was achieved also thanks to the completion in 2013 of the following projects:

• Replacement of process furnaces at the gasoline hydrorefining and oils refining units – the new furnaces are much more energy efficient compared with the old units;
• Upgrade of the third boiler at our CHP plant and its adaptation to the burning of natural gas;
• Construction of a flare gas recovery unit, which redirected 45% of the total volume of flare gases to the fuel gas network between the beginning of September and the end of the year.

The only significant source of indirect emissions in Grupa LOTOS is in the purchase and use of electricity. It should be noted that in 2013 we significantly reduced the use of heavy fuel oil as a fuel for heat generation, replacing it with more environmentally friendly fuel gas, the main ingredient of which is natural gas.

These projects allowed Grupa LOTOS to reduce its carbon dioxide emissions by approximately 185 thousand tonnes in 2013.

Apart from carbon dioxide, Grupa LOTOS is also required to monitor emissions of such substances as sulphur dioxide (SO₂), nitrogen oxides (NO_x), and particulate matter (PM). The method of monitoring these pollutant emissions remained unchanged from the previous year. Measurements are performed separately for two installations: the CHP plant and the refinery. An online measurement system has been fitted inside the flue gas stack of the CHP plant, which continuously indicates the average concentrations of emitted oxides and particulate matter. Emissions from the refinery are calculated based on periodic measurements.

Pollutant emissions in Grupa LOTOS [tonnes per year]:

Substance		2011 Es	2011 Ed	2012 Es	2012 Ed	2013 Es		2013 Ed
SO2		5,708	7,137	3,370	6,342	548		5,169
NO2		1,620	2,650	1,308	2,501	843		2,264
PM		344	556	264	461	91		366

In LOTOS Petrobaltic, fuel combustion emissions of such substances as nitrogen and sulphur oxides are due mainly to the combustion of fuel oils. It needs to be emphasised that none of the emissions from the LOTOS Petrobaltic Group’s production operations contain any ozone-depleting substances.

Pollutant emissions in the LOTOS Petrobaltic Group in 2013 [tonnes]

Substance	Unit	Volume
LOTOS Petrobaltic
SOx	tonne	4.53
NOx	tonne	26.88
Dust	tonne	2.88
LOTOS Geonafta
SOx	tonne	0.46
NOx	tonne	2.95
VOC (volatile organic compounds)	tonne	69.54
Dus	tonne	0.29
Energobaltic
SOx	tonne	0.004
NOx	tonne	11.23
Dust	tonne	0.005

In 2013, a flare gas recovery unit was put in service at the Grupa LOTOS refinery in Gdańsk. The unit was fitted on one of the two discharge ducts leading to flare 3500. To achieve the greatest possible mitigation of environmental nuisance while ensuring that the project remains economically viable, the unit’s connection point was located on the duct which carries the vast majority of all flare gases produced in Grupa LOTOS.

Amount of discharge – amount of flare gas in Grupa LOTOS [thousand cubic metres per year]

Source	Unit	2011	2012	2013
Flare 3500	thousand cubic metres	21,036	19,388	16,363
Flare 3550	thousand cubic metres	10,819	3,603	5,499
Total	thousand cubic metres	31,855	22,991	21,862

Significant volumes of flare gases are produced at shutdowns and startups of installations. Given that an overhaul shutdown was performed in our refinery in 2013, the aggregate volumes of gas being burned in flares should have been significantly higher than in previous years. However, the construction of a flare gas recovery unit, in addition to many other minor improvements, reduced the aggregate annual volumes of flared gases.

The extent to which Grupa LOTOS managed to reduce its environmental impact is also reflected by the figures showing a reduction in our air emissions.

Action	Emission reduction in 2013 [tonne]*
	CO2	SO2	Pył	NOx
Replacement of fuel oil with natural gas in the fuel gas network	35,000	1,960	150	190
Replacement of fuel oil with natural gas at the CHP plant	68,000	1,420	60	220
Replacement of light petrol/LPG with natural gas in the Hydrogen Generation Unit (HGU)	82,000	0	0	0
Total	185,000	3,380	210	410

In 2013, as in previous years, we did not use any ozone-depleting substances, neither did we introduce any products the use of which would cause atmospheric emissions of such compounds.

In the years to come, we want to continue our efforts to gradually reduce emissions of carbon dioxide and other pollutants into the atmosphere, through further:

• increasing the share of natural gas in our fuel gas network;
• reducing the consumption of heavy fuel oil by replacing it with fuel gas.

Energy efficiency

The energy efficiency of all production units used by Grupa LOTOS is one of our top priorities. Our steady progress in this area is reflected in the comparative performance analyses of the refining industry published by Solomon Associates.

In the latest Solomon report for 2012, Grupa LOTOS was named the most energy efficient fuels refinery in Central Europe and Southern Europe, and secured one of the top positions in Europe.

We constantly undertake new initiatives to improve the refinery’s energy efficiency. In 2013, the key project consisted in replacing process furnaces at two refining units, i.e. the gasoline hydrodesulphurisation unit and the oils refining unit.

The new furnaces are highly efficient, with an energy efficiency ratio of over 90%. By using advanced, highly efficient technological solutions, we also reduced the consumption of primary energy, which relative to 2012 was down 28% and 30% in the fuel and lube complexes, respectively.

As a result of the work performed during the overhaul shutdown and rational management of process media, we managed to permanently reduce the refinery’s consumption of compressed (control) air by 20%.

In 2013, we also took steps to lower the indirect use of energy by the refinery. To this end, low voltage switchgears were modernised and inverters were installed on the supplies of the motors of all cooling fans in one of the cooling water units. This solution enhances the cooling efficiency and saves electricity through flexible control of the rotational speed of the fan motors in individual cooling units. The system was put in service in late 2013. We also continued to use LED lights on a test basis.

Given the requirements of the Act on Liquid Biocomponents and Biofuels, the Grupa LOTOS refinery’s fuel products contain biocomponents (renewable energy carriers): ethanol and ethyl tert-butyl ether are used in gasoline production, whereas fatty acid methyl esters are added to diesel oils. According to the current quality requirements for liquid fuels, the permitted ethanol and ethyl tert-butyl ether content in gasoline is 5% and 15%, respectively. Similarly, the volume of fatty acid methyl esters in diesel oils must not exceed 7%. The total required content of biocomponents in motor fuels is set by the state. In 2013, the Council of Ministers issued a Regulation on National Indicative Targets for 2013-2018, whereby the NIT was set at 7.10%, which means that biocomponents must account for 7.10% of the energy content of fuels marketed in Poland. Grupa LOTOS has met this requirement.

Direct energy consumption of Grupa LOTOS in 2013, by primary energy source [GJ]

Item	Unit	Direct − purchased energy	Direct − produced energy	Direct − sold energy	Direct − total energy consumption
Natural gas	GJ	7,943,250	0	0	7,943,250
Fuel gas	GJ	0	9,542,926	140,807	9,402,119
HSFO+Bleed fuel oil	GJ	0	0	0	0
LSFO	GJ	0	1,952,920	0	1,952,920
Light fuel oil (HON)	GJ	0	25,043	0	25,043
Electricity	GJ	0	0	0	0
Heat	GJ	0	0	118,054	-118,054
Residual gas	GJ	0	3,258,653	0	3,258,653
Total		7,943,250	14,779,542	258,861	22,463,931

Indirect energy consumption of Grupa LOTOS, by primary energy source

Year	Unit	Amount of electricity purchased from the National Power Grid
2011	GJ	4,163,239
2012	GJ	4,407,590
2013	GJ	4,036,944

The main source of energy used on the drilling platforms is diesel oil, supplied by ships, as well as natural gas extracted together with oil.

On the ‘Petrobaltic’ platform, energy is generated by a system of power engines and generators running on diesel oil, which meets the requirement to keep sulphur content below 1%. Energy generated in this way is then distributed throughout the platform. On the ‘Baltic Beta’ platform, energy is additionally generated by gas turbines powered by gas separated from the formation fluid, composed chiefly of crude oil. In LOTOS Geonafta, energy on the rigs is produced by a diesel generator.

Direct energy consumption of LOTOS Petrobaltic in 2013, by primary energy source

Item	Unit	Direct − purchased energy	Direct − produced energy	Direct − sold energy	Direct − total energy consumption
Natural gas	GJ	0	53,048	25,139	27,910
Diesel oil	GJ	106,733	0	0	106,733
Total	GJ	106,733	53,048	25,139	134,643

Direct energy consumption of LOTOS Geonafta in 2013, by primary energy source

Item	Unit	Direct − purchased energy	Direct − produced energy	Direct − sold energy	Direct − total energy consumption
Natural gas	GJ	2,521	0	0	2,521
Fuel gas	GJ	0	17,056	0	17,056
Diesel oil	GJ	24,874	0	0	24,874
Total	GJ	27,395	17,056	0	44,451

Direct energy consumption of Energobaltic in 2013, by primary energy source

Item	Unit	Direct − purchased energy	Direct − produced energy	Direct − sold energy	Direct − total energy consumption
Natural gas type E (GZ 50)	GJ	17,679	0	0	17,679
Natural fuel gas (dry)	GJ	262,519	0	0	262,519
Light fuel oil	GJ	116	0	0	116
Electricity	GJ	0	50,033	47,968	2,065
Heat	GJ	0	134,163	102,275	31,887
Total	GJ	280,314	184,196	150,243	314,266

Indirect energy consumption of LOTOS Petrobaltic in 2013, by primary energy source

	Unit.	Quantity
Energy purchased for the land base’s operations	GJ	5,948

Indirect energy consumption of LOTOS Geonafta in 2013, by primary energy source

Item	Unit	Quantity
Energy purchased for administrative purposes	GJ	1,256
Energy for production purposes	GJ	11,826
Total	GJ	13,082

Indirect energy consumption of Energobaltic in 2013, by primary energy source

	Unit	Quantity
Energy purchased	GJ	26,539

Raw materials and consumables used

Raw materials used in exploration and production are substances used in the drilling and production processes. In the case of drilling, these include:

• Drilling mud components (materials),
• Cement used to bond well casing to the drilled rock.

LOTOS Petrobaltic does not use oil-based muds for drilling. All muds used on the drilling rig are water-based. Drilling mud components are brought to the platform, where they are added to water to obtain drilling mud of the required physical and chemical properties. The main ingredients of drilling mud are bentonite or metal salts (KCl, NaCl), with baryte or galena as weighting agents. Various other chemical substances are added to achieve the required properties.

The main raw materials used in the production process include also:

• Chemical substances (materials) added to the formation and produced water injection system,
• Materials used as filter inserts (anthracite, ground nut shells, gravel of different grain size, metal and fibrous filter inserts).

Formation water is saturated brine, mostly chlorine, sodium and calcium brine.

From the point of view of environmental protection, injection of water into a deposit does not pose any environmental threat because the applied pressure does not exceed the fracture pressure of the rock layer, and so does not affect its structure. However, the presence of water in extracted crude oil poses the problem of its disposal or recycling by further technological process. So far, the main method of managing this highly mineralised formation water, extracted together with oil, consists in separating it from the oil in separators, and discharging it into the sea after cleaning it to a level below 15 ppm of oil components (in accordance with the requirements of MARPOL 73/78 and HELCOM).

In order to protect the Baltic Sea and meet the environmental requirements set forth in the Baltic Sea Action Plan, such as those imposing a total ban on discharge of waters, including treated formation water, directly into the sea, LOTOS Petrobaltic has built an installation which pumps produced waters back into the deposit. Consequently, all formation water is pumped back to the deposit it came from, together with the sea water. This solution does not interfere with the marine environment or with the formation of oil-bearing strata, but merely returns the extracted substance.

Water parameters around the platforms are continually monitored in order to ensure that they meet the relevant environmental requirements. We carry out regular monitoring of multiple parameters, including hydrocarbon content in the water, chemical and biological oxygen demand, chlorides, sulphides, bacteria, surfactants and others.

The cementing process uses water-based slurry with chemical additives which delay the setting time. The purpose here is to bond the casing pipes to the drilled levels, prevent contact between drilled rock layers of different pressure gradients, and ensure tightness of the uncased section to prevent the overflow of drilling mud or substances extracted during operations. The parameters are monitored before, during and after drilling, in accordance with the relevant environmental decisions and approvals. Any variations that may occur are due to country-specific regulations. The Baltic Sea is particularly sensitive, which is why operations on the Baltic Sea are governed by more rigorous regulations than those applicable in other areas.

Raw materials and consumables used in 2013 by the LOTOS Petrobaltic Group, by weight and volume (tonnes)

LOTOS Petrobaltic
Injected and formation water	Volume
Biocides	10.17 [t]
Coagulants	1.69 [t]
De-emulsifiers	8.84 [t]
Other	15.16 [t]
Total	35.9 [t]
Drilling mud	Volume
Bentonite	19.3 [t]
Salts (drilling mud and packer fluid)	78.8 [t]
Hydroxides	2.9 [t]
Other (for maintaining appropriate properties - viscosity, filtration, etc)	22.8 [t]
Total	123.8 [t]
Cement slurry	Volume
Cement	430.6 [t]
Processing agents	14.4 [t]
Total	445.0 [t]
Total	604.7 [t]
Transport of gas from the platform via pipeline to Władysławowo	Volume
Methanol	8.08 [t]
LOTOS Geonafta
Substances used in the drilling process	Volume
Acid inhibitors	6.95 [t]
Drilling mud additives	111.40 [t]
Polymers	48.31 [t]
Blokers	29.25 [t]
Lubricants	1.40 [t]
Cement	162.42 [t]
Extraction additives	111.40 [t]
Total	471.13 [t]
Substances used in the production process	Volume
Corrosion inhibitors	2.16 [t]
De-emulsifiers	29.28 [t]
Oxidants	0.20 [t]
Total	31.65 [t]
Total	502.78 [t]
Energobaltic
Stage I - Gas Compressor Station	Volume
Input material: waste gas	9,790,352 [Nm3]
Indirect production material: methanol	10,200 [l]
Stage II - Gas/Input Material Separator Station	Volume
Input material: waste gas (wet) for LPG production	4,966.58 [t]
Input material: natural gas condensate	1,613.51 [t]
Obtained natural fuel gas (dry) as a fuel for heat and electricity generation	5,250,374 [Nm3]

Raw materials and consumables used by Grupa LOTOS, by weight and volume (tonnes)

Raw materials	Unit	2011	2012	2013
Crude oil	tonne	9,163,836	9,673,647	8,702,622
Raw materials and components	tonne	1,062,156	833,610	834,114
Enhancing additives	tonne	2,254	2,091	1,994

Water consumption

The refinery draws water from the nearby Motława river, which is its only source of surface water. Given the risk of seawater influx into the river near our intake, to ensure an adequate supply of freshwater the refinery draws water into a retention tank with a capacity of 350,000 m³, constructed in the Motława oxbow lake. Underground water is sourced from Cretaceous and Quaternary formations. Cretaceous water drawn by means of two wells is an important source of water for human use. Because of its quality, Quaternary water is used solely for industrial purposes, and given that our intake from these formations is relatively small, the source is classified as immaterial. 

Economic use of the natural environment, including water resources, is based on relevant water-law permits and an integrated permit for drawing water from Cretaceous wells. The environmental impact of water intake is assessed during each permit application procedure. Inspections carried out near the refinery's underground and surface water intakes confirm that our water intake does not affect any protected sites or areas of great environmental value.

We consistently maintain water consumption substantially below the prescribed volumes. In 2013, the volume of surface water drawn by the refinery represented 28.9% of the permitted volume, with Quaternary and Cretaceous waters at 0.4% and 59.2% of the respective limits.

Total freshwater drawn by Grupa LOTOS, by source (m³/year)

Source	Unit	2011	2012	2013
Underground water	m3	202,429	189,217	162,511
Surface water	m3	3,607,427	3,532,113	3,574,791
Total	m3	3,809,856	3,721,330	3,737,302

Grupa LOTOS processes consuming large quantities of water

Source	Unit	2011	2012	2013
CHP plant – production of utilities	m3/year	2,929,811	2,936,080	2,778,592
Refinery – circulatory cooling water	m3/year	1,386,304	1,503,995	1,418,925

Freshwater for the needs of the LOTOS Petrobaltic platforms is extracted from a deep well, for which the company holds the required permit. The amount of water drawn is closely monitored and remains below permitted levels. The amount of water drawn from the Baltic Sea for the needs of the rigs is negligible in relation to its total water resources – 303,121 m³ out of 21,727 m³. It should also be noted that none of the other companies of the LOTOS Petrobaltic Group are depleting water resources through excessive withdrawal.

Water is used on the platforms for human use and for technological purposes. In addition to freshwater, seawater is also used for production purposes, for example in the water injection system. This water is drawn directly from the sea by means of deep-well pumps.

Total freshwater drawn by LOTOS Petrobaltic in 2013, by source (m³)

Source	Unit	Amount of water drawn
Freshwater – own intake	m3	27,645
Freshwater – municipal water supply	m3	2,467
Seawater	m3	303,121
Formation water	m3	94,366
Total	m3	427,599

Total freshwater drawn by LOTOS Geonafta in 2013, by source (m³)

Source	Unit	Amount of water drawn
Freshwater	m3	3,012
Water for technological purposes	m3	1,855
Total	m3	4,867

Total freshwater drawn by Energobaltic in 2013, by source (m³)

Source	Unit	Amount of water drawn
Water drawn from municipal network	m3	4,853

Grupa LOTOS seeks to increase the volume of reused water and wastewater. Our goal is to increase the share of recycled water in our overall process water consumption. In this way, we keep the use of natural resources to a necessary minimum. For a number of years now, we have been witnessing measurable effects of our efforts, as the percentage of reused water in our overall water consumption continues to rise. Recycled water includes industrial water produced from treated wastewater as well as condensate returned to the boiler feedwater.

Volume of water recycled in Grupa LOTOS (m³)

	Unit	2011	2012	2013
Industrial water produced from treated wastewater	m3	1,179,317	1,254,556	1,368,844
Pure condensate volume	m3	2,030,131	2,207,217	2,237,300

Total volume of water recycled in Grupa LOTOS

	Unit	2011	2012	2013
Total volume of recycled water	m3	3,209,448	3,461,773	3,606,144
Percentage of recycled water	%	45.7	48.2	49.1

Treated wastewater from the Grupa LOTOS treatment plant is discharged to the Martwa Wisła river. The receiving body was historically a part of the Wisła Leniwka river. The reservoir was cut off from the main course of the Wisła in the 19th century, following construction of the Wisła cutting and the Przegalina sluice. The Martwa Wisła waters in the refinery area are classified as internal seawaters.
The second stream of water discharged from the plant consists of treated drainage water and clean rainwater, which are directed to the Rozwójka river, an element of the Żuławy Gdańskie hydrological improvement system and a tributary of the Martwa Wisła.

Neither of these receiving waters are protected or have high biodiversity value in the discharge area. Furthermore, long-term monitoring has confirmed that wastewater discharged by Grupa LOTOS has no material impact on them. Additionally, despite many years of operation, the refinery does not seem to materially affect any of the habitats located in the vicinity of its discharge areas.

The separate treatment lines allow us to redirect almost all oily rainwater after treatment, to produce industrial water which is fed back to the plant and reused. Only excess volumes of treated oily rainwater are discharged, together with technical wastewater and greywater/blackwater, to the receiving body.

Total volume of wastewater from Grupa LOTOS, by quality and destination (m³)

	Unit	2011	2012	2013
Rozwójka	m3	3,874,089	4,305,910	4,220,723
Martwa Wisła	m3	1,354,015	1,293,596	1,273,851
Total	m3	5,228,104	5,599,506	5,494,574

Treated wastewater discharged by Grupa LOTOS into the Martwa Wisła river

Measure	Unit	2011 Wr	2011 Wd	2012 Wr	2012 Wd	2013 Wr	2013 Wd
pH	-	7.81	6.50-9.00	7.79	6.50-9.00	7.56	6.50-9.00
Biological Oxygen Demand	mg O2/dm3	2.68	25.00	2.56	25.00	2.99	25.00
Chemical Oxygen Demand	mg O2/dm3	34.00	125.00	30.20	125.00	44.10	125.00
Suspended solids	mg/dm3	7.89	35.00	6.38	35.00	7.89	35.00
Volatile phenols	µg/dm3	1.00	100.00	<5.00*	100.00	<0.005*	100.00
Substances extractable with petroleum ether	mg/dm3	0.58	50.00	0.74	50.00	0.73	50.00
Petroleum hydrocarbons	mg/dm3	0.83	5.00	1.93	5.00	0.23	5.00
Total Nitrogen	mg/dm3	2.90	30.00	2.40	30.00	4.30	30.00
Total Phosphorus	mg/dm3	1.07	3.00	1.03	3.00	0.57	3.00
Sulphides	µg/dm3	2.00	200.00	6.00	200.00	9.00	200.00
Nickel	µg/dm3	10.10	500.00	10.20	500.00	17.05	500.00
Vanadium	µg/dm3	36.30	2,000.00	28.90	2,000.00	19.10	2,000.00
Aluminium	µg/dm3	92.20	3,000.00	62.40	3,000.00	69.00	3,000.00

Treated wastewater discharged by Grupa LOTOS into the Rozwójka river

Measure	Unit	2011 Wr	2011 Wd	2012 Wr	2012 Wd	2013 Wr	2013 Wd
Suspended solids	mg/dm3	11.92	35.00	10.71	35.00	9.50	35.00
Petroleum hydrocarbons	mg/dm3	1.64	5.00	2.15	5.00	0.74	5.00

All oily wastewater is stored on the LOTOS Petrobaltic platforms in special containers, and later taken ashore for disposal. Greywater/blackwater is processed in a biological treatment station and then released to the sea. The condition of seawater around the platform is monitored on a daily basis. Similarly, no wastewater produced by LOTOS Geonafta in its drilling operations is discharged directly into natural bodies of water (lakes and rivers). All technological wastewater and greywater/blackwater is stored and subsequently transported to a wastewater treatment plant.

Volume of wastewater produced in 2013, by destination (m³)

LOTOS Petrobaltic	Unit	Volume
Greywater/blackwater	m3	7,546
LOTOS Geonafta	Unit	Volume
Greywater/blackwater	m3	3,012
Energobaltic	Unit	Volume
Greywater/blackwater	m3	617

All formation water produced by LOTOS Petrobaltic in the oil extraction process is pumped back to the reservoir it came from.

Volume and disposal method of formation water and water produced by LOTOS Petrobaltic in 2013

Item	Unit	Volume
Degree of oil contamination of formation water	ppm	7.64
Water injected back to the reservoir	m3	94,366

Volume and disposal method of formation water and water produced by LOTOS Geonafta in 2013

	Unit	Volume
Formation water	m3	246,333

In LOTOS Geonafta, all formation water produced in the oil extraction process is stored on the rig and then transferred for disposal.

Waste management

Management of waste generated by Grupa LOTOS is carried out in compliance with EU and national regulations, ensuring maximum safety for the environment. As a result of the work performed during the overhaul shutdown in 2013, noticeably more waste was produced, which, however, comprised mostly non-hazardous waste.

Waste generated by Grupa LOTOS − quantity [tonnes/year]

Waste generated by Grupa LOTOS	2011	2012	2013
Waste stored at the end of the previous year	2,244	2,195	1,777
Generated hazardous waste	7,338	6,784	6,478
Generated non-hazardous waste	5,046	5,574	6,659
Total generated waste	12,384	12,358	13,137
Volumes permitted by the integrated permit	89,627	89,627	89,627
Waste generated by service providers	N/A	4,154	3,170

Our endeavours towards environmentally friendly waste management is evidenced by the fact that in 2013 we managed to recycle all waste produced by the Grupa LOTOS refinery.

Waste management methods applied by Grupa LOTOS − quantity [tonnes/year]

Waste management method	2011.	2012	2013
Waste recycled	12,428	12,749	13,504
Waste treated or disposed of	4	28	0
Incineration	4	27	0
Landfilling	0	1	0
Waste stored on site at the end of the year	2,196	1, 777	1,410
Hazardous	1,977	1,503	1,376
Non-hazardous	219	274	34

The only hazardous waste sent abroad by Grupa LOTOS are used catalytic converters. Foreign companies have the appropriate technologies to manage such waste in an environmentally friendly way.

Type of hazardous waste generated by Grupa LOTOS

Type of waste	Unit.	2011	2012	2013
Hazardous waste transported from external sources (from outside the LOTOS Group) to the refinery	tonne	21	0	0
Hazardous waste transported from the refinery to external sites in Poland	tonne	6,286	7,258	6,352
Hazardous waste transported from the refinery to external sites outside of Poland	tonne	119	0	253
Total hazardous waste transported	tonne	6,426	7,258	6,605
Percentage of waste transported across international borders	%	2	0	3.8

In 2013, there were two incidents involving hazardous substances at the Grupa LOTOS refinery, but their potential impact was limited to the immediate area and neither of them resulted in environmental pollution, as confirmed by appropriate tests carried out under the inspection of the Pomeranian District Inspector for Environmental Protection.

In 2013, the LOTOS Petrobaltic Group did not report any significant spills into the environment.

Drill cuttings (small pieces of rock fragmented by the advancing drill bit) are the main waste product of the drilling process. Once carried to the surface, they are directed to the drilling mud treatment system. Drill cuttings do not contain any of the substances listed in Annex 1 to the Helsinki Convention. Drill cuttings with drilling mud from primary and secondary treatment are discharged to the seabed after being separated and washed, whereas drill cuttings from tertiary treatment are carried ashore and transferred to a waste management company. Every batch of disposed drill cuttings is tested for toxic content. Drilling mud, on the other hand, is recycled so it can be reused in the drilling process. When drilling mud is not suitable for recycling, it is also taken ashore and transferred to a waste management company.

Waste generated by LOTOS Petrobaltic − quantity [tonnes/year]

Generated waste	2013
Generated hazardous waste	38
Generated non-hazardous waste	644
Total generated waste	682

Waste generated by LOTOS Geonafta − quantity [tonnes/year]

Generated waste	2013
Generated hazardous waste	22
Generated non-hazardous waste	3,966
Total generated waste	3,988

Waste generated by Energobaltic − quantity [tonnes/year]

Generated waste	2013
Waste stored at the end of the previous year	0.07
Generated hazardous waste	0.42
Generated non-hazardous waste	0.808
Total generated waste	1.30

Waste management methods applied by LOTOS Petrobaltic − quantity [tonnes/year]

Waste management method	2013
Waste recycled	141
Landfilling	541
Waste stored on site at the end of the year:	0
hazardous	0
non-hazardous	0

Waste management methods applied by LOTOS Geonafta − quantity [tonnes/year]

Waste management method	2013
Waste treated or disposed of	3,988
Landfilling	0
Waste stored on site at the end of the year:	0
hazardous	0
non-hazardous	0

Waste management methods applied by Energobaltic - quantity [tonnes/year]

Waste management method	2013
Waste treated or disposed of	0.65
Waste recycled	0.40
Landfilling	0.25
Waste stored on site at the end of the year:	0.146
hazardous	0.101
non-hazardous	0.045

All drilling mud and drill cuttings generated by LOTOS Petrobaltic are produced using water-based drilling fluid. In the process of drilling, drill cuttings (small pieces of drilled rock, containing 5%-10% of drilling mud) are separated from drilling mud. The quantity of drill cuttings differs depending on the drilling interval and its diameter.

The chemical composition and environmental impact of drill cuttings depend on the type of drilling mud being used. In order to completely eliminate the chemical activity of produced waste, the use of the simplest type of drilling muds was designed for the process. The drilling muds were tested for their impact on the marine environment (a study entitled ‘Determination of the potential impact of drilling mud on the marine environment of the Baltic Sea’ prepared at the Gdańsk University of Technology) and considered environmentally non-toxic.

LOTOS Geonafta used only water-based drilling mud in its production operations. Most of its ingredients are biodegradable. All technological water, drilling mud and drill cuttings are carried away for disposal.

Waste generated in 2013 - Drill cuttings [tonne] (LOTOS Petrobaltic)

Drill cuttings	Unit	Total weight
transferred as waste	tonne	94
discharged to the sea	tonne	1,054
Total	tonne	1,148

Waste generated in 2013 [tonne] (LOTOS Petrobaltic)

Drilling mud	Unit	Total weight
in circulation	tonne	1,141
transferred as waste	tonne	340
discharged to the sea	tonne	144
Total	tonne	1,625

Waste generated in 2013 [tonne] (LOTOS Geonafta)

	Unit	Total weight
Drill cuttings	tonne	1,601
Drilling mud and technological water	tonne	2,322
Total	tonne	3,924

In accordance with applicable regulations, the LOTOS Group companies have engaged recycling contractors for recovery and recycling of packaging introduced to the domestic market.

At Grupa LOTOS, LOTOS Oil and LOTOS Paliwa, the aggregate recovery rates for packaging waste were in line with the statutory requirements and in 2013 stood at 58.5%  for recovery and 50%  for recycling. Tar papers were a product sold by LOTOS Asfalt in packaging until mid-2013 Altogether, the recovery rate for used packaging waste for this company was 58.5%, with the recycling rate at 15.8%.

Transport

Transport is another key area in which we seek to mitigate our environmental impact.

All bitumen and heavy fuel oil transport for the Polish market is coordinated by LOTOS Asfalt. In 2013, road tankers carried nearly 510 thousand tonnes of products, covering more than 11.5 million kilometres and consuming more than 3.5 million litres of fuel. To limit exhaust gas emissions, the company’s products are first transported to distribution centres by rail, and only then dispatched to customers in road tankers. The products are reloaded in modern handling terminals, where harmful vapour emissions are minimised.

Seeking to protect the environment, LOTOS Kolej, the company providing transport services i. a. to the LOTOS Group’s companies, keeps increasing the share of electric traction transport, gradually replacing diesel locomotives. As at the end of 2013, the company used 91 locomotives, including 54 electric vehicles.

Due to traction issues, a portion of transport and shunting work is still carried out using diesel locomotives.

Out of the total volume of fuels sold by LOTOS Paliwa in 2013, 7% was transported by rail and 26% by road tankers, with the balance represented by fuels collected from storage depots by customers using their own means of transport. In 2013, no fuel spills were reported in road or rail transport.

Mitigation of environmental impact

Refinery

The environmental impact of Grupa LOTOS products is unavoidable. Fuels provide energy which is released through combustion, emitting exhaust gas. The efficiency of chemical energy conversion into usable forms of energy (mechanical or thermal) depends on the design of the engine, rather than the fuel itself. Even so, we take steps to make sure that our fuels do not have a significant environmental impact.

All Grupa LOTOS products meet the quality requirements prescribed by law, and in some environmentally relevant respects they even exceed the legally required standards.

• The sulphur content in Grupa LOTOS gasolines and diesel oils is substantially below the legal threshold. In 2013, the average annual sulphur content in motor gasolines and diesel oils was 3.3 ppm and 5.5 ppm, respectively, considerably beneath the required maximum of 10 ppm. This results in substantially lower sulphur dioxide emissions.
• The aromatics content in Grupa LOTOS fuels is also considerably lower than that prescribed by applicable laws. In the case of unleaded gasoline type 95, the average aromatics content in 2013 was 29.7%, less than the legal threshold of 35%. For diesel oils, the content of polycyclic aromatic hydrocarbons is limited to 8% of the fuel’s weight. However, in 2013 the average PAH content in our B7 diesel oil was only 0.8% in weight terms. Consequently, this oil produces less soot during combustion, which translates into lower particulate emissions in exhaust fumes.

Benzene, sulphur and lead content in Grupa LOTOS fuels

Substance	j.m.	2012 - volume	2012 - volume (average)	2013 - volume	2013 - volume (average)
Benzene (in gasolines)	% V/V	0.5 - 1.0	0.8	0.4 - 1.0	0.9
Sulphur (in gasolines)	mg/kg	1.0 - 9.9	3.9	0.1 - 7.9	3.3
Sulphur (in diesel oil)	mg/kg	1.4 - 9.5	5.5	2.0 - 10.0	5.5
Lead (in gasolines)	mg/kg	0	0	0	0

Detailed information regarding the properties and composition of fuel products are available for our customers at www.lotos.pl/en, where descriptions of all our products along with their Safety Data Sheets are published. On request, the Sheets are also available at LOTOS service stations.

Another long-used method of mitigating the environmental impact of fuels is the use of biocomponents, which can be considered renewable energy sources, and therefore limit the impact of fuel combustion on the environment.

Logistics is another area where the environmental impact of fuel products may be mitigated, by preventing product losses into the environment. In 2013, we launched a new Vapour Recovery Unit (VRU) at the refinery in Gdańsk, to recover the vapours of gasoline. The new unit enables more efficient removal of gasoline vapours from the air pushed out of rail tankers during loading, with three times the capacity of the old one (3,000 m³/h). Thanks to the investment, the volume of hydrocarbons released into the atmosphere is minimised, which reduces the environmental impact of logistics operations related to gasoline handling.

Bitumens

We take steps to eliminate hydrocarbon release related to the production, storage and transport of bitumens, which produce olfactory nuisance, especially within the production plants. Completed projects which are part of this strategy include in particular:

• Jasło: construction of a thermal afterburner, air-tightening of tanks and connecting the air-tight tanks and bitumen nozzles to the thermal afterburner;
• Gdańsk: connection of all road and rail tank nozzles to a vapour extraction system, air-tightening of tanks, connection enabling treatment of extracted vapours in thermal afterburners, construction of an auxiliary unit for treatment of vapours collected from the nozzles with activated charcoal.

Following completion of the project in 2013, the aerosanitary conditions in the area improved substantially.

Rail operations

In 2013, we completed an overhaul and modernisation of the advanced rail tanker cleaning facility, operated by LOTOS Kolej in Gdańsk. Apart from the main facility, the project involved the construction of a specially designed track fitted with an additional station for removing LPG residues from tankers and feeding them to flare stacks. The range of services was also extended to include shot blasting of internal tanker surfaces.

Oils

In 2013, the LOTOS Oil production branch in Czechowice-Dziedzice was working on solutions designed to limit soil, surface water and groundwater contamination. As a result of this work, double bottoms were installed in selected tanks.

Fuels

In 2013, we continued to invest in mitigating the environmental impact of existing LOTOS service stations. These activities included modernising the fuel facilities by installing gasoline vapour recovery units, adding new equipment for measuring and monitoring petroleum product stocks, as well as detecting and signalling any petroleum product leaks to surface water and groundwater, and replacing single-shell tanks with double-shell units.

Production

One of the most important elements in mitigating the impact of production operations on the natural environment consists in protecting the sea from possible pollution by extracted oil and accompanying substances, and minimising the environmental damage should such an emergency occur. To remain prepared for response to potential emergencies, every year we run obligatory drill exercises on tackling oil spills. In 2013, such training was carried out in the Gdańsk Bay, with the participation of Maritime Search and Rescue services and the Maritime Office in Gdynia. At the same time, LOTOS Petrobaltic updated its Oil Spill Response Plan for spills resulting from exploration and production work conducted within its licence areas, which is part of the National Plan to Combat Pollution of the Marine Environment.

One of the most important activities to ensure a clean environment and mitigate adverse impacts is environmental monitoring, which is the study of the environment before, during and after operations. This relates chiefly to seawater and bottom sediment testing. Another important aspect of the process is the management of waste generated on the rigs, based on the ‘zero discharge’ policy, covering both post-consumer and production waste.

Chemicals used in the drilling process circulate within a closed system, not entering in any contact with the environment. In order to ensure that the arrangements set out in the Baltic Sea Action Plan are followed, in 2013 LOTOS Petrobaltic equipped the production rig with an installation for pumping oily formation waters.

Biodiversity

Marine environment

As at the end of 2013, LOTOS Petrobaltic held eight crude oil and natural gas exploration and production licences in Polish marine areas. Previously, only one of them, SAMBIA W, bordered on conservation areas of the Baltic Sea coast, protected under the EU Birds Directive. Currently, the newly acquired licences Słupsk W and Słupsk E border on the Słupsk Shoal (Ławica Słupska), which is a marine site of the NATURA 2000 network as defined by the Birds and Habitats Directives.

One of the most important elements in mitigating the impact of production operations on the natural environment consists in protecting the sea from possible pollution by extracted oil and substances accompanying the drilling process, and minimising the environmental damage should such an emergency occur.

Surveys have shown seabed degradation over vast stretches of the central Baltic Sea, caused primarily by accumulations of undegradable organic matter, as well as reduced oxygen content at depths of more than 60 metres. An animal that can be found in this area, although irregularly and very rarely, is the harbour porpoise. In 2013, we took samples for the purpose of biodiversity testing together with bottom sediment samples. The samples, however, contained too little fauna and flora material to perform biodiversity tests.

Our activities in the Baltic Sea consist in exploration for and production of crude oil from the seabed. Exploration work can be divided into two stages:

1. Seismic surveys, which show where hydrocarbons can be found;
2. Test drilling to make a preliminary estimate of the size of a reservoir and its resources, which helps evaluate the economic viability of future production.

Seismic surveys involve generating acoustic waves, which affect the sea fauna. An environmental decision issued by the Regional Directorate for Environmental Protection is required to commence such work. An opinion from the Director of the relevant Maritime Office is also needed. The environmental decision specifies the requirements which must be met in conducting the planned work. In this respect, LOTOS Petrobaltic strictly complies with all the procedures and requirements laid down in the applicable laws and regulations. The Soft Entrance procedures are applied in seismic work, under which the intensity of a seismic source is gradually ramped up so as to allow the fish and porpoises inhabiting the area to leave the affected region.

Although the oil deposits beneath the Baltic Sea floor are low-pressure reservoirs, the risk of an eruption during appraisal work and test drilling must be taken into account. Therefore, the procedures to be followed during such operations are very detailed, and provide for all safety measures following from best practice and best technology solutions to reduce, insofar as practically possible, the risk of an eruption. An oil spill would have negative consequences, especially for the bird populations. However, considering that crude oil produced from the Baltic Sea is light oil and 30% of its volatile fractions would evaporate within the first few hours of a spill, and that HELCOM recommends mechanical collection of oil contamination from the sea surface while restricting the use of dispersants causing the clumping and sinking of oil particulates, the impact of a spill on the environment would be minimised.

The main output of the production process is formation fluid, which is separated on the drilling rig into crude oil, natural gas and formation water, the latter being injected back into the reservoir to an appropriate depth in order to maintain the reservoir pressure. Natural gas is transported to LOTOS Energobaltic, where it is used to generate electricity. Such measures also help protect the air, in line with the requirements of Annex VI to MARPOL Convention 73/78 and the Baltic Sea Action Plan.

The licence areas where LOTOS Petrobaltic may explore for and produce crude oil and natural gas are located outside the so-called Baltic Sea Protected Areas. As a result, the exploration and production operations conducted within the licence areas pose a negligible threat to protected areas and the maritime environment. The Baltic Sea Protected Areas are given priority when it comes to tackling oil spills in sea waters, with the key objective to prevent any contamination from entering those areas.

Onshore areas controlled by LOTOS Geonafta are located approximately 700 metres from NATURA 2000 sites. The company manages surface water runoff in a comprehensive way, by using, among other measures, an appropriate system of drainage canals. The level of air and groundwater pollution is also monitored. All projects are preceded by environmental impact reports, with data for the purpose of environmental impact assessment provided by continuous monitoring. Periodic analyses have not shown any impact of the exploration and production operations on the biodiversity of the neighbouring conservation areas.

Refinery’s surroundings

We are consistent in making biodiversity protection a priority for our planned and ongoing investment projects. In order to obtain an environmental decision, an environmental impact assessment must be performed for every major project which may have a significant effect on the environment. As part of this process, a comprehensive environmental impact assessment report is prepared, containing an obligatory description of the project’s effect on biodiversity. In our effort to uphold the principles of corporate social responsibility, Grupa LOTOS goes above and beyond the statutory requirements, thoroughly covering biodiversity issues in such reports.

Our commitment to mitigating the adverse impact of our operations on the local fauna and flora is also evidenced by the fact that one of our key environmental objectives for 2014 is to perform a large-area inventory of elements comprising the environment within and surrounding our refinery in Gdańsk. We intend to use the inventory data as a basis for future initiatives to help us manage the biodiversity risks in the refinery’s vicinity.

In 2013, our standing with respect to the protection of species included in any category of the IUCN Red List of endangered species did not change relative to previous years. {link to the 2012 Report} So far, the only protected animal species identified as living in the vicinity of our refinery have been peregrine falcon and kestrel.

In 2013, a pair of peregrine falcons built a nest on the platform attached to the stack of the refinery’s CHP plant. The birds are under strict protection in Poland, with only ca. 70 nesting pairs left in the country.

We have also been recording an increasing number of kestrels nesting within the refinery’s premises. In 2013, two such nests were found on refining units − the first one was located on one of the flares, while the second one was situated on the bearing of the flue gas duct in the oils refining furnace. The second nest is particularly worth mentioning, because the area around the duct was to be modernised in connection with the replacement of the unit’s furnace, as announced the year before. However, to allow the protected birds to raise their young until they were ready to leave the nest, we rescheduled the work by nearly a month.

Service station areas

In 2013, the LOTOS service station chain was expanded to include 34 locations operating under the CODO model. 12 of them are newly built stations, with state-of-the-art facilities ensuring environmentally safe operation. In accordance with the applicable regulations, each service station was assessed for environmental impact at the design phase to determine its potential impact on the neighbouring areas, in particular protected sites and areas of high biodiversity value. All the stations were approved for operation and have no impact on protected areas.

The other 22 service stations were acquired on the market from private owners and made compliant with LOTOS standards not only in terms of visual identity and service quality, but also in technological terms.

All the locations selected to be included in the LOTOS service station chain were inspected, with special attention paid to technological solutions and environmental protection documentation. We also reviewed their location in relation to protected areas and any other areas of biodiversity, and performed a risk analysis of the possible impact of each station on the environment. Based on the reviewed documentation and site visits, it was concluded that the service stations newly included in the LOTOS chain were mostly located within towns and cities, away from protected areas.

As at the end of 2013, the chain comprised 256 service stations owned by LOTOS Paliwa. To mitigate the risk of uncontrolled environmental impact, we undertook to monitor each station’s environmental impact beyond the scope of mandatory measures. In line with the CSR strategy for 2012-2015, we reviewed the archived documentation of all service stations. In 2012, the review was carried out for 30% of them, with the remaining 70% covered in 2013.

In some cases, additional assessments were commissioned to review their impact on the local environment and protected areas. These efforts will be spread over two years, with subcontractors (experts with relevant expertise and experience in assessing fuel sector facilities) to be engaged in the first year. We expect that reports produced as part of this initiative, covering ca. 50 service stations, will provide us with detailed information about the facilities’ location with respect to protected areas, and identify potential hazards for the protected areas arising from their operations.
In 2013, no revitalisation work was carried out on areas managed by LOTOS Paliwa.

Land owned by the LOTOS Group is discussed in more detail in the 2012 Report . {link}

Capital expenditure on environmental protection

A substantial decrease in charges for economic use of the natural environment proves that the changes we introduce materially reduce the environmental impact of entities operating as part of the LOTOS Group.

Item	Costs and expenditure (PLN ’000)
	2011	2012	2013
Grupa LOTOS
Costs
Environmental management costs	2,685	3,143	2,137
Environmental protection spending	20,011	23,555*	22,336
Financing of pro-environmental activities of external institutions	285	525	509
Expenditure
Pro-environmental investment	12,116	67,606	63,012
Expenditure on property, plant and equipment**	114,733	141,913	202,314
LOTOS Group
Costs
Environmental management costs	25,450	4,729	4,695
Environmental protection spending	34,564	26,716	28,336
Financing of pro-environmental activities of external institutions	295	547	509
Environmental insurance***	104	105	194
Expenditure
Pro-environmental investment	34,709	75,515	66,348
Expenditure on property, plant and equipment**	805,265	814,264	1,130,446

Item	Expenditure [PLN ‘000]
	2011	2012	2013
Grupa LOTOS
Air emissions	4,268	2,980	1,256
Water withdrawal	144	140	162
Wastewater discharge	313	298	316
Waste landfilling	0	0	0
Total	4,725	3,418	1,734
LOTOS Group
Air emissions	4,805	3,218	1,651
Water withdrawal	210	173	240
Wastewater discharge	487	388	511
Waste landfilling	0	0	0
Total	5,502	3,779	2,402

 

Challenges in strategy implementation until 2015

 

The investment projects completed in 2013 (upgrading one boiler of the CHP plant by converting it into a gas-fired unit, replacing old process furnaces with new and more energy efficient ones at two units, a flare gas redirection system) are fully consistent with our efforts to meet the key objective of the LOTOS Group’s CSR strategy in the Management of natural resources in the production process area, which is to reduce the environmental risk and seek to continually minimise the environmental impact of the LOTOS Group’s operations.

Actions mitigating the LOTOS Group’s negative impact will be continued. In 2014, the fourth, and last, boiler of the Grupa LOTOS CHP plant is to be converted to a gas-fired unit. The completion of this task will allow us to fully meet the stringent emission standards regarding large gas combustion units (power plants/CHP plants), which are to come into force as of January 1st 2016.

Development prospects until 2020

Further reduction of the LOTOS Group’s negative environmental impact will be possible thanks to the implementation of two more environmental objectives set for the coming years, which are:

• To improve the energy efficiency of the steam heating system of pipelines connecting units;
• To decrease the primary energy consumption of the Grupa LOTOS refinery through modernising further process furnaces.

These actions contribute to further improvement of the energy efficiency, and thus are in line with the objective of mitigating our negative impact on the natural environment.