Polish Incumbent Sees Stable Growth
Polish state oil and gas company PGNiG reported first-half profits up 65%, nearing zloty 2.1bn ($580mn), and earnings before interest, tax, depreciation and amortisation were twice that, at just under zloty 4.2bn, up by a third, it said August 18. But unlike last year, this year's results were not hit by impairments.
Most of the Ebitda came in Q2: zloty 1.4bn, which is almost double the figure posted for the same period in 2016 (up 91%), when it wrote down property, plant and equipment by zloty 725mn. Total revenue rose 12% in Q2. above zloty 7.2bn.
CEO Piotr Wozniak said the Q2 performance was "in line with the new group strategy for 2017−2022, unveiled in March. We keep a stable pace of growth. In the last three months we reported stronger revenue figures across all business segments. We have signed a number of strategic contracts, we continue to export gas to Ukraine, we have received our first US cargo of liquefied natural gas, and we are close to launching the Norwegian Corridor project. All these factors help us to further consolidate our position on the international gas market."
Upstream revenue from sales of gas climbed 10%, or zloty 67mn, year on year. Despite lower sales volumes reported for the period, revenue from sales of oil and condensate rose by zloty 5mn year on year. Excluding the effects of last year's impairments, Ebitda rose 8% year on year to zloty 785mn.
Trade & Storage operations saw revenue rise by 12% to zloty 5.4bn, with the growth fuelled by rising gas prices and higher volumes of gas sold to residential and industrial customers (both retail and wholesale).
Gas distribution volumes over Q2 rose 19% year on year, to 2.4bn m³ thanks to new connections and colder weather. Revenue from distribution services was up 10%, year on year.
In generation, revenue from sales of heat rose to zloty 231mn, or 21%, compared with Q2 2016 and Ebitda totalled zloty 171mn, up 95%. The strong segment performance was mainly driven by acquisitions in 2016 and an over 25% rise in sales volumes of electricity generated from own sources.
PGNiG received the first US cargo of LNG, destined for a country in central and eastern Europe at the President Lech Kaczyński LNG Terminal in Swinoujscie. Going forward, the Company may sign further contracts for the supply of US liquefied gas. Back in the first quarter of the year, PGNiG signed a supplementary agreement to the long-term contract with Qatargas, one of the world’s leading LNG producers, who will increase the volume of LNG supplied to Poland to a total of 2.9bn m³/year in 2018−2020 and to 2.7bn m³ in the following years of the contract term.
In June 2017, PGNiG signed contracts for the supply of natural gas to Grupa Azoty SA and its subsidiaries, running from October 1 2018 to September 30 2020, with an option to extend the contracts for another two years. The Company has also signed a long-term gas supply contract with the ArcelorMittal Group in Poland. The volume of gas to be supplied under the contract may reach around 1.6bn m³ in total, for a price of up to about zloty 1.4bn.
PGNiG signed a gas export contract with storage and pipeline operator Ukrtransgaz, in partnership with ERU Trading, for the supply of 218m m³ of gas in 2017.
Norway's Gina Krog field in the North Sea (PGNiG: 8%) was brought on stream at the very end of June and PGNiG has also made two discoveries in the Greater Poland region. One, near the town of Sroda Wielkopolska, was discovered in partnership with the Orlen refinery group, using horizontal drilling for the first time. The second discovery is in the Rokietnica commune and PGNiG is sole owner.
William Powell