Polish Gas Co Has Record First Half
Polish gas monopoly PGNiG reported record results for its first-half 2020 activities August 20, as the arbitration case with Gazprom finally bore fruit this year. The company recorded a settlement gain of zlotys 5.9 ($1.6)bn – the same amount as the company's net income – reflecting overpayments to Russia under the old, oil-indexed pricing clause since 2014.
The Yamal gas purchase contract with the Russian monopoly now reflects European gas hub prices, which cuts its weighted average cost of gas until the contract expires at the end of 2022. But the company increased its imports of relatively expensive LNG by 24% to 2.19bn m³ (regasified) from Qatar and the US.
Net profit of zlotys 5.92bn and pre-tax, interest and tax earnings (Ebit) zlotys of 7.65bn were four times more than in the same period of 2019. Ebitda of zlotys 9.35bn tripled year on year.
CEO Jerzy Kwiecinski said: “Despite the turmoil caused by the coronavirus pandemic, we delivered excellent financial results in H1 2020. PGNiG achieved the best financial results among those reported for the first half of the year and the quarter by Polish listed companies, in the history of the Warsaw Stock Exchange.”
Upstream revenues were however down 29% year on year at zlotys 2.12bn, thanks to a 34% drop in oil prices that more than offset the 7% growth in output. The average day-ahead price of gas on the Polish Power Exchange was down as much as 43% year on year, and the segment also took an impairment on non-current assets of zlotys 853mn.
Gas trade and storage revenue dropped by 8% to zlotys 16.48bn, despite a 6% increase in total sales of natural gas, to 16.90bn m³. The average gas price in transactions made on the PPX fell 21% in the period. At the same time, LNG imports volumes grew 24%, to 2.19bn m³.
The volume of distributed gas grew 6.19bn m³, down 2% on last year but revenue grew 1% to zlotys 2.28bn and Ebitda rose 5% to zlotys 1.17bn.
Generation reported a 5% growth in revenue, to zlotys 1.48bn. Revenue from heat sales rose 7% to zlotys 790mn, as a tariff hike offset the 1% drop in volume. In addition, the average monthly temperatures were 0.3°C lower in the first half of 2020 than in the corresponding period of 2019. Revenue from sales of electricity (own generation) decreased by 6% year on year, to zlotys 506mn, with sales volumes down 11%, to 2.02 TWh.
The company is in merger talks with PKN Orlen as the state is bringing together its major energy companies. Generator Energa and refiner Lotos are already either absorbed or on the way to becoming part of the major refiner PKN Orlen. An exclusive NGW interview with Kwiecinski and a feature on the merger may be read here.