News

For over a year now, PGNiG SA has been engaged in efforts aimed at securing additional gas supplies to Poland, to replace the quantities formerly delivered under the contract with RosUkrEnergo AG. In spite of those efforts, PGNiG SA may be unable to meet the industrial customers' orders in full. Therefore, in line with the provisions of The Act of 16 February 2007 on stocks of crude oil, petroleum products and natural gas, the principles of proceeding in circumstances of a threat to the fuel security of the State and disruption on the petroleum market, last week PGNiG SA notified GAZ-SYSTEM SA (the transmission system operator) that in Q4 2010 it might be unable to fully meet the natural gas requirements of industrial customers.

The root causes of the current situation include termination of the contract with RosUkrEnergo in autumn 2006 and the abandonment in 2006 of the plans to construct a two-way cross-border interconnection, via which imports of natural gas to Poland would have been possible, for instance, from the EU grid.

As the European Commission raised some doubts regarding the annex to the Yamal contract providing for gas supplies from the Russian Federation to Poland, so far the attempts to make up for the shortage of gas imported from the markets east of Poland have been unsuccessful. In 2007-2008, the annual offtake of gas imported from the markets east of Poland was approx. 10 billion cubic metres, of which nearly 2.4 billion cubic metres were supplied by RosUkrEnergo. All that changed on January 1st 2009, when RosUkrEnergo discontinued contractual supplies, one year before the contract was due to expire. In 2009, PGNiG SA signed the so-called summer-time contract with Gazprom Export, thanks to which, as well as the economic slowdown, it was able to match supplies with demand.

For almost 12 months now, the Management Board of PGNiG have been engaged in intensive efforts aimed at securing alternative supplies of natural gas to accommodate the unmet demand of the Polish economy.

At the same time, PGNiG SA takes an optimistic view of the announced results of the trilateral talks, held last Saturday in Moscow, concerning the terms of a new contract for natural gas supplies from Russia. In line with the agreed terms, in 2010 PGNiG SA would purchase from Russia approx. 9 billion cubic metres of gas, in 2011 - approx. 9.3 billion cubic metres, while from 2012 onwards it could import up to 10.27 billion cubic metres, with an option to flexibly reduce that quantity by 15% depending on the actual requirements. This means that the amount of gas flowing to Poland from the markets east of our country would be back at level comparable with that of 2006-2008, when natural gas was still being supplied by RosUkrEnergo.

In 2008 and 2009, Poland's demand for natural gas reached 13.7 and 13.5 billion cubic metres, respectively. PGNiG estimates that in 2015 it will reach roughly 18 billion cubic metres. The Company produces approx. 4.2 billion cubic metres of gas annually from domestic fields and imports some 9 billion cubic metres, including approx. 7.5 billion cubic metres from Russia under the Yamal contract currently in effect. The Company's current storage capacities are close to 1.6 billion cubic metres. As at September 20th 2010, the Underground Gas Storage Facilities were filled to over 85%. The daily consumption of gas in autumn and winter ranges from about 26 to 60 million cubic metres.

At present, the supplies of imported natural gas are consistent with the orders placed by PGNiG, while the Polish gas mines are operating without disruptions. The gas storage space available to PGNiG at the Mogilno Underground Gas Storage Cavern Facility, as well as the Husów, Strachocina, Brzeźnica and Swarzów Underground Gas Storage Facilities, has been filled to capacity. At the same time, due to the fact that the investment project aimed to expand the Wierzchowice Underground Gas Storage Facility in still ongoing, the facility has been filled to 370 million cubic metres (i.e. close to 64% of its total capacity). The amount will be available for withdrawal in the winter of 2010/2011.

Joanna Zakrzewska

Spokeperson for PGNiG SA