PGNiG - Polish Oil & Gas Company

03/14/2019 | News release | Distributed by Public on 03/14/2019 00:37

PGNiG Group: stable increase in financial results in 2018 despite sudden fluctuations in energy markets

In 2018, the PGNiG Group's net profit amounted to PLN 3.2bn and rose by 10 percent. EBITDA amounted to PLN 7.1bn and rose by 8 percent y/y. EBIT was up 12 percent, to nearly PLN 4.4bn. The Group's revenue grew to PLN 41.23bn,up by 16 percent y/y.

'2018 was a great year for the Group, marked by a strong performance. Growth in revenue from oil sales was largely driven by rising oil prices and increased demand for crude, while revenue from gas sales rose mainly on the back of an upward price trend on the Polish Power Exchange,' said Piotr Woźniak, President of the Management Board of PGNIG S.A. 'In 2018, our gas sales went up by more than 2.26 bcm, or 8 percent year on year', he added.

Driven by growing oil and gas prices, sales of the Exploration and Production segment rose by 25 percent, to PLN 7.67bn, with EBITDA up 30 percent.

'We increased CAPEX in the Exploration and Production segment. Supported by state-of-the-art exploration technologies, we achieved a high success rate in drilling for hydrocarbons. With stepped up exploration efforts, new expenditure on production from existing fields and optimised field development times, the Group was able to maintain its overall natural gas output at 4.55 bcm (Poland, Norway, Pakistan). Our crude oil production in Poland and Norway expanded by 4 percent and 12 percent, respectively. By continuing asset acquisitions on the Norwegian Continental Shelf, we will steadily increase production from our own sources to the target level set in our Strategy', said Piotr Woźniak.

The volume of gas sales in the Trade and Storage segment altogether rose by 8 percent, to 28.16 bcm, with revenue up 19 percent, to PLN 31.70bn. While in the Exploration and Production segment higher crude oil prices are a performance driver, for Trade and Storage they translate into higher costs of gas imports.

The Distribution segment's revenue and volumes of distributed gas remained largely flat on 2017, despite a reduction in the distribution tariff rates effective from March 2018. In 2018, the number of new grid connections was 60,750, up 10.6 percent versus 54,922 new connections in 2017.

The Generation segment's revenue, mainly from heat and electricity sales, grew 6 percent, to PLN 2.39bn. The segment's performance was supported by increased electricity prices, offset by higher temperatures in the second half of 2018 and coal price levels. In 2018, a new multi-fuel unit at the Zofiówka CHP Plant, with a capacity of 70 MWe and 120 MWt, was brought on stream.

Major events in 2018:

  • The Arbitration Institute of the Stockholm Chamber of Commerce rendered a partial award in favour of PGNiG in its price dispute with Gazprom. According to a ruling by the arbitration court, the contractual conditions for PGNiG to demand a reduction in the price of gas supplied to Poland under the Yamal contract were met.
  • Long-term contracts for LNG supplies from the US were signed with Venture Global LNG, Cheniere Marketing International and Port Arthur LNG. The total volume of natural gas to be supplied only under those contracts will amount to more than 7 bcm (when regasified) after 2023, and together with contracts with Qatargas - will exceed 10 bcm.
  • Revitalisation of the Przemyśl field - new gas discoveries made in the field using latest technologies are estimated at close to 20 bcm.
  • The Norwegian Ministry of Petroleum and Energy approved the development plans for the Ærfugl and Skogul fields, in which PGNiG Upstream Norway holds interests. Production is scheduled to commence in 2020.
  • PGNiG Upstream Norway AS acquired an over 42 percent interest in the Tommeliten Alpha field. The new asset will result in an additional 0.5 bcm increase in the PGNiG Group's gas output from the Norwegian Continental Shelf. Production is scheduled to commence in 2024.
  • PGNiG was awarded a hydrocarbon exploration, appraisal and production licence in a tendering procedure held in Ras Al Khaimah, the United Arab Emirates.