PGNiG profit hit by high Russian gas prices

Polish Oil and Gas Company (PGNiG) saw its first-quarter net income slip 32 percent due to high cost of gas fuel purchased from sources east of Poland. 

The company reported a net income of 1.06 billion Polish zloty ($274.9 million) in the first three months of the year, compared to 1.57 billion Polish zloty in the corresponding period in 2018.

Commenting on the results, PGNiG president Piotr Woźniak said, “The high cost of gas fuel purchased from sources east of Poland weighed on the group’s performance, but imports from other sources – especially LNG – helped us mitigate the adverse impacts of the Yamal contract.”

The nine-month average Brent crude price in USD per barrel, affecting the Yamal contract delivery price, was a third higher than in the previous year.

The company succeeded in partly mitigating the negative effect of this factor on the segment’s performance by replacing gas sourced from east of Poland with supplies from other directions – primarily liquefied natural gas (LNG) and gas procured from suppliers based west and south of Poland.

In the first quarter of 2019, the volume of LNG supplies to the President Lech Kaczyński Terminal in Świnoujście reached 727 million cubic meters of the regasified fuel, a 44 percent increase year on year.

As for imports from the western and southern directions, they reached 1.15 billion cubic meters, more than three times the volume imported over the same period of 2018.

At the same time, the volume of gas procured in the first quarter of 2019 from the eastern direction was 1.79 billion cubic meters, down 40 percent year on year.

The segment posted PLN 11.69 billion in revenue, up by 15 percent year on year. In addition to other factors, the revenue increase was driven by gains on the gas purchase and sale hedging transactions, as well as a 2.5 percent increase in the average price of fuel gas in the new retail tariff effective from February 15th, 2019.