Group revenue grew by PLN 5.7bn, to PLN 28.7bn in 2012, mainly on the back of stronger sales of natural gas and crude oil, as well as the first-ever consolidation of PGNiG Termika's revenue. A significant drop in natural gas supply costs and disciplined control of operating expenses helped turn the revenue growth into stronger operating profit, which rose by 35% to PLN 2.53bn.

Yamal Contract annex contributes to improved Trade and Storage segment performance

The key driver of the Group's overall performance was operating profit earned by the Trade and Storage segment, up PLN 524m following the signing of an annex to the Yamal Contract in November 2012, providing for reduced gas prices and a different gas pricing formula. The effect of the annex on the Company's EBITDA in 2012 is estimated at approximately PLN 3bn. This is the result of an aggregation of the retroactive effect, which accounts for the reduced costs of gas supplies in the previous periods, and the new pricing formula having been applied to settlements for Q4 2012.    

The increase in profit was led by stronger profitability of high-methane gas sales. The raising of the gas tariff in March 2012 proved insufficient at first, but with the unit cost of imported gas reduced under the annex to the Yamal Contract, the price of gas - including as applied to previous gas purchases - changed. The resulting adjustment to profit, which  was recognised in the fourth quarter, helped offset losses sustained in the first three quarters of the year.

Increased output enhances Exploration and Production segment performance

In 2012, the Exploration and Production segment generated operating profit of PLN 1.35bn, which is approximately 3% more than a year ago. This satisfactory performance was driven by an increase in crude production and sales as a result of new wells on the Barnówko-Mostno-Buszewo (BMB) field having come on-stream, and high productivity from the existing wells. In combination with the Brent crude price having risen to approximately USD 110/barrel, the increases in production had a direct effect on the segment's operating profit.

Improved Distribution segment performance

2012 operating profit posted by the Distribution segment was up 12% year on year, to PLN 878m. Factors contributing to this strong improvement included a 5% rise in the volume of distributed gas, as well as higher distribution tariffs, which were raised in July 2011 by an average of 1.7%. The volume of distributed gas rose with the increased gas consumption by households and smaller industrial customers connected to the distribution network, as a result of the low air temperatures recorded in Q1 and Q4 2012, and the acquisition of new customers, including customers for coke gas.   

 2012 PGNiG Group results (PLNm)

Q4 2012 PGNiG Group results (PLNm)

Increase in natural gas sales to nearly 15 billion cubic metres

In 2012, the volume of natural gas sales ran to nearly 15bn cubic metres, from the 14.3bn cubic metres recorded in 2011. This resulted from strong sales in the first quarter of the year due to low temperatures, an expanding customer base outside of Poland (served by PGNiG Sales and Trading), as well as the acquisition of new accounts.

In Q4 2012, the volume of natural gas sales rose 5% year on year, to 4.4bn cubic metres, from 4.2bn cubic metres in the same period of the year before.

Increase in gas supplies from countries lying west and south of Poland

In 2012, our continued efforts to diversify gas sources and expand storage capacities delivered welcome results, bringing about a shift in the structure of imports. Thanks to the extended Lasów terminal, the virtual reverse flow on the Yamal Pipeline and the Moravia interconnector, a total of nearly 2bn cubic metres of gas were imported from countries lying west and south of Poland's borders, up by ca. 400m cubic metres on 2011, when the volume of imports sourced from these markets amounted to 11.6bn cubic metres. Accordingly, in 2012 the share of imports from countries lying west and south of Poland grew to 18%, as compared to 15% a year earlier.

Higher production and revenue from crude oil sales

In 2012, the volume of crude oil production grew 5%, to 492,000 tonnes, while crude oil sales rose 4% to 485m cubic metres (from 467m cubic metres in 2011). The growing volumes of crude production and sales were driven by the hook-up of new wells in the BMB field and achievement of target production volumes at the Dębno facility, which in the comparative period (May and June 2011) had had to scale down production of crude due to reduced gas off-take by a CHP plant.

On a cumulative basis, revenue from crude oil sales increased on the back of both higher sales volumes and a rise in the average annual USD exchange rate with the price of Brent barrels remaining flat.

In 2012, the volume of crude oil production reached 492,000 tonnes, 12,000 tonnes above the annual projections.

Injection of gas into storage

Having extended our underground gas storage facilities and filled them to capacity in the summer months, we had accumulated a reserve of 1.8bn cubic metres of gas by the end of 2012, versus 1.5bn cubic metres at the end of 2011, which substantially enhanced Poland's energy security.

Consolidation of PGNiG Termika

2012 saw a 4% growth in heat sales, to 40,214 TJ, and a 1% increase in electricity sales, to 3,719 GWh. Sales of heat and electricity grew mainly on the back of the lower temperatures recorded in the first and fourth quarters of 2012. In H2, a strong contributor to PGNiG Termika's performance was the rise in heat tariffs, in effect since July 2012. In September, the Żerań CHP Plant was shut down for 18 days following a fire - its functions temporarily taken over by the Siekierki CHP Plant.

Generation, the new operating segment in the Group since Q1 2012, posted annual revenue of PLN 1.96bn, with operating profit of PLN 15m. The latter figure has been adjusted for the effect of accumulated amortisation of intangible assets of PGNiG Termika, without which the segment's EBIT in 2012 would have reached PLN 225m.

Joanna Zakrzewska

Press Officer