Poland: PGNiG Q1 Profit Slides

PGNiG Q1 Profit Slides

In the first quarter of 2012, the PGNiG Group posted a PLN 297m net profit, down by 71% from PLN 1.025bn in Q1 2011.

One of the main reasons behind the decline, despite a 27% growth in revenue (to nearly PLN 9bn), was a negative margin on sales of high-methane gas (-10%). This was, in turn, primarily attributable to a 41% increase in the unit purchase price of imported gas and lack of new tariff approval, for which PGNiG had applied already in October 2011.

In Q1 2012, the PGNiG Group reported a 27% year-on-year rise in revenue, up to almost PLN 9bn. The increase was principally driven by record-high gas sales volumes and the first-time consolidation of PGNiG Termika (former Vattenfall Heat Poland), whose acquisition was completed in January 2012.

Record-high demand for natural gas

In the first quarter of 2012, the production of natural gas was 1.1bn m3, an output comparable to that seen in the first quarter of 2011. In the first three months of 2012, the volume of gas sales came in at an all-time high of PLN 5.1bn m3, up by 6.6% on Q1 2011. High consumption of natural gas by households (1.7bn m3) was due to low temperatures – February 2012 has been the coldest month since 2005. A substantial increase in natural gas demand was also seen among nitrogen processing plants (up by 12%) and other industrial customers (up by 10%).

Revenue from gas sales was PLN 7.4bn, up by 16% on Q1 2011. However, the cost of gas sold increased by as much as 42%, which led to a major decline in the margin on sales of high-methane gas and resulted in a significant loss of PLN 778m in the Trade and Storage segment.

Diversification of gas supplies – optimisation of gas import costs

The consistent policy of diversifying gas supply sources and developing storage capacities brought fruit in Q1 2012. Despite the record-high demand for gas, import volumes fell compared with Q1 2011 by more than 4%, to 3bn m3. The structure of import purchases changed as well. Thanks to the use of the expanded capacities of the Lasów interconnector, the virtual reverse flow at the Yamal pipeline, and the Moravia interconnector, 860m m3 of gas was sourced from Gemany and the Czech Republic, which is more than three times the amount reported in Q1 2011, when such imports amounted to 275m m3. At the same time, imports from Russia fell from 2.8bn to 2.1bn m3.

As the underground gas storage facilities were expanded and, during the summer season, filled to capacity, gas stocks reached 1.8bn m3 at the end of September and 1.5bn m3 at the end of December 2011. Consequently, in Q1 2012, during peak demand, as much as 900m m3 of gas was withdrawn from the storage facilities.

1 Polish zloty = 0.297539 U.S. dollars

LNG World News Staff, May 15, 2012