‘In 2019, the total volume of gas we sold increased by approximately 6% year on year, despite higher temperatures in the first and fourth quarters of the year. On the other hand, the oversupply of LNG continued to suppress gas prices on global markets. The average annual price of gas traded on the Polish Power Exchange was 35% lower compared with the previous year, which had a significant impact on revenue from gas sales,’ said Jerzy Kwieciński, President of the PGNiG Management Board. ‘All participants of the global gas market are currently facing the challenge of low prices. We should bear in mind, though, that demand for gas has been growing at a significant rate, as confirmed by forecasts from all around the world. Against this backdrop, we are consistently and actively diversifying our sources of natural gas imports with a view to ensuring Poland’s energy security. In 2019, our LNG imports increased by more than 27% on the year before,’ added Mr Kwieciński.

The Trade and Storage segment’s revenue rose by 5%, to PLN 33.25bn. 2019 saw a clear shift in total gas imports. The share of natural gas imported from Russia fell from 67% to 60%. While the share of LNG imports went up from 20% to 23%. In 2019, PGNiG received 31 LNG cargoes under long-, medium- and short-term (spot) contracts (2018: 23 LNG deliveries). LNG import volumes rose from 2.71 bcm in 2018 to 3.43 bcm in 2019. In 2019, the number of retail gas customers increased by about 67,000, to 6.95m. The Group’s retail company, PGNiG Obrót Detaliczny, sold 7.59 bcm of natural gas to end users, approximately 100 mcm more than in 2018.

A decline in the Exploration and Production segment’s revenue from sales of crude oil and condensate was attributable to both lower oil prices and a 10% drop in the volume of oil produced by the Group. The segment’s revenue from sales of natural gas also fell, by ca. PLN 1.45bn, on lower prices of gas traded on the Polish Power Exchange.

Total gas volumes sold outside the Group increased by 6% y/y, to 30.70 bcm.

Revenue from distribution services decreased by 5% relative to the year before, to PLN 4.21bn, accompanied by a 2% year-on-year decrease in the volume of distributed gas. The distribution tariff (effective as of February 15th 2019) is 5% lower than the tariff applicable in 2018.

Revenue from heat sales earned by the Generation segment was stable at approximately PLN 1.33bn (up 1% y/y) with higher average temperatures and slightly lower sales (down 3% y/y). Revenue from sales of internally generated electricity went up markedly, by 24% y/y, on stable sales volumes of 3.95 TWh (down 0.5% y/y). The segment’s total revenue rose by 7%, to PLN 2.57bn.

The PGNiG Group’s financial performance was also affected by impairment losses on property, plant and equipment, recognised in Q4 2019, mainly in the Exploration and Production (of PLN 212m) and the Trade and Storage (of PLN 339m) segments, as well as an impairment loss on shares in Polska Grupa Górnicza, of approximately PLN 272m.

Major events in 2019:

• Start of work on a development concept for the Tommeliten Alpha discovery on the Norwegian Continental Shelf. The concept will be ready in the third quarter of 2020. Production is to be launched in 2024.
• First commercial LNG bunkering of ships carried out by PGNiG in partnership with Grupa LOTOS.
• First LNG delivery under a long-term contract with Cheniere Energy.
• Further contracts on LNG supplies for city bus fleets, including in Warsaw. Launch of LNG supplies for truck fleets – signing of the first contract with Bisek-Asfalt.
• Discovery of a natural gas and crude oil deposit within the PL838 licence area (Shrek).
• Purchase of a 20% interest in the Duva field on the Norwegian Continental Shelf, followed by purchase of an additional 10% interest. Purchase of a 22.4% interest in the King Lear field.
• PGNiG notifies Gazprom of its intention to terminate the Yamal Contract, effective from December 31st 2022.
• Start of geophysical surveys within the Ras Al Khaimah licence area in the United Arab Emirates.
• Securing exclusive use of the small-scale LNG reloading terminal in Klaipėda, Lithuania, for a period of five years.
• Contract on LNG supplies to Duon Dystrybucja. Within seven years, PGNiG will supply 150 thousand tonnes of liquefied natural gas.
• Upgrade by Fitch and Moody’s of their respective ratings on PGNiG to BBB (with a stable outlook) and Baa2 (with a stable outlook).