“The results delivered in the first half of 2021 confirm the PGNiG Group’s robust financial and operational condition. The increase in gas sales was not only driven by the cold winter and higher consumption of gas for heating purposes, but also by the clear signs of economic recovery seen in the second quarter of the year. We expect that Poland’s energy transition will further increase demand for gas,’ said Paweł Majewski, President of the Management Board of PGNiG SA.

In the first six months of the year, the PGNiG Group posted PLN 24.99bn in revenue, up 19% year on year. Operating expenses rose 61% year on year, to PLN 21.57bn, mainly on the back of a steep increase in the cost of gas due to record-high gas prices in international markets. EBITDA contracted by 44%, to PLN 5.2bn, with EBIT down 55%, to PLN 3.42bn. The Group generated a net profit of PLN 2.43bn, 59% less than the year before.

The year-on-year decrease in EBITDA and EBIT follows from the recognition in the results for the first half of 2020 of the refund by Gazprom of the overpayment for gas supplies as a result of the arbitration dispute resolved in favour of PGNiG. Net of the effect of the refund on the results for the first half of 2020, the Group’s EBITDA and EBIT would improve year on year by 17% and 25%, respectively. Operating expenses grew at a slower rate too, having increased 18% year on year.

The shares of individual segments in the Group’s EBITDA changed markedly. The largest contributor was the Exploration and Production segment: 53% vs 3% the year before. The Distribution segment added 30% to EBITDA, compared with 13% in the first half of 2020. The Generation segment’s contribution has doubled year on year, amounting to 12%. The Trade and Storage segment’s share fell to 5%, from 81% in the previous year. Those changes, especially in the case of the Exploration and Production and Trade and Storage segments, were largely driven by sharp movements in hydrocarbon prices.

“During the year, the prices of natural gas rebounded from all-time lows to all-time highs. Despite the rapidly changing market environment, the PGNiG Group was able to maintain business stability and performance. This is the effect of diversifying our operations, which includes both hydrocarbon production and trade, supported by the Generation and Distribution segments,’ emphasised Paweł Majewski.

Exploration and Production

In the first half of 2021, the segment’s revenue was PLN 3.79bn, up 79% year on year. EBITDA grew more than ten-fold on the previous year, to PLN 2.75bn. The improvement in financial figures was mainly driven by higher hydrocarbon prices. The average PLN price of Brent crude in the period went up 49% on the previous year, and the average price of gas on the Day-Ahead Market of the Polish Power Exchange TGE soared as much as 159% year on year.

The oil production volume was 608 thousand tonnes, down 7% relative to the first half of 2020, while the output of natural gas increased 7% year on year, to 2.34 bcm, supported by higher production in Norway and Pakistan.

Trade and Storage

In the six months to June 30th 2021, the volume of gas sold by the Trade and Storage segment was 17.68 bcm, a 7% increase on the previous year. Coupled with price hikes, this translated into an 18% year-on-year increase in revenue from gas sales, to PLN 17.53bn. Taking into account the sales of crude oil and electricity in the first half the year, the segment’s revenue rose 18%, to PLN 19.46bn. The segment’s EBITDA came in at PLN 0.27bn, down 96% year on year, due to higher cost of gas following a sudden increase in global gas prices and the effect of refunded overpayments on the Group’s performance in the first half of 2020 as a result of the favourable resolution of the arbitration proceedings against Gazprom.

Distribution

The segment’s revenue rose 19% year on year, to PLN 2.87bn, mainly on account of higher volumes of distributed gas (up 19%, to 7.35 bcm). The increase was chiefly attributable to more than a 1.5°C year-on-year decrease in the average air temperature. After the first six months of 2021, the segment’s EBITDA reached PLN 1.55bn, having increased 32% year on year.

Generation

The segment posted revenue of PLN 1.69bn and EBITDA of PLN 0.63bn, up 14% and 19%, respectively, year on year. Revenue from sale of heat amounted to PLN 0.95bn, up 20% on the same period of 2020 due to higher tariffs and a 3% increase in heat sales volumes (23.5 PJ). Revenue from sales of electricity from own generation decreased by 7% year on year, to PLN 0.47bn. The sales volume of produced electricity was 1.83 TWh, having fallen by approximately 9% year on year.