Poland

2008 was a very good year for our Polish fuel stations network. Fuel sales at PKN ORLEN’s fuel sales went up by over 15% at their own stations and 30% at franchised stations in the premium and economic sector. Such good fuel sales results were of particular importance given the 2008 market situation. Oil prices were extremely high in the first half of the year, which led among others to increased prices paid by customers at fuel stations. Our consequent strategy to modernise the network, to ensure a high level of customer service and to continue the development of services and non-fuel offers proved to be right. In 2008, we created a network of over 400 cafés at premium fuel stations under the Stop Café and Stop Café Bistro (with hot snacks on offer) brands. In 2009, we plan further development of cafés especially the Stop Café Bistro format. The two cafés are a reaction to the changing habits of Polish drivers who tend to stop at fuel stations for a rest and a meal.

As on 31 December 2008, Polish PKN ORLEN retail network consisted of 1,803 stations, 1,339 of them being our own stations, 318 – franchised and 146 – under umbrella facility ^[4] including Petrochemia Płock and CPN brands.

 

Number of fuel stations in Poland per ownership structure in 2007–2008

	2007	2008
Own stations	1 410	1 339
Franchised stations	245	318
Affiliated stations	242	146
Total	1 897	1 803

Number of fuel stations in Poland per brand in 2007–2008

	2007	2008
ORLEN	851	924
BLISKA	308	406
Petrochemia Płock/CPN	738	473
Total	1 897	1 803

In the 12 months of 2008, the Company sold over 5 billion litres of engine fuel through its Polish retail network. Thanks to consistent implementation of our retail network development strategy, we managed to increase our share in the Polish retail market to almost 29.5%.

PKN ORLEN – fuel sales structure in 2007–2008 (%)

In 2008, PKN ORLEN reported a slight drop in the share of Premium fuels in the Company sales. It was due to increased customer interest in more attractive fuel prices caused by rocketing oil prices over the first three quarters of the year.

In 2008, we applied a new formula of VERVA 98 additives which reduce sediments in the engine, eliminate corrosion of metal elements of the supply system and reduce toxic emissions in the atmosphere. The new Premium fuel formula was accompanied by the introduction of a new logo with a chequered pattern, commonly recognised as a race symbol. Here, we referred to our involvement in car races and F1 coverage.

In November, VERVA 98 received a European Medal awarded by the Office of the Committee for European Integration (UKIE), Business Centre Club and European Economic and Social Committee. The medal is awarded to products which meet the strictest EU standards, and the aim of the competition is to publicise examples of good quality and to promote the methods of achieving it.

Since they were launched onto the market in 2005, VERVA Premium fuels have complied with strict European requirements for “sulphur-free” fuels to contain less than 10 mg/kg sulphur, effective in the EU since January 2009.

Currently, VERVA is the best known and the most recognisable enriched fuel brand in Poland ^[5].

Last year was the first year of the National Index Target (NIT) implementation. Under the NIT, we introduced renewable fuel, Bioester, at our economic fuel stations. Bioester is fuel produced from vegetable oils for diesel cars. It meets all the requirements laid down in PN-EN 14214, as well as relevant regulations in Poland and in other EU Member States.

Bioester won the main award for “Chemical Products” at the 1st International Exhibition of Technologies for Chemical Industries EXPOCHEM 2008 in Katowice and the “Product of the Year” award for “biofuels” at the 15th International Petrol Station Fairs 2008 in Warsaw.

Renewable fuels are also applied by Unipetrol and AB Mažeikiu Nafta companies, which belong to the PKN ORLEN Capital Group. In 2008, both companies complied with national requirements concerning biocomponent content in fuel by adding bioethanol and ETBE to petrol and esters to diesel oils.

Our 220 stations sold over 33.4 mn litres of bioester, which is nearly 4 mn litres more than estimanted.

In 2009, PKN ORLEN faces even more demanding challenges, among others due to the required increase of renewable fuel share in Poland from 3.45% in 2008 to 4.6% of the energy value, and to the introduction of stricter regulations in the Czech Republic. We participate in promoting the launch of other biofuels on the Polish market, namely E85 for petrol engines in FlexiFuel vehicles and E95 for diesel engines. We are also working on the launch of next generation biofuels - synthetic diesel made from any vegetable oil or animal fat, having exceptional physicochemical parameters and being more environmentally friendly than standard biofuels.

In 2008, PKN ORLEN introduced a number of amenities for customers with fleet cards. In March last year, we activated an improved interactive portal for participants of the FLOTA programme which enables fleet management over the Internet.

Under an agreement signed with D.A.S. Towarzystwo Ubezpieczeń Ochrony Prawnej SA, holders of ORLEN fuel cards are offered legal insurance protection insurance for owners and drivers of mechanical vehicles. Legal insurance protection is a contemporary insurance product that reduces litigation costs. D.A.S. policy covers all litigation costs and offers professional legal assistance. Legal insurance protection is a novelty on the fuel card market. The decision to include such insurance in the FLOTA package was mainly related to the extension of the offer for institutions, providing them with maximum improvements and amenites under the programme and encouraging car fleet managers to use the ORLEN programme.

Moreover, PKN ORLEN concluded an agreement with MOTO-PROFIL, under which it offers the Moto-FLOTA programme for car fleets, involving service management unavailable for individual customers. Moto-FLOTA is a specialist car service management system involving over 200 independent and authorised service stations with uniform prices overhaul and repair procedures. The company employees are well experienced in the automotive industry and fleet customer service. They provide consulting, technical assistance, cost optimisation and coordination of overhaul and repair activities.

With a view to extending our offer under the FLOTA Programme, we offer our customers the possibility to collect Vitay points for purchasing Premium fuels. Previously, fleet card holders could only receive credits for promoted products available in shops and for services.

On top of this, we offer the possibility to tank up AdBlue directly from a pump at 12 of our own stations. AdBlue is a non-toxic, odourless, colourless, safe and environmentally friendly agent that reduces harmful exhaust gas particles and is used with the newest generation of diesel engines with the Selective Catalytic Reduction (SCR) technology. The majority of European truck and bus manufacturers have opted for SCR technology in their latest models, so as to minimise the emission of harmful substances and comply with the EU standards: Euro IV and Euro V.

AdBlue which is sold at ORLEN stations complies with DIN 70070 and meets relevant ISO and CEFCIC standards, which guarantees safe and faultless functioning of the SCR system.

Our extended offer and the achievements under the FLOTA Programme were noticed and appreciated both by our customers and by Polish fleet market experts, which is best proven by the “Fleet Product of the Year” title awarded to the PKN ORLEN fleet cards at the Polish National Fleet Awards 2008 Plebiscite organised by Magazyn Flota periodical and Fleet Management Institute Central-Eastern Europe.

Currently, fleet cards are accepted at over 1,700 ORLEN and BLISKA fuel stations, which means that fleet transactions are made throughout the country.

[4] The Company completely gave up umbrella contracts, instead is focusing on the franchise segment. This means gradual withdrawal of Petrochemia Płock and CPN brands from the market.

[5] According to the “Brand Barometer” study by GfK Polonia in December 2008.