Polish Incumbent Spends Overseas to Grow

Polish integrated oil and gas incumbent PGNiG unveiled March 14 its new six-year strategic plan to 2022. It is in response to lower oil and gas prices, rising competition at home and the need to diversify its gas imports beyond 2022, when its Gazprom contract for around 10bn m³/yr expires. As part of that, it announced a doubling of its Qatar LNG imports from the start of next year.

PGNiG sees cumulative profits before interest, tax, depreciation and amortisation (Ebitda) of about zloty 33.7bn ($8.3bn) over the six-year period, funding capital expenditure above zloty 34bn, of which almost half will go on upstream activities. In order to boost reserves by 35% and production growth to 6%/yr to 55,000 barrels of oil equivalent by 2022, it is looking at expanding its acreage in Norway and Pakistan, which by then should account for 40% of the total, the rest coming from Poland.

It will spend another 30% on distribution as it seeks to expand its sales at home to around 12.3bn m³ in 2022 and smaller amounts on high-value energy projects, where its strategic ambition is to increase the annual volumes of electricity and heat sales from about 15 TWh in 2017 to around 18 TWh in 2022. Overall gas sales are planned to rise from about 15bn m³/yr to about 16bn m³/yr, the fastest growth being in overseas markets.

It will also spend over zloty 680mn ($167mn) on research, development and innovation. 

“With the new strategy in place, we will handle those new challenges more effectively,” said CEO Piotr Wozniak (pictured below).

(Credit: PGNiG)

Investments in the Norwegian production assets where it will have 2.5bn m³/yr of equity gas, participation in the Norway-Denmark-Poland gas pipeline project, and the development of its gas and LNG trading position will be the basis of its main competitive advantages, it said.

“In 2017-2022, we want to deliver cumulative Ebitda of about zloty 33.7bn. We expect the investment programme to support long-term growth of this metric, which should be evident particularly in 2023-2026, when the annual average Ebitda is expected to reach about zloty 9.2bn,” said CFO Michal Pietrzyk.

William Powell