Under the agreement, "Puławy" and PGNiG will consider the preparation of investment projects involving the use of natural gas, including projects located in other natural gas-producing countries.

"We would like to prepare jointly some good investment projects which will allow us to better use natural gas, in particular domestic natural gas," said Michał Szubski, president of PGNiG SA.

Some of the proposed projects involve expansion of the production capacity of the "Puławy" plant through installing production lines for mineral fertilisers or other natural gas-based products. Other investment projects may also be pursued. Both companies further agreed that in the case of domestic investment projects, Puławy will be the first location to be considered.

"We hope that this agreement will allow us to expand our production capacity and strengthen the position of our Company and the entire region," said Paweł Jarczewski, president of Zakłady Azotowe "Puławy" S.A. "Our companies are in good financial condition, which warrants the success of the planned undertakings."

The agreement is valid until 31 December 2009 and may be extended. During this year, the companies will assess the technical and economic feasibility of the project, evaluate the demand for resources, in particular for natural gas, prepare the business plan and determine the legal framework for implementation of the project. A new company might also be established in which both parent companies would have an equal shareholding.

In order to implement the agreement, the parties may appoint special Task Teams charged with preparing and presenting to the Management Boards of both companies a detailed project concept with terms of implementation.

Contact

Grzegorz Kulik                                                             Joanna Zakrzewska

ZA Puławy SA                                                             PGNiG SA

e-mail: gkulik@azoty.pulawy.pl                                     e-mail: joanna.zakrzewska@pgnig.pl

tel. +48 81 565 21 76, +48 607 045 318                         tel. +48 22 691 79 30, +48 667 951 263

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Zakłady Azotowe "Puławy" Spółka Akcyjna. A listed company (since October 2005) owned mainly by the State Treasury (a 50.75% shareholding). The company operates on three main product markets:

• fertilisers for agriculture (urea, ammonium nitrate, urea-ammonium nitrate solutions, ammonium sulphate) - leading producer in Poland and worldwide
• melamines (used in the production of synthetic resins, which are used in the furniture, paint, textile and paper industries) - the third-largest producer worldwide and the only producer in Poland,
• caprolactam (a compound used in the production of textile and industrial fibres, carpets and engineering resins that are used in the automotive, electronics and food industries) - one of two exclusive producers in Poland.

The company is the leader in the fertiliser and chemical sector in Poland and a significant producer worldwide. Roughly half of the company's revenues come from exports.

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PGNiG is the leader of the natural gas market in Poland. The company is owned mainly by the State Treasury, which holds 84.75% of its shares. The core business of the company includes:

• exploration and production of natural gas and crude oil,
• imports,
• storage,
• trade and distribution of gaseous and liquid fuels.

The PGNiG Capital Group includes 56 production, trading and service companies. The Group companies specialise in natural resources exploration and production, as well as geological and geophysical services. The Group companies provide the highest quality specialist services, in Poland and worldwide. The distribution companies (regional natural gas companies), which provide natural gas to over 6 million customers in Poland, are companies of strategic importance.