Poland: PGNiG Q3 Net Dives

In Q1-Q3 2012, the PGNiG Group earned net profit of PLN 48m, compared with PLN 1.32bn in the corresponding period of the previous year. In Q3 2012, the Group’s net profit dropped 80%, to PLN 65m, from PLN 319m a year ago.

The Group’s operating result for Q1-Q3 2012 was most significantly affected by a PLN 1.8bn loss posted by the Trade and Storage segment, responsible for gas purchases and sales. In Q3 2012 alone, the segment’s operating result was down PLN 320m year on year, leading to a PLN 350m loss.

In Q1-Q3 2012, the Group’s operating result was down by nearly PLN 1.5bn, despite a 25% rise in sales revenue, to PLN 20.1bn. The Group posted an operating loss of PLN 77m for the period, vs. a PLN 1.4bn profit in Q1-Q3 2011. The decline was chiefly caused by the rising cost of gas purchases.

The March 2012 increase in gas tariffs by approximately 17% proved insufficient to offset the rising cost of gas. As a result of the inadequate tariff and strong movements of exchange rates, the Group recorded a negative margin on sales of high-methane gas for six consecutive quarters. In Q3 2012 and Q3 2012, the margin on gas sales was -9% and -2%, respectively, while in Q1-Q3 2012 the margin was -11%, substantially down on -1% reported for Q1-Q3 2011.

The negative margin on sales of the Group’s key product directly translated into weaker performance of the Trade and Storage segment.

Higher natural gas sales

In Q1-Q3 2012, the volume of gas sales was 10.5bn cubic metres, up from 10.1bn cubic metres in the corresponding period of 2011. Year to date, each customer group purchased more gas than in 2011, with growth rates from 3 to 5%. There was no major year-on-year change in demand in Q2 and Q3 2012 – the increase in gas consumption was driven by low air temperatures in Q1 2012.

In Q3 2012, the volume of gas sales was 2.5bn cubic metres, and stayed relatively flat on Q3 2011.

Twofold increase in gas supplies from countries west and south of Poland

The consistent policy of diversifying gas supply sources and developing storage capacities brought fruit in Q1-Q3 2012 when a significant change in the structure of imports occurred. Thanks to the use of the extended Lasów interconnector, the virtual reverse flow at the Yamal pipeline, and the Moravia interconnector, a total of 1.4bn cubic metres of gas was sourced from countries west and south of Poland, which represents a twofold increase over Q1-Q3 2011, when imports from the West were 700m cubic metres. Despite these changes, the average cost of purchased gas was higher than the tariff price. Consequently, in Q3 2012 the Company had to recognise an additional impairment loss of PLN 60m on gas inventories.

Utilisation of gas storage capacities

After the withdrawal of significant volumes of gas in Q1 2012, during two subsequent quarters the Company injected 1.2bn cubic metres of gas into its storage facilities. The largest quantities of (almost 800m cubic metres) were injected in Q2 2012. In Q3 2012 alone, 430m cubic metres of gas was injected, which together with the gas already stored represents a considerable proportion of the total storage capacity.

1 Polish zloty = 0.3052 US dollars

[mappress]

LNG World News Staff, November 12, 2012