“We are pleased with our first-half consolidated results. Despite an unusually warm spring, gas sales grew by eight percent, mainly on the back of strong economic growth in Poland as well as increasing capacity of gas-fired heat and power generation. However, the biggest performance driver was rising global oil and gas prices, which led to a marked increase in the cost base of the Trade and Storage business. On the other hand, strong commodity prices supported the excellent performance delivered by Exploration and Production,” said Piotr Woźniak, President of the Management Board of PGNiG SA. “Thanks to growing LNG imports we are also successful in diversifying our gas supply sources, which is a key objective set in the Group’s Strategy and directly contributes to enhancing Poland’s energy security,” he added.

The PGNiG Group reported an 11% yoy growth in H1 2018 revenue, to PLN 20.89bn, with EBITDA up 3%, to PLN 4.3bn, and net profit up 8%, to PLN 2.27bn.

LNG imports by volume increased over 50%. In H1 2018, liquefied natural gas accounted for 18% of total imports, compared with 13% the year before. The share of supplies from sources east of Poland decreased from 80% to 77% yoy.

In Q2 2018 alone, the PGNiG Group reported a 7% yoy growth in revenue, to PLN 7.64bn, with EBITDA up 16%, to PLN 1.63bn, and net profit surging 41%, to PLN 0.7bn.

An overview of Q2 2018 results by segment is provided below:

Exploration and Production

In Q2 2018 revenue rose 30% yoy, to PLN 1.68bn, on rising global oil and gas prices. The average crude oil price for the quarter expressed in PLN was 39% higher year on year. The quarterly average price of natural gas on the Day Ahead Market of the Polish Power Exchange was PLN 94.39 per Mwh, having risen 28% year on year.

The results of operations also improved, with gas production rising ca. 3%, to 1.07 bcm, and oil production up 20%, to 324 thousand tonnes.

Trade and Storage

In Q2 2018 revenue rose 11% yoy, to PLN 5.56bn, as a result of higher average sales prices of gas. The segment’s operating costs increased as rising global prices of hydrocarbons pushed up the cost of gas. In Q2 2018, costs stood at PLN 5.77bn, having risen 9% year on year.

The volumes of gas supplied to refineries and petrochemical plants rose almost 19% and to power plants and CHP plants by almost 31%, as new gas-fired power generating units were placed in operation. Also noteworthy is the rapid growth in sales reported by PGNiG Supply & Trading (PST), which apart from trading on commodities markets, supplies natural gas and electricity mainly to retail customers in Germany and Austria. In Q2 2018, PST sold 0.72 bcm of gas, almost 50% more than the year before.

The segment’s revenue from sales of electricity rose fast, reaching PLN 0.47bn in Q2 2018, up 17% year on year.

In Q2 2018, the PGNiG Group increased its gas imports by 3% yoy, to 3.42 bcm. LNG imports grew as first cargoes were delivered under an additional contract for the supply of LNG from Qatar and a medium-term contract with Centrica.

Distribution

Despite a warm spring and lower yoy rates of transmission tariffs, the Group maintained its revenue from Distribution broadly unchanged (a slight decline of 1% yoy, to PLN 1.14bn). Gas distribution volumes fell 12%.

Generation

The warm weather also affected the financial and operating performance of the Generation segment. Heat sales volumes fell 35% yoy, with revenue from sales of heat down 28%, to PLN 172m. Electricity sales by volume fell 19%, to 599 GWh, with revenue down 5% yoy, to PLN 112m. The segment posted combined revenue of PLN 347m, down 15% yoy.