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In response to the changing internal and external environment, the Group has developed the new PGNiG Group Strategy for 2017−2022 with an Outlook until 2026. The Strategy was approved by the PGNiG Supervisory Board on March 13th 2017.

Following an analytical review, key macroeconomic assumptions underlying the strategic forecasts were updated, including those related to gas, oil and electricity prices. Also, new strategic objectives and ambitions for the Group PGNIG until 2022 were formulated.

A major internal change associated with the adoption of the Strategy is a novel approach to strategic management at the PGNiG Group. The Balanced Scorecard methodology enables the balancing of the Group’s financial, operating and development goals based on four key ‘perspectives’: financial, customers, processes, and resources and growth. The result is a new way of defining the main strategic objectives, where targets and ambitions are set at the Group level and then cascaded down to the Group’s key business areas.

The pursuit of sustainable development as the Group’s priority will be driven by parallel investments in riskier business areas yielding relatively high rates of return (upstream) and in regulated areas offering considerable safety of the investments (gas distribution, power and heat generation). The PGNiG Group has embarked on an ambitious capital investment programme that is to lay the foundations for long-term and stable value growth.

Targets and ambitions for 2017−2022

The new Strategy identifies seven key business areas, with the following strategic objectives and ambitions for 2017−2022 defined for them:

  • Exploration and Production – increase the current base of documented hydrocarbon reserves by ca. 35%, increase hydrocarbon production by ca. 41%, significantly reduce unit costs of exploration for and appraisal of deposits, and maintain unit cost of field development and hydrocarbon production;
  • Wholesale – build a diversified and competitive gas supply portfolio beyond 2022 and increase the overall volume of natural gas sales by ca. 7%;
  • Retail – maximise retail margins, while maintaining the total volume of retail gas sales at ca. 67–69 TWh/year;
  • Storage – secure access to storage capacities adjusted to actual demand and improve storage efficiency;
  • Distribution – build more than 300,000 new service lines and increase gas distribution volume by ca. 16%;
  • Power and Heat Generation – increase power and heat sales volumes by ca. 20%;
  • Corporate Centre – increase involvement in and effective execution of R&D&I projects (target outlay of ca. PLN 680m), improve operational efficiency across the PGNiG Group and enhance the Group’s image.

PGNiG Group’s targets and ambitions for 2017−2022 according to strategic perspectives

Strategic perspective

PGNiG Group’s strategic objectives

Strategic ambitions for 2017-2022

Financial

Increasing the PGNiG Group’s value and ensuring its financial stability

Cumulative EBITDA of PLN 33.7bn

Customers

Development of gas and electricity sales

Cumulative natural gas sales volume on wholesale markets in Poland and abroad 1,000 TWh

Cumulative natural gas and electricity retail sales volume 410 TWh

Processes

Improve efficiency in connecting new customers

Over 300 thousand new customers connected to the PSG distribution network

Resources and growth

Increase hydrocarbon reserves

Increase potential for hydrocarbon production

Diversified gas supply portfolio

Increase the base of documented hydrocarbon reservesby 35%

Increasing total output of hydrocarbons by 41%

Diversification of gas supply sources

 

Investment projects in 2017−2022

The total capex has been assumed to exceed PLN 34bn in 2017−2022. Average annual capital expenditure in 2017−2022 will amount to ca. PLN 5.7bn:

Planned capital expenditure in 2017−2022

01
of which almost a half (45%) will be spent on hydrocarbon exploration and production,
03
ca. 13% − on power and heat generation projects,
02
almost 30% of capital expenditure will be spent on developing the distribution business,
04
additionally, ca. 12% of capex will be allocated to other, selected growth projects offering attractive returns, including in distribution, trading, power and heat generation.
01
of which almost a half (45%) will be spent on hydrocarbon exploration and production,
02
almost 30% of capital expenditure will be spent on developing the distribution business,
03
ca. 13% − on power and heat generation projects,
04
additionally, ca. 12% of capex will be allocated to other, selected growth projects offering attractive returns, including in distribution, trading, power and heat generation.

The investment programme should deliver cumulative 2017−2022 EBITDA of ca. PLN 33.7bn, driving long-term growth of the Group’s EBITDA in 2023−2026 to the annual average of ca. PLN 9.2bn. At the same time, the net debt to EBITDA ratio should stay below 2.0 over the Strategy term, with the current dividend policy providing for distribution of up to 50% of the Group’s consolidated net profit upheld.