Polish Gas Profits Rise on Higher Sales

Poland's dominant gas supplier PGNiG posted March 8 net income of zloty 2.35bn ($575mn) for 2016, up 10% on 2015. Ebitda was zloty 5.97bn, up 2% after adjusting for impairments of non-current assets.

PGNiG's trading and storage segments more than doubled their contribution on the year before, with sales of 24.3bn m³, up 5.7% thanks to the biggest industrial users and a cold winter. Discounting and dual fuel tariffs gained it more customers. More grid connections – 60% more than the additions in 2015 – drove sales from 9.8bn m³ to 10.9bn m³; while distribution revenue rose by 7% just to zloty 4.92bn.

Net new gas sales to business customers averaged 11mn m³/month, offsetting a drop in selling prices related to tariff reductions and an active pricing policy with respect to the largest customers, it said.

Upstream was mainly affected by eroded revenue from oil and condensate sales in the wake of falling crude prices. Oil and gas output was cut and the segment’s revenue dropped 12% year on year, to PLN 4.29bn. PGNiG exported 0.37bn m³, mainly to customers in Ukraine. It expects to sell more this year as well as in Germany. The company will spend zloty 1.7bn on network expansion.

PGNiG CEO Piotr Wozniak

PGNiG expects the arbitration proceedings against Gazprom to be finally resolved in the second half of 2017. Preparations are underway to participate in reservation of capacity of Norway-Denmark-Poland pipeline. First transactions on the LNG market by trading office in London are also expected.

A non-financial highlight of its year was the successful challenge in December to the European Union's decision to allow Gazprom greater access to Opal, as a result of which transmission capacity use soared in January, before falling back in February. A court in Germany is reviewing the EU decision but even it approves it, a further challenge is expected. 

A related success, but not directly the consequence of PGNiG's actions, was the decision by the six Nord Stream 2 partners in July to drop their plans to form a joint venture, following questioning from the Polish anti-trust agency. That has thrown a spanner into the works, particularly where financing the 55bn m³/yr offshore pipeline is concerned.

William Powell