PGNiG Earnings Soar on Gas Price Ruling
Earnings at Polish state gas company PGNiG surged in the first nine months of the year, thanks to the impact of an arbitration award paid by its Russian supplier Gazprom, it said on November 19.
PGNiG's Ebitda increased by 168% year on year to zlotys 10.69bn ($2.84bn), while Ebit soared 346% to zlotys 8.24bn. While revenues were down 7% yr/yr at zlotys 29.65bn, operating expenses fell 31% to zlotys 19.19bn.
Under a ruling by an arbitration court in Stockholm, Gazprom paid PGNiG $1.5bn during the summer for previously overpricing gas supples. It also agreed to amend the pricing formula in the pair's long-term supply agreement, known as the Yamal contract. Excluding the settlement sum and other one-off gains and charges, PGNiG's EBITDA was still up 32% at zlotys 5.5bn thanks to its Russian gas being cheaper, while Ebit grew by 51% to zlotys 3.06bn.
"Winning the arbitration proceedings has helped PGNiG to significantly improve its trading position by creating a stronger link between the costs of gas purchased east of Poland and gas prices in European markets," PGNiG president Pawel Majewski said. "It is not the money returned by Gazprom that underlies the strength of our group."
Trading and storage generated 77% of PGNiG's Ebitda, while its distribution, exploration and production and generation segments earned 14%, 7% and 5% respectively.
Mere months after resolving their last dispute, PGNiG and Gazprom are once again in a disagreement over the gas price. PGNiG said on November 3 it had requested talks to renegotiate the price it pays, as their long-term contract allows either party to do so every three years. Gazprom responded on November 10 saying it had requested an increase in the price.
The Yamal contract came into force in 1996 and covers 10bn m3/year of gas supplies. The take-or-pay clause in the contract requires PGNiG to pay for at least 8.7bn m3 of gas annually. The contract is due to expire at the end of 2022 and PGNiG has insisted it will not renew it, replacing Russian volumes with LNG and piped gas from Norway.