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Exploration and Production

With production of 38.9 million boe in 2017, the PGNiG Group is Poland’s largest upstream company and one of the largest in Central & Eastern Europe. Exploration and production is a key segment of the company’s business, contributing the greatest amount to the total EBITDA generated by the entire capital group.

38.9 million boe

production of crude oil and natural gas by PGNiG in 2017

Most of the firm’s operations connected with extraction of hydrocarbons are conducted in European countries of international standing (Poland and Norway). This business is supplemented by cooperation between PGNiG Group and Pakistan Petroleum in the territory of Pakistan. The level of documented recoverable hydrocarbon reserves belonging to PGNiG is one of the highest among companies with a similar profile and operating in the same region.

Trade and Storage

Wholesale market

In the business customer segment, PGNiG’s main competitors operating directly in Poland include PGE Polska Grupa Energetyczna S.A., DUON (Fortum Holdings), Hermes Energy Group S.A., RWE Polska S.A., TAURON Polska Energia S.A., and PKN ORLEN S.A. Competitors step up gas sales by strengthening their sales force, increasing the flexibility of their offering and price hedging mechanisms, as well as by bundling gas and electricity.

In the reporting period, PGNiG’s sales of high-methane grid gas in Poland were 165.2 TWh, up 15.1% on 2016 (143.5 TWh). On the one hand, the higher sales volume resulted from stronger market demand, but on the other, the increase was driven by competitors’ declining share in gas imports. In 2017, competitors’ net gas imports fell by 8.2 TWh, or 42.6%, year on year.

Retail market

Based on PGNiG OD estimates, in 2017 there were over 60 gas suppliers on the market who actively competed for domestic and business customers, mainly by offering competitive gas prices and gas and electricity bundles as well as by cross selling products and services.

In 2017, the activity of competitors combined with growing customer awareness resulted in a greater market pressure on PGNiG OD to reduce gas prices and negotiate contract terms on a case-by-case basis. However, the trend to win back B2B customers that began in 2016 continued into 2017, and the company reported a strong order book for the gas year 2018. The net order book was again positive year on year.