PGNiG 1Q Earnings, Sales Volumes Rise

Polish Oil & Gas Company (PGNiG) reported a record-high 1Q pre-tax profit of PLN 2.77bn ($740mn), up 16% year on year, it said May 25. This was despite revenues of PLN 11.65bn ($3.1bn) being up only 6% year on year. The group also reported a strong increase in volumes of natural gas sales (up 11% year on year) and distribution (up 13%), as the company continued with its gasification programme to bring in more customers.

Higher prices and flat operating expenses boosted upstream profits by 84% to PLN 1.08bn ($288mn); sales revenue was up 37% to PLN 500mn.

CEO Piotr Wozniak said: "Our excellent performance in the first quarter of 2017 is a result of the effective roll-out of PGNiG's new strategy, which will continue to support the company's steady growth. We are also satisfied with the results reported by our segments, in particular the E&P and the Generation segments, both of which delivered very strong growth... With new contracts in the pipeline, we are consolidating our position on Poland's gas market and expanding our foreign operations. We are also successfully diversifying the sources of gas supply to the country."

PGNiG CEO Piotr Wozniak (Photo credit: the company)

Trade and Storage segment earned operating profit of PLN 308mn, as the volume sold was 11% higher than in Q1 2016. Revenues were up by PLN 312mn to PLN 9.93bn. Sales of gas to strategic and wholesale clients expanded by 17% year on year, while PGNiG Obrót Detaliczny, the segment’s retail arm, increased its sales volume by 6%.

Generation did well also with pre-tax profit of PLN 409mn, up 13% year on year. Two subsidiaries – Przedsiębiorstwo Energetyki Cieplnej Jastrzębie and PGNiG Termika Energetyka Przemysłowa – made a combined pre-tax profit of PLN 40mn and were the main contributors to the segment's results. Heat sales were also higher, and the company's combined gas and power retail offering is also taking market share from the electricity-only sector, it said.

PGNiG's strategy is to set capex for the five year period at PLN 34bn ($9.1bn) with half to be spent on upstream oil and gas. Cumulative pre-tax earnings are projected at PLN 33.7bn ($9bn). It also plans to spend PLN 680m on research, development and innovation, add new production capacities in Norway, and sell more gas abroad.

PGNiG Group's new contracts

The group said it successfully delivered its strategy of diversification of gas supplies to Poland. It executed a supplementary agreement to its long-term contract with Qatargas, which will come into force on January 1st 2018, to double its import volume to 2.7bn m³ (2mn metric tons) per year.

In February 2017, PGNiG opened its office in London, which handles short-term international LNG contracts. Last month it announced that it expects to receive the first US LNG import cargo into Poland in the first half of June. 

PGNiG is also consolidating its position in the small-scale LNG segment. On March 20, 2017, PGNiG dispatched the 1,000th tank car filled with LNG at the President Lech Kaczyński LNG Terminal in Świnoujście to the Group's customers. 

William Powell