The Company continued its activities with the aim of further securing uninterrupted gas and oil supplies for the PGNiG Group. We believe that this goal can be achieved through stable and diversified hydrocarbon production from the Norwegian Continental Shelf.
In 2017 the Company delivered revenues of NOK 2.6 billion and an EBITDA of NOK 1.8 billion. These results were despite slight production decrease in comparison with the previous year. With the overall production in 2017 of 0.54 billion cubic metres of gas and 470 thousand tonnes of crude oil (including NGL’s), PGNiG Upstream ranked among the twenty largest hydrocarbon producers on the NCS this year. High revenues and decreased operating expenses enabled the Company to improve its financial results. As a consequence, PGNiG Upstream delivered a net profit of NOK 21 million which is the best result in the last five years’ period. In 2017 the Company managed to create additional value for its shareholders through involvement in the activities across the entire upstream value chain:
- Firstly, the Company continued involvement in the Gina Krog development which resulted in production start-up in June 2017. This project fulfils strategy to deliver new project and replace existing production with new assets.
- Secondly, PGNiG Upstream achieved record high reserves replacement ratio of 1.8. Such value increase was possible mainly thanks to identification of additional reserves in the Ærfugl gas field following successful production test.
- Furthermore, the Company was heavily involved in business development activity and acquired shares in two prospective licenses on the NCS. In March, PGNiG Upstream entered into PL460 which contains the Skogul oil discovery. In December, the Company signed agreements to purchase shares in PL433 with the Fogelberg gas-condensate discovery. This transaction is expected to be effective in 2018. Both acquisitions were the consequence of the new PGNiG strategy focused on increase in production from the Norwegian fields. This involvement will continue in the upcoming years.
- Moreover, PGNiG Upstream and its partners submitted two plans for development and operation (PDO) for the Ærfugl and Skogul fields. Both projects are highly promising. The development of the Ærfugl gas field will translate into significantly higher production of natural gas which we want to transmit from Norway to Poland through the planned new gas pipeline via Denmark.
- Finally, PGNiG Upstream continued its exploration efforts. During 2017 the portfolio was extended with two new licenses through awards in the APA2016. Two other licenses were relinquished to the authorities in 2017. In addition, the Company participated in the APA2017 and drilled one exploration well (Central-3 well on Gina Krog) which proved to be dry.
- Other important activities in 2017 included celebration of 10th anniversary of PGNiG’s presence on the NCS and involvement in the Baltic Pipe project aimed at exporting Norwegian gas to Poland through a new infrastructure connection (“Baltic Pipe”). The Company gathered key business partners to celebrate its 10th anniversary during gala dinner. The importance of the event was confirmed by Director General of Norwegian Petroleum Directorate Bente Nyland in her speech directed to PGNiG’s guests and reflected in numerous positive feedback notes received by the Company. In the opinion of the Board, the Company is now benefiting from much higher recognition and acknowledgement of its achievements on the NCS.
- The company is currently participating in four large 3D seismic projects in the recently opened Barents South East area adjacent to the Russian border.