On December 19th 2011, Mr Michał Szubski, President of the Management Board of PGNiG SA, resigned from his position for compelling personal reasons. The Supervisory Board of PGNiG SA accepted his resignation with effect from the balance-sheet date, i.e. December 31st 2011.

PGNiG Norway, a subsidiary of Polskie Górnictwo Naftowe i Gazownictwo SA, may have to postpone the launch of production from the Skarv field from the first to the second quarter of 2012 due to delays in the installation of production piping caused by adverse weather conditions in the Norwegian Sea.

PGNiG Norway, a subsidiary of Polskie Górnictwo Naftowe i Gazownictwo SA, has received approval from the Norwegian Ministry of Energy and Petroleum to double its interest in the PL558 licence on the Norwegian Continental Shelf following a purchase of a further 15% licence interest from Nexen Exploration Norge AS.

On November 29th 2011, the President of the Polish Office of Competition and Consumer Protection unconditionally approved the acquisition by a special purpose vehicle PGNiG SPV1 Sp. z o.o., a wholly-owned subsidiary of PGNiG SA, of 24,591,544 shares (over 99.8% interest) in Vattenfall Heat Poland S.A. (VHP).

Standard & Poor's Financial Services, a rating agency, has revised the outlook on PGNiG SA from negative to stable. It has also affirmed the Company's "BBB+" rating.

In the third quarter of 2011, the PGNiG Group posted PLN 319m in net profit, down by PLN 26m year on year, due mainly to a 4 pp drop in margin on sales of high-methane gas, from 2% in Q3 2010 to -2% in Q3 2011. The drop in margin was caused by a higher unit purchase price of imported gas, which went up by 27% year on year.

Polskie Górnictwo Naftowe i Gazownictwo SA's legal representative formally called OAO Gazprom and OOO Gazprom Export to participate in arbitration proceedings before the Arbitration Tribunal in Stockholm. The subject matter of the proceedings is a change of the current price terms of gas supplies to Poland.

PGNiG Norway, a subsidiary of Polskie Górnictwo Naftowe i Gazownictwo SA, has doubled its interest in the PL558 licence on the Norwegian Continental Shelf following a purchase of a further 15% licence interest from Nexen Exploration Norge AS.

In the first three quarters of 2011, Polskie Górnictwo Naftowe i Gazownictwo SA sold 10.2 billion cubic meters of natural gas, versus 10 billion cubic meters in the same period of 2010. Gas production volume rose to 3.2 billion cubic meters in the first three quarters of 2011, from 3.1 billion cubic meters in the same period of 2010.

PGNiG Norway, a subsidiary of Polskie Górnictwo Naftowe i Gazownictwo SA, has signed an agreement with Shell International Trading and Shipping Company Ltd. on sales of oil, which will be produced from the Skarv field on the Norwegian Continental Shelf.

Negotiations between PGNiG SA and Gazprom on the new pricing terms of gas imports to Poland have entered their crucial stage. If the Parties are not able to reach an agreement by the end of October 2011, PGNiG will file an application with the arbitration court in Stockholm.

Polskie Górnictwo Naftowe i Gazownictwo SA has started the Flame of Hope campaign. Its purpose is to collect the largest possible number of votes in support of an appeal to Members of the European Parliament to refrain from activities aimed at stopping shale gas exploration and production. To take part in the campaign, please cast your vote on the http://www.plomiennadziei.eu/ website.

Polskie Górnictwo Naftowe i Gazownictwo SA is the first Polish company to have started technological production of shale gas. Prime Minister Donald Tusk and other members of the government arrived at the location to personally participate in the event, which marks a major milestone not only for PGNiG, but also for the entire Polish economy.

Hydrocarbon exploration and production and power generation are two areas which are easy to combine, as natural gas coming from Polish fields is the best source to fire power generation units. "This is why PGNiG is strongly involved in exploration for hydrocarbons, including both conventional and unconventional reserves," said Michał Szubski, PGNiG's CEO, when opening a panel discussion on "Polish and European Gas Markets - Impact of the Shale Gas" organised by Polskie Górnictwo Naftowe i Gazownictwo SA on September 8th 2011 as part of the Economic Forum in Krynica

InterTransGas GmbH (ITG), a joint company of VNG - Verbundnetz Gas Aktiengesellschaft (VNG) and Polskie Górnictwo Naftowe i Gazownictwo S.A. (PGNiG) is conducting a market survey for a high pressure natural gas pipeline between Germany and Poland, the "IPG - Interconnector Poland - Germany".

In H1 2011, the PGNiG Group posted a net profit of PLN 1bn, with sales revenue increasing to PLN 11.5bn (by 7%) year on year. In H1 2011, the growing cost of gas purchases reduced the margin on gas sales, which had an adverse effect on the Group's financial performance. However, the Group was able to partially offset the adverse effect of a negative margin thanks to improved profitability of the Exploration and Production segment and a profitable disposal of shares in Zakłady Azotowe w Tarnowie-Mościcach.

On August 25th 2011, Polskie Górnictwo Naftowe i Gazownictwo SA signed the documentation for a EUR 1.2bn Eurobond issue programme with PGNiG Finance AB (PGNiG's subsidiary) and three banks, including Societe Generale, BNP Paribas and Unicredit Bank AG. This is the first stage of PGNiG SA's Eurobond issue programme.

Polskie Górnictwo Naftowe i Gazownictwo SA maintains its forecast for natural gas production at 4.3 billion cubic metres in 2011, with crude oil production forecast slightly lowered to 460 thousand from the 480 thousand declared earlier. The oil and gas production forecasts for 2012 remain unchanged.

Polskie Górnictwo Naftowe i Gazownictwo SA ("PGNiG") has acquired 24,591,544 shares in Vattenfall Heat Poland SA ("VHP"), representing over 99.8% of the company's share capital. After the project in Stalowa Wola, acquisition of the CHP plants from Warsaw is another stepping stone on the path to PGNiG's transformation into a diversified energy conglomerate.