26. Trade payables, other liabilities and provisions
| Note | Dec 31 2016 | Dec 31 2015 | |
|---|---|---|---|
| Non-current financial liabilities: | 23,281 | 8,906 | |
| Investment commitments | 2,955 | 8,070 | |
| Liabilities towards the Polish National Foundation (1) | 19,019 | - | |
| Other | 1,307 | 836 | |
| Current financial liabilities | 1,941,687 | 1,405,335 | |
| Trade payables | 1,718,178 | 1,232,510 | |
| Investment commitments | 147,696 | 110,710 | |
| Settlements under joint operations (Norwegian fields) (2) | 57,801 | 43,792 | |
| Liabilities towards the Polish National Foundation (1) | 5,000 | - | |
| Other | 13,012 | 18,323 | |
| Financial liabilities | 1,964,968 | 1,414,241 | |
| Non-current non-financial liabilities: | 1,177,641 | 1,283,665 | |
| Provisions | 26.1 | 1,164,360 | 1,269,053 |
| Grants | 10,093 | 11,157 | |
| Other | 3,188 | 3,455 | |
| Current non-financial liabilities: | 1,395,567 | 1,230,920 | |
| Provisions | 26.1 | 92,711 | 143,291 |
| Value-added tax payable | 443,199 | 337,431 | |
| Excise duty and fuel charge payable | 698,110 | 604,528 | |
| Other liabilities to the state budget other than corporate income tax | 73,890 | 61,430 | |
| Grants | 24,311 | 23,924 | |
| Prepaid deliveries | 5,254 | 3,925 | |
| Liabilities under the NAVIGATOR loyalty programme | 15,767 | 12,655 | |
| Settlements under joint operations (Norwegian fields) (2) | 5,455 | 12,125 | |
| Provision for deficit in CO2 emission allowances | 9,790 | 1,059 | |
| Other | 27,080 | 30,552 | |
| Non-financial liabilities | 2,573,208 | 2,514,585 | |
| Total | 4,538,176 | 3,928,826 | |
| including: | |||
| non-current | 1,200,922 | 1,292,571 | |
| current: | 3,337,254 | 2,636,255 | |
| - trade payables | 1,718,178 | 1,232,510 | |
| - other | 1,619,076 | 1,403,745 |
(1) As one of the founders of the Polish National Foundation created in 2016 (“PFN”; number in the National Court Register: KRS 0000655791), Grupa LOTOS S.A. is required to make annual contributions for the next 10 years to finance the activities provided for in the foundation’s constitutional documents. The total amount of the Company’s commitment to finance PFN’s activities was established at the amount of discounted future payments, equal to PLN 29,019 thousand (see Note 9.4). On December 30th 2016, the Company contributed PLN 5,000 thousand to PFN’s founding capital, and the amount of the outstanding commitment under PFN’s constitutional documents as at December 31st 2016 was PLN 24,019 thousand (including PLN 5,000 thousand presented under current financial liabilities and PLN 19,019 thousand presented under non-current financial liabilities).
(2) Liabilities of LOTOS Exploration and Production Norge AS (LOTOS Petrobaltic Group, the upstream segment) under mutual settlements between the operator and consortium members in relation to individual Norwegian fields.
Trade payables do not bear interest and are typically paid in 7-60 days. Other liabilities do not bear interest, and their average payment period is one month. Amounts resulting from the difference between value added tax receivable and value added tax payable are paid to the relevant tax authorities on a monthly basis. Interest payable is usually settled on a monthly basis during a financial year.
For currency risk sensitivity analysis of trade payables and other liabilities, see Note 28.3.1.
For information on maturities of trade payables and other liabilities, see Note 28.5.
26.1 Provisions
| Note | Provisions for decommissioning and reclamation costs | Other provisions | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Provision for oil and gas extraction facilities | Provisions for retired refining and other units | Total | ||||||
| Poland | Norway | Lithuania | ||||||
| Jan 1 2016 | 191,837 | 986,439 | 14,133 | 25,770 | 1,218,179 | 194,165 | 1,412,344 | |
| Recognised | - | - | - | - | - | 29,310 | 29,310 | |
| Remeasurement of decommissioning costs | (11,254) | (119,901) (1) | (1,523) | - | (132,678) | - | (132,678) | |
| Remeasurement of estimated provision for contingent payments | - | - | - | - | - | (27,513) | (27,513) | |
| Change in provisions for liabilities attributable to approaching maturity date (discount unwinding effect) | 9.6 | 5,639 | 40,349 | 826 | 75 | 46,889 | 2,238 | 49,127 |
| Interest on Oil and Gas Facility Decommissioning Fund | 310 | - | - | - | 310 | - | 310 | |
| Exchange differences on translating foreign operations | - | 93,610 | 532 | - | 94,142 | 11,491 | 105,633 | |
| Used | - | (41,861) | - | (158) | (42,019) | (105,652) (2) | (147,671) | |
| Reversed | - | - | - | (10,499) | (10,499) | (21,292) | (31,791) | |
| Dec 31 2016 | 186,532 | 958,636 | 13,968 | 15,188 | 1,174,324 | 82,747 | 1,257,071 | |
| including: | ||||||||
| non-current | 186,532 | 944,339 | 13,968 | 13,805 | 1,158,644 | 5,716 | 1,164,360 | |
| current | - | 14,297 | - | 1,383 | 15,680 | 77,031 | 92,711 | |
Provisions for decommissioning and reclamation costs:
Provision for oil and gas extraction facilities in Poland – a provision for future costs of decommissioning of the oil and gas extraction facilities in the B-3 and B-8 licence areas, and the Oil and Gas Extraction Facility Decommissioning Fund, set up to cover future costs of decommissioning of oil and gas extraction facilities, in accordance with the Geological and Mining Law of February 4th 1994 and the Minister of Economy’s Regulation of June 24th 2002.
Provision for oil and gas extraction facilities in Norway − a provision for future costs of decommissioning of the oil extraction facilities in the YME field (including provision for future cost of MOPU removal), and the oil and gas extraction facilities in the Heimdal and Sleipner fields.
Provision for oil and gas extraction facilities in Lithuania − a provision for future costs of decommissioning of the Lithuanian oil extraction facilities.
Provisions for retired refining units and other installations − a provision for land reclamation and the cost of disassembly and decommissioning of the retired installations at LOTOS Terminale S.A., a provision for estimated cost of disassembly of the subsea pipeline operated by a subsidiary Energobaltic Sp. z o.o. (a company of the LOTOS Petrobaltic Group), as well as for land reclamation and clean-up.
(1) The amount includes mainly remeasurement of provisions for future costs of decommissioning of crude oil and gas extraction facilities related to the Heimdal and Sleipner assets.
(2) Including PLN 103,003 thousand (NOK 217,995 thousand) related to a provision for contingent payments under the Sleipner assets acquisition agreement.
| Note | Provisions for decommissioning and reclamation costs | Other provisions | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Provision for oil and gas extraction facilities | Provisions for retired refining and other units | Total | ||||||
| Poland | Norway | Lithuania | ||||||
| Jan 1 2015 | 183,579 | 497,194 | 14,302 | 30,504 | 725,579 | 52,849 | 778,428 | |
| Recognised | - | 610,121 (1) | 361 | 512 | 610,994 | 150,353 (3) | 761,347 | |
| Remeasurement of decommissioning costs | 5,574 | 17,253 | (1,245) | (2,319) | 19,263 | - | 19,263 | |
| Remeasurement of estimated provision for contingent payments | - | - | - | - | - | 4,794 | 4,794 | |
| Change in provisions for liabilities attributable to approaching maturity date (discount unwinding effect) | 9.6 | 4,965 | 15,943 | 720 | 64 | 21,692 | 510 | 22,202 |
| Interest on Oil and Gas Facility Decommissioning Fund | 469 | - | - | - | 469 | - | 469 | |
| Exchange differences on translating foreign operations | - | (59,326) | (5) | - | (59,331) | (8,587) | (67,918) | |
| Used | - | (94,746) (2) | - | (480) | (95,226) | (2,008) | (97,234) | |
| Reversed | (2,750) | - | - | (2,511) | (5,261) | (3,746) | (9,007) | |
| Dec 31 2015 | 191,837 | 986,439 | 14,133 | 25,770 | 1,218,179 | 194,165 | 1,412,344 | |
| including: | ||||||||
| non-current | 191,837 | 882,753 | 14,133 | 24,142 | 1,112,865 | 156,188 | 1,269,053 | |
| current | - | 103,686 | - | 1,628 | 105,314 | 37,977 | 143,291 | |
Provisions for decommissioning and reclamation costs:
Provision for oil and gas extraction facilities in Poland − a provision for future costs of decommissioning of the oil and gas extraction facilities in the B-3 and B-8 licence areas.
Provision for oil and gas extraction facilities in Norway − a provision for future costs of decommissioning of the oil extraction facilities in the YME field (including provision for future cost of MOPU removal), and the oil and gas extraction facilities in the Heimdal and Sleipner fields.
Provision for oil and gas extraction facilities in Lithuania − a provision for future costs of decommissioning of the Lithuanian oil extraction facilities.
Provisions for retired refining units and other installations − a provision for land reclamation and the cost of disassembly and decommissioning of the retired installations at LOTOS Terminale S.A., a provision for estimated cost of disassembly of the subsea pipeline operated by a subsidiary Energobaltic Sp. z o.o. (a company of the LOTOS Petrobaltic Group), as well as for land reclamation and clean-up.
(1) Recognition of a provision for decommissioning in connection with the acquisition of the Sleipner assets (see Note 13.1.3 to the Consolidated financial statements for 2015).
(2) The amount mainly includes PLN 62,043 thousand of used provisions for future costs of removal of the MOPU and disassembly of plant and equipment in the YME field. The provision was recognised in connection with an agreement between Talisman (the YME field operator) and SBM (rig owner) made in March 2013 (see also Note 30.1 and 13.2.2).
(3) Including PLN 133,157 thousand related to a provision for contingent payments under the Sleipner assets acquisition agreement (see Note 13.1.3 to the Consolidated financial statements for 2015).
Provision for oil and gas extraction facilities − Norway
Provision for decommissioning and reclamation of oil extraction facility in the YME field
As at December 31st 2016, the provision for decommissioning and reclamation of the extraction facility in the YME field, totalling PLN 159,156 thousand, was disclosed under other liabilities and provisions and reflected the current estimate, made based on the Group’s best knowledge, of future costs of removal of the YME infrastructure and costs of land reclamation, assuming that the project is decommissioned in 2031. As at December 31st 2015, the provision was PLN 141,407 thousand.
Provision for removal of the defective MOPU from the YME field
As described in Note 30.1, in March 2013, the operator of the YME field, Talisman Energy Norge AS (“Talisman,” “Operator”), and the supplier of the Mobile Offshore Production Unit (MOPU) to be operated in the YME field, Single Buoy Moorings Inc. (“SBM”), announced that an agreement had been reached to remove the defective MOPU (evacuated in mid-July 2012) from the YME field and to terminate all existing contracts and agreements between the parties in connection with the YME project. Following the agreement, the Group recognised a provision for the future removal of the MOPU from the YME field, in the amount of PLN 281,859 thousand. The provision was gradually used in subsequent years. In 2016, the provision amount was increased as a result of an increase of PLN 8,905 thousand in the estimated cost of the removal, see Note 9.4. As at December 31st 2016, the provision was PLN 13,065 thousand. In 2016, the Group used PLN 37,905 thousand of the provision.
For information on the YME project and details of the provision for decommissioning of the remaining subsea infrastructure associated with the YME field, see also Note 13.2.2.
Provision for decommissioning and reclamation of gas extraction facilities in the YME field
Decommissioning of the non-current assets of the offshore oil and gas extraction facility in the Heimdal field and reclamation work are scheduled for 2016–2035. As at December 31st 2016, the provision was disclosed in the Group’s statement of financial position under other liabilities and provisions at PLN 203,636 thousand. As at December 31st 2015, the provision was PLN 230,767 thousand.
Provision for decommissioning and reclamation of gas extraction facilities in the Sleipner field
Decommissioning of the non-current assets of the offshore oil and gas extraction facility in the Sleipner field and reclamation work are scheduled for 2016–2033. As at December 31st 2016, the provision was disclosed in the Group’s statement of financial position under other liabilities and provisions at PLN 582,739 thousand. As at December 31st 2015, the provision was PLN 575,178 thousand.
Other provisions
As at December 31st 2016, the provision for contingent payments under the Heimdal assets acquisition agreement was PLN 33,685 thousand. As at December 31st 2015, the provision was PLN 29,379 thousand.
As at December 31st 2016, the provision for contingent payments under the Sleipner assets acquisition agreement was PLN 5,413 thousand. As at December 31st 2015, the provision was PLN 126,506 thousand.
26.2 Grants
| 2016 | 2015 | |
|---|---|---|
| At beginning of period | 35,081 | 41,918 |
| Grants received in period | 5,047 | 516 |
| Deferred grants | (5,724) | (7,353) |
| At end of period | 34,404 | 35,081 |
| including: | ||
| non-current | 10,093 | 11,157 |
| current | 24,311 | 23,924 |
The grants are primarily related to licences received free of charge and grants from the Eco Fund for the use of waste gas from an offshore oil extraction facility for heating purposes.