‘The consistent efforts to expand our upstream operations not only help enhance security of supply but also allow us to generate cash flows that support liquidity and efficient operation of the Group. Therefore, our priority, also with the diversification of supply sources in mind, is to increase our own production. A good example is the rapid growth in output on the Norwegian Continental Shelf,’ noted Iwona Waksmundzka-Olejniczak, President of the Management Board of PGNiG SA.

In the first quarter of 2022, the Exploration and Production segment reported a year-on-year revenue growth of over 424%, contributing as much as 88% to the Group’s EBITDA, a considerable improvement on the first quarter of 2021, when upstream accounted for 40% of the result. The situation was different in the Trade and Storage segment, where gas procurement costs outpaced revenue from gas sales. The segment’s contribution to the Group’s EBITDA was negative in the first quarter of 2022, at PLN -0.21bn, compared with a contribution of PLN 0.49bn posted a year earlier. EBITDA reported by the Distribution and Generation segments in the first quarter of 2022 was at the prior year’s level (PLN 1.00bn and PLN 0.46bn in the first quarter of 2022 vs PLN 1.01 and PLN 0.46bn in the first quarter of 2021, respectively). Their contribution to the Group’s EBITDA was 10% and 5%, respectively, compared with 30% and 14% in the same period last year.

The Group’s financial performance was mainly driven by rising prices of hydrocarbons, especially natural gas, whose prices in Europe hit all-time highs in the first quarter of 2022. This increased revenue generated by the PGNiG Group, which reached PLN 47.40bn in the first quarter of 2022, compared with PLN 14.55bn a year earlier. The Group’s operating expenses rose to PLN 39.39bn, from PLN 12.12bn in the same period of 2021. The Group posted EBIT of PLN 8.01bn, compared with the PLN 2.44bn reported for the first quarter of 2021. EBITDA came in at PLN 9.60bn. A year earlier EBITDA was PLN 3.39bn. Net profit also improved, rising from PLN 1.75bn in the first quarter of 2021 to PLN 4.09bn in the first quarter of 2022.

‘Despite the continued challenging situation on the European gas market, the PGNiG Group improved its financial performance in the first quarter of 2022. In addition to a major improvement in performance reported by the Exploration and Production business, I would like to highlight the stable EBITDA of the Distribution and Generation segments delivered despite the warmer winter. It helped mitigate the impact of deteriorating results on gas sales in Trade and Storage. This demonstrates a well-balanced business model can enhance our resilience to market turbulences,’ explained Przemysław Wacławski, Vice President of the PGNiG Management Board, Finance.

Performance of the PGNiG Group by segment in the first quarter of 2022:

Exploration and Production

The segment reported a significant improvement of its financial and operating performance. Revenue amounted to PLN 9.35bn vs PLN 1.79bn a year earlier, while EBITDA increased more than six-fold, from PLN 1.35bn in the first quarter of 2021 to PLN 8.45bn in the first quarter of 2022, largely on the rising prices of natural gas and other hydrocarbons traded on global commodity markets, including Poland. The arithmetic average price of gas on the Day-Ahead Market of the Polish Power Exchange was almost five times higher year on year in the first quarter of 2022, at PLN 472 per MWh (increase by +387%). The quarterly average price of Brent crude rose 80% year on year, to PLN 412 per barrel.

The volume of oil and gas produced by the PGNiG Group increased year on year, from 1.25 bcm to 1.78 bcm for gas and from 0.33 million tonnes to 0.37 million tonnes for oil. The increase was largely attributable to the scale-up of the Group’s operations on the Norwegian Continental Shelf. The number of licences held by PGNiG Upstream Norway, PGNiG’s Norwegian subsidiary, nearly doubled from the first quarter of 2021. Successful acquisitions and intensive work to develop reserves helped PGNiG Upstream Norway to increase own production volumes by ca. 250%, to 0.77 bcm, from 0.22 bcm in the first quarter of 2021.

Trade and Storage

In the first quarter of 2022, revenue of the Trade and Storage segment came in at PLN 44.8bn, up 290% year on year. Operating expenses excluding depreciation and amortisation increased from PLN 11.00bn in the first quarter of 2021 to PLN 45.02bn in the first quarter of 2022, a 309% rise year on year. This led to negative EBITDA of PLN -0.21bn.

The volume of gas sold outside the Group in the first quarter of 2022 was 11.54 bcm, almost 2% more than the 11.28 bcm sold by the Group in the same period last year. The higher sales volumes were driven primarily by foreign trading operations of PGNiG Supply Trading and a transaction entered into with the Government Strategic Reserves Agency following amendment of legislation on emergency gas stocks.