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PGNiG Group reports revenue growth in latest results

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LNG Industry,

In 2019, the PGNiG Group posted revenue of PLN 42.02 billion, which represents a 2% percent year-on-year increase. EBITDA and net profit came in at PLN 5.5 billion and PLN 1.37 billion, respectively.

“In 2019, the total volume of gas we sold increased by approximately 6% year on year, despite higher temperatures in the first and fourth quarters of the year. On the other hand, the oversupply of LNG continued to suppress gas prices on global markets. The average annual price of gas traded on the Polish Power Exchange was 35% lower compared with the previous year, which had a significant impact on revenue from gas sales,” said Jerzy Kwiecinski, President of the PGNiG Management Board. “All participants of the global gas market are currently facing the challenge of low prices. We should bear in mind, though, that demand for gas has been growing at a significant rate, as confirmed by forecasts from all around the world. Against this backdrop, we are consistently and actively diversifying our sources of natural gas imports with a view to ensuring Poland’s energy security. In 2019, our LNG imports increased by more than 27% on the year before,” added Kwiecinski.

The company’s Trade and Storage segment’s revenue rose by 5%, to PLN 33.25 billion and 2019 saw a clear shift in the company’s total gas imports. The company’s share of natural gas imported from Russia fell from 67% to 60%, while its share of LNG imports went up from 20% to 23%. In 2019, PGNiG received 31 LNG cargoes under long, medium and short-term (spot) contracts (2018: 23 LNG deliveries). LNG import volumes rose from 2.71 billion m3 in 2018 to 3.43 billion m3 in 2019.

In 2019, the number of retail gas customers increased by approximately 67 000 to 6.95 million. The group’s retail company, PGNiG Obrót Detaliczny, sold 7.59 billion m3 of natural gas to end users, approximately 100 million m3 more than in 2018.

A decline in the company’s Exploration and Production segment’s revenue from sales of crude oil and condensate was attributable to both lower oil prices and a 10% drop in the volume of oil produced by the group. The segment’s revenue from sales of natural gas also fell, by approximately PLN 1.45 billion, on lower prices of gas traded on the Polish Power Exchange.

Total gas volumes sold outside the group increased by 6% year-on-year to 30.70 billion m3.

Revenue from distribution services decreased by 5% relative to the year before, to PLN 4.21 billion, accompanied by a 2% year-on-year decrease in the volume of distributed gas. The distribution tariff (effective as of 15 February 2019) is 5% lower than the tariff applicable in 2018.

Revenue from heat sales earned by the company’s Generation segment was stable at approximately PLN 1.33 billion (up 1% year-on-year) with higher average temperatures and slightly lower sales (down 3% year-on-year). Revenue from sales of internally generated electricity went up markedly, by 24% year-on-year, on stable sales volumes of 3.95 TWh (down 0.5% year-on-year). The segment’s total revenue rose by 7%, to PLN 2.57 billion.

The PGNiG Group’s financial performance was also affected by impairment losses on property, plant and equipment, recognised in 4Q19, mainly in the Exploration and Production (PLN 212 million) and the Trade and Storage (PLN 339 million) segments, as well as an impairment loss on shares in Polska Grupa Górnicza, of approximately PLN 272 million.

Major events in 2019:

  • Start of work on a development concept for the Tommeliten Alpha discovery on the Norwegian Continental Shelf. The concept will be ready in 3Q20. Production is to be launched in 2024.
  • First commercial LNG bunkering of ships carried out by PGNiG in partnership with Grupa LOTOS.
  • First LNG delivery under a long term contract with Cheniere Energy.
  • Further contracts on LNG supplies for city bus fleets, including in Warsaw. Launch of LNG supplies for truck fleets – signing of the first contract with Bisek-Asfalt.
  • Discovery of a natural gas and crude oil deposit within the PL838 licence area (Shrek).
  • Purchase of a 20% interest in the Duva field on the Norwegian Continental Shelf, followed by purchase of an additional 10% interest. Purchase of a 22.4% interest in the King Lear field.
  • PGNiG notifies Gazprom of its intention to terminate the Yamal Contract, effective from 31 December 2022.
  • Start of geophysical surveys within the Ras Al Khaimah licence area in the United Arab Emirates.
  • Securing exclusive use of the small scale LNG reloading terminal in Klaipeda, Lithuania, for a period of five years.
  • Contract on LNG supplies to Duon Dystrybucja. Within seven years, PGNiG will supply 150 000 t of LNG.
  • Upgrade by Fitch and Moody’s of their respective ratings on PGNiG to BBB (with a stable outlook) and Baa2 (with a stable outlook).

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