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    Polish Gas Incumbent's Profits Rise

Summary

Higher prices and more oil output helped the company to weather the volatility.

by: William Powell

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Polish Gas Incumbent's Profits Rise

Polish state-controlled incumbent gas supplier PGNiG saw its annual profit rise 10% to zloty 3.2bn ($840mn) in 2018, as gas and oil prices were higher, it said March 14. Gas output was stable at 4.55bn m³ while crude output rose.

It was also a year of US LNG purchase agreements with some projects yet to take final investment decisions: Venture Global LNG, Cheniere Marketing International and Sempra's Port Arthur LNG. They are lined up to deliver the pipeline equivalent of over 7bn m³/yr in total after 2023 on a free on board basis, allowing the gas to go anywhere PGNiG decides. Together with contracts with Qatargas, LNG purchases will exceed 10bn m³/yr. 

Earnings before interest, tax, deprecation and amortisation (Ebitda) were up 8%, at zloty 7/1bn. Revenue however was up 16% to  zloty 41.23bn thanks to higher crude prices and demand and higher gas prices.

CEO Piotr Wozniak said gas sales went up by more than 2.26bn m³, or 8% year on year. Higher prices boosted revenues from upstreams by a quarter to zloty  7.67bn, and earnings with Ebitda up 30%.

Upstream capex rose, he said, and "supported by state-of-the-art exploration technologies, we achieved a high success rate in drilling for hydrocarbons.... 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.”

The volume of gas sales in the Trade and Storage segment rose by 8% to 28.16bn m³, with revenue up 19% to zloty 31.70bn, despite higher import prices. Distribution also grew as more connections to the pipelines were made.

Generation grew 6% thanks to higher electricity prices, offset by higher temperatures in the second half of 2018 and coal prices.