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Wholesale trade: Diversification of gas supply sources

The PGNiG Group’s position has been adversely affected by the long-term contract for gas supplies to Poland, concluded in the past (the Yamal contract). As the contract is nearing expiry in 2022, the Group seeks to ensure real diversification of gas supplies. To this end, the Group will focus primarily on supporting construction of the pipeline connecting Norway to Poland, developing LNG trading and logistic competencies on the global market, and expanding its portfolio of natural gas reserves.

  • The Group’s strategic objective is to build a mix of gas supply sources based on the planned transmission infrastructure Norway-Denmark-Poland to enable gas imports from new directions and at market prices, thus ensuring renewal of the gas supply portfolio beyond 2022.
  • Once built, LNG trading and logistic competencies on the global market will help create a more flexible gas supply portfolio beyond 2022 as the Group will be able to swiftly balance its gas imports. Efforts to develop such competencies and strengthen the Company’s presence on the global LNG market will be continued. The Group intends to analyse the possibility of entering into contracts for LNG imports from new directions (e.g. from North America, Australia, Africa), expand cooperation with the existing LNG suppliers, and acquire new competencies in LNG transport by sea.
  • Expansion of the resource base in Poland and abroad accompanied by completion of the Norwegian Corridor project would enable transport of gas from the Group’s own fields directly to Poland.

Direction

In the coming years, PGNiG will continue the efforts to secure its position in the natural gas market.

Wholesale trade: Increased gas volume in wholesale

In wholesale, the strategic objective is to expand the Group’s gas trading volume to approximately 178 TWh in 2022 (in 2017, the volume was approximately 175.7 TWh). This is to be achieved by increasing the volume of gas sales in Poland, taking steps to reduce the rate of decline in sales of gas to end users due to market deregulation, and expanding the volume of gas sales on foreign markets. This objective fits in with the upward trend observed in 2017 in the volumes of natural gas sold to the largest industrial gas customers in Poland and the strong sales of gas to Ukraine.

Given PST’s experience and competencies, one of the Group’s strategic objectives will be to continue the expansion into other markets in Central and Eastern Europe. PGNiG intends to continue its efforts aimed at strengthening its presence in Ukraine, one of the most promising markets in the region.

Retail trade: Maintaining current market position and maximising retail margins

During the term of the Strategy, the overriding strategic objective of PGNiG OD is to improve the effectiveness of retail sales of gas while maintaining the total volume of retail sales at around 67−69 TWh/year.

In the near term, the key factor with a bearing on PGNiG OD’s business will be the deregulation of retail gas prices. The obligation to seek approval for institutional tariffs was abolished as of October 1st 2017, which means that approximately 50% of the gas volume sold by PGNiG OD is exempt from the tariff obligation.

PGNiG OD has taken steps aimed at enhancing its product offering. PGNiG’s retail segment has been expanding its offering of products targeted at various customer groups (both gas and electricity products). To build lasting partnership-based relations with customers, steps have been taken to develop new value-added services and to increase customer satisfaction by improving service quality and launching modern sales channels.

Approximately 50% of the gas volume sold by PGNiG OD is exempt from the tariff obligation

Storage: Increasing available storage capacities

In its storage business, the PGNiG Group focuses on two key strategic goals, i.e. securing storage capacities in keeping with actual demand, and further improving efficiency of the storage operations. It is expected that upon completion of the extension of the underground gas storage facilities, the storage capacities will be sufficient to satisfy the anticipated demand for storage services until 2022. The key objective is to complete the current projects (Kosakowo UGSF). Once the projects are completed, Poland’s total capacity to store high-methane gas will be approximately 3 bcm.

In response to market expectations, in early February 2017 PGNiG added to its offering a ticketing service which allows gas importers and traders to meet their gas-stocking obligations in accordance with the applicable Polish regulations. The ticketing service will allow the storage capacities to be efficiently utilised by gas market participants.