Responsible Energy

CSR Report 2012 PGNiG SA

Responsible Energy

CSR Report 2012 PGNiG SA

Responsible Energy 3 Table of Contents

6 Mission and values 39 Shale Gas 39 Task Team on Communication and Dialogue with Local 8 Letter from the President of the Management Communities Board 40 Customers 10 PGNiG – Company profile 41 Financial performance in 2013 41 Awards 13 PGNiG on the stock exchange 42 Activities promoting development of local communities – Pomeranian Gas Trading Division 17 Corporate governance 42 The Lower Silesian Trading Division’s active efforts to improve communication with customers 18 The business and the value chain 43 New gas network rollouts: Chęciny and Sitkówka Nowiny 19 Upstream area communes – Carpathian Trading Division 19 Market 43 Upgrading of the helium purification, liquefaction and 21 Business model storage unit at the Odolanów Branch 44 Internet communication with PGNiG customers 22 PGNiG’s approach to sustainable growth 44 Central Agreement with Poczta Polska S.A. – several 22 Stakeholders million złoty saved 23 Sustainable Development and Responsible Business 45 Customer satisfaction survey Strategy 24 Strategy management 46 Shale Gas 24 Information about this Report 46 Joint shale gas projects by PGNiG and GRUPA LOTOS 46 Shale gas workshops for local self-government and the 25 Calendar of corporate events media 46 Launch of a website devoted to shales 30 Workplace 47 PGNiG in 12 Blue Gas Programme projects 31 Awards and distinctions 47 PGNiG SA obtains the Shale Gas Company of the Year 32 Dragon Boats – Pomeranian Trading Division award 32 Promoting active mobility, employee voluntary work during the Cycling Fridays Campaign and the Congress of 48 Environment Active Mobility – Pomeranian Trading Division 50 Implementation, maintenance and improvement of EMS 33 The ‘Student’s Smile’ (Uśmiech Żaka) initiative – Zielona and HSE Góra Branch 52 Reducing emissions of greenhouse gases and other air 33 Best practices in the Mobile Sales Department – Mazovian pollutants Trading Division 54 Water and wastewater management 33 Recognition in the 5th edition of the ‘Mother at Work’ 55 Waste management (Mama w pracy) contest – Lower Silesian Trading Division 58 Pro-environmental projects, capex 33 Rescue services and firefighters practice fire containment – Fire drill at the Husów Underground Gas 59 Shale Gas Storage Facility – Sanok Branch 59 Meeting with environmental NGOs 34 ‘Safety at work’ (Bezpiecznie w pracy) contest promoting 59 Educational video and internet cameras OHS – Sanok Branch 59 PGNiG Code of Responsible Gas and Oil Production 35 PGNiG employee satisfaction surveys 59 Non-mandatory environmental monitoring 35 ‘Yellow Week’ campaign at PGNiG 59 Inspections by the Provincial Environmental Protection 35 The fourth conference on Social Dialogue at the PGNiG Inspector Group 36 The ‘Computer as a Window to the World’ project – Pomeranian Trading Division 36 The ‘Little Bird Feeder – Great Cause’ project – Pomeranian Trading Division 36 PGNiG Ethics Programme 38 Dialogue with employees 38 Accidents at PGNiG 38 Total headcount 39 Training hours 39 Headcount as at the end of 2012, by segment (persons)

4 PGNiG 60 Local communities 72 Shale Gas 62 STARTER for inter-sector dialogue and cooperation in the 72 Strategy for communication and dialogue with local Gdańsk region – Pomeranian Trading Division communities as part of shale gas exploration activities 62 Day for Safety – Pomeranian Trading Division 72 Social surveys 62 ‘Let an Apple Hit Your Head’ – Pomeranian Trading 72 Educational video series, press campaign, newsletter on Division shale gas, mailbox, information materials, conferences 63 ‘Help to Please the Children’ concert – Carpathian Trading 73 Meetings with commune authorities, local residents, Division information centres, study visits 63 Theatrical performance for the youngest patients of the 73 Commune Consultation Councils children’s hospital – Carpathian Trading Division 73 Support for local initiatives 63 Charity benefit for the children at Tarnów’s Special Educational and Training Centre Supporting the ‘Hanka’ 74 GRI indicators Children’s Home in Dębica – Carpathian Trading Division 63 Not Alone – Santa’s Visit – Pomeranian Trading Division 78 Additional information 63 The School Bag Project – Pomeranian Trading Division 79 Express your opinion 64 Disabled Persons’ Dignity Day – Pomeranian Trading 79 Acknowledgements Division 80 Glossary of key CSR terms 64 Artists for Children. The Sheltering Art – Pomeranian 82 Glossary of industry terms Trading Division 83 Shale gas 64 Lower Silesian Trading Division to the rescue of children 65 Concert of Hope – Lower Silesian Trading Division 65 Wrocław sport relief for little patients – Lower Silesian Trading Division 65 ‘Pre-schooler’s Safety Academy’ project – Greater Poland Trading Division 65 Educational talks in pre-schools and primary schools – Carpathian Trading Division 66 ‘Oil and gas – time to make their acquaintance’ – Pomeranian Trading Division 66 Women’s Safety Academy – Greater Poland Trading Division 66 Miners from the mountains to the sea – PGNiG Zielona Góra Branch 66 Initiatives implemented with the Foundation of the Silesian Heart Disease Centre: the ‘Say Yes to Transplantation’ programme – Carpathian Trading Division 67 Miners donate blood – PGNiG Zielona Góra Branch 67 Arm in arm with the Polish Red Cross almost from the very start – Carpathian Trading Division 67 ‘Cops for Tots’ – Greater Poland Trading Division 67 PGNiG GAS CUP – Greater Poland Trading Division 68 OSTRZESZOWSKI CROSS-COUNTRY RACE – Greater Poland Trading Division 68 Talent show in Kalisz – PGNiG GAS CUP 2012 Energy in Youth – Greater Poland Trading Division 69 PGNiG 11th Provincial Indoor Football Tournament for Students of Special Schools – Carpathian Trading Division 69 World Cup in Szklarska Poręba ‘Bieg Gwarków’ cross- country ski run – Lower Silesian Trading Division 69 The taste of Venice in Jarosław – Carpathian Trading Division 69 World Press Photo Exhibition in Poznań – Greater Poland Trading Division 70 Policies on participation in public life and lobbying 71 The PGNiG SA Ignacy Łukasiewicz Foundation

Responsible Energy 5 Mission and values

Our mission is to provide reliable and secure supplies of clean and environmentally friendly energy, using competitive and innovative solutions. We remain true and faithful to our tradition and to customers who trust us, but at the same time we are open-minded and ready to face new challenges. Acting in the best interest of our shareholders, customers and employees, we strive to be a reliable and trustworthy partner, and an organisation that delivers growth and creates value in accordance with the principles of sustainable development.

6 PGNiG Responsibility Partnership Credibility Quality Responsibility is the Partnership is about Credibility is Quality comes from foundation of the daily building lasting, trust- manifested in our consistent work to activities of all PGNiG based and mutually long-term, consistent enhance our products employees, regardless beneficial relationships effort to develop and service levels by of their position, and is both within PGNiG – high standards of deploying advanced also what drives us to with employees and communication based technologies, work for the common trade unions – and on open dialogue, streamlining good. beyond, with customers, fostering a climate of management systems local communities trust among all our and fostering a culture and other market stakeholders. of ethics, to meet the participants. aspirations of our customers, employees and partners.

Responsible Energy 7 Introduction Letter from the President of the Management Board

Ladies and Gentlemen, On behalf of the Management Board of Polskie Górnictwo Naftowe i Gazownictwo, I am pleased to welcome you to our 2012 Corporate Social Responsibility Report. While we aim to always deliver sound financial performance, we are equally committed to pursuing the objectives of our Sustainable Development and Responsible Business Strategy. I particularly encourage you to read the sections of this Report which look at our dialogue with local communities on the issue of shale gas. Recent months have shown with renewed clarity how important this is, and how much attention is being paid to it by all parties concerned, including the government, public authorities and licence holders. Compared with the EU average, in Poland there is PGNiG has approached the task of engaging in dialogue significant room for growth in demand for electric- with its local communities (from communication to ity and for greater use of natural gas as power education to cooperation) in a truly responsible and generation fuel, particularly in high-efficiency thorough way, setting up a dedicated team to handle co-generation. So with a view to diversifying our the task with a wide array of tools, as described in future revenue sources, in 2012 we were active detail further in the Report. in adding electricity to our product portfolio. Our move into the power generation segment and involvement in the construction of new CCGT projects in Poland will enable the Group to attain that goal, and meet the expected market demand. In 2012, we again reviewed and assessed the Despite the downturn caused by the global crisis, PGNiG’s own generation capacity will also facilitate objectives set out in the Company’s strategy for the prospects for natural gas remain bright. We see its entry into the electricity trading market with 2011–2015. We look at all the changes in our busi- the upstream and power generation segments as maximum efficiency. ness environment, such as new economic trends, being complementary to each other and having a tendencies in the gas market, and changes in the lot to offer in potential synergies, so we are con- Securing stable and uninterrupted supplies of regulatory regime. As a result, some of our original tinuing to develop both of them. Natural gas from electricity and natural gas to both homes and busi- assumptions and plans had to be adjusted, and indigenous sources should play an increasingly nesses remains our overriding concern. To this end, we incorporated the results of the review in the important role in the power generation sector, so we are making strategic investments in construct- Short-Term Value Creation Strategy for 2012–2014. developing our own hydrocarbon production also ing and expanding our underground storage facili- Its priorities are to intensify exploration and pro- remains an important strategic objective. ties and distribution pipelines. And once increased, duction, ensure the Group is well prepared for the the underground storage capacity will enable us to impending gas market deregulation, optimise our We want to intensify the exploration for gas and oil respond flexibly to any disruptions in gas supply. portfolio of natural gas sources, restructure the from conventional sources across our 80 licences Group’s business model, and consistently grow the in Poland, and also plan to further optimise our In concert with these efforts, we are consistently power generation segment. exploration and production operations abroad. diversifying our gas import sources. This allows us Our pursuit of hydrocarbons from unconventional to procure gas at lower prices, and also enhances sources, primarily in the Pomerania and Lublin Poland’s energy security. The Moravia interconnec- regions, also continues. tor between Poland and the Czech Republic, the Lasów interconnector on the Polish-German border The launch of production from the Skarv field on and the virtual reverse flow through the Yamal the Norwegian Continental Shelf and the LMG field pipeline have all contributed to an increased share in Wielkopolska (the Greater Poland region) in late of gas imported from countries lying south and 2012 has already considerably strengthened the west of Poland to 18%, or 2 billion cubic metres. Group’s production potential.

8 PGNiG Faced with the ever-changing environment of the energy and gas markets, impending market de- regulation and the growing burden of new regula- tory requirements (including the legal obligation to sell gas through the commodity exchange), there is still much for the Group to do to continue as a com- petitive player in the marketplace. These changes will affect management of both the wholesale gas portfolio and the retail sales structure. But we will strive to further expand our offering for the customers and to enhance our sales resources by leveraging the economies of scale inherent in our operations, the existing customer relationships, and the new opportunities offered by the power generation segment. We are very satisfied with the results of this past In 2012, we also embarked on the reorganisa- year. The Group’s revenue came in at PLN 28.7bn, tion of our Company structure, as part of which Finally, it is the people that populate our a PLN 5.7bn rise year on year. Net profit and we centralised business customer service across ­Company’s organisational hierarchy who are operating profit were at amounted to PLN 2.23bn branches and transformed retail customer service responsible for its success, and it is the daily effort and over PLN 2.5bn, respectively. After difficult units into Regional Sales Offices. Simultaneously, of each one of us that contributes to the creation negotiations with Gazprom, we agreed a record we effected a series of changes in the upstream of the Group’s value. I would therefore like to reduction in gas prices under the Yamal Contract. segment, leading to the establishment of the Geol- warmly thank all our employees and Supervisory We stepped up our exploration activities, including ogy and Hydrocarbon Production Branch, in charge Board Members for their support in building the for shale gas. We were also busy remodelling our of coordinating our exploration work and decision- Company’s current position. organisation, in preparation for the gas market’s making with respect to upstream investments deregulation. And all our efforts have already been in Poland and abroad. The geology and drilling Respectfully yours, acknowledged by the market – in just one year, functions, previously carried out by the Sanok and our stock price gained almost 30% and PGNiG SA Zielona Góra branches, were consolidated with was presented with a Byki i Niedźwiedzie (Bulls and the Hydrocarbon Extraction Department and the Bears) award in the WIG-20 Company of the Year Exploration Department, operating as part of the category by Gazeta Giełdy Parkiet. PGNiG Head Office. In spring 2012, the five drilling and well-servicing subsidiaries of the PGNiG Group PGNiG has been a constituent of the Warsaw Stock (PNiG Kraków SA, PNiG Jasło SA, PNiG NAFTA SA, Jerzy Kurella Exchange’s RESPECT Index of socially responsible PN Diament Sp. z o.o. and ZRG Krosno Sp. z o.o.) Vice-President and companies ever since the index was launched, were consolidated to form PGNiG Poszukiwania. acting President of the PGNiG Management Board and in April 2012 the Company was named the Since the completion of its legal and organisational Most Socially Responsible Business, in the Fuels merger as of February 1st 2013, the combined and Energy category of a ranking compiled by entity has traded as Exalo Drilling. the Dziennik Gazeta Prawna daily. Although it was a great honour to receive these accolades, we still see many challenges ahead, and so we treat our awards as incentives to further great effort, such as in our commitment to the Global Compact initiative. It is a formidable challenge, but is also an expression of the PGNiG Group’s determination to implement what the global business community regards as its key objectives and values, as defined in this prestigious UN agenda.

Responsible Energy 9 Introduction

PGNiG – Company profile

Key results in 2012

Crude oil and Natural gas Natural gas Natural gas Distribution network condensate production production imports sales length

491,600 4.32 11 14.91 120,800 tonnes bn m3 bn m3 bn m3 km

Our core business consists in the production and PGNiG has been listed on the Warsaw Stock sale of natural gas and crude oil. Both domestically Exchange since September 2005. The PGNiG Group and abroad, we are engaged in geophysical and has enjoyed the growing trust and confidence of geological research, exploration for and produc- the capital market and has been assigned excel- tion of hydrocarbons, as well as preparation of lent credit ratings. Our strong position is con- products for sale. firmed by the fact that PGNiG shares are included in the WIG20, and since September 23rd 2013 The Group sells natural gas produced in Poland also in the WIG30, the blue-chip index of the as well as imported gas. To secure stable and Warsaw Stock Exchange. continuous supplies of natural gas, the PGNiG Group stores gas in eight modern underground gas storage facilities. Gas is supplied to our custom- ers through thousands of kilometres of pipeline, owned and operated by six regional gas distribu- tion companies.

10 PGNiG The PGNiG Group is the leader of the Polish natural gas market. A broad business remit – from exploration and production operations to sale of end products to customers – requires substantial human resources. This is why the PGNiG Group companies employ approximately 32,000 staff. Outside Poland, where the PGNiG Group ranks among the largest employers, we are present in multiple countries, including Belgium, Denmark, Egypt, Norway, Pakistan, Russia, Kazakhstan, Uganda, Czech Republic, Austria, Germany, Belarus, Ukraine, and Hungary.

Crude oil and Natural gas Natural gas Natural gas Distribution network condensate production production imports sales length

491,600 4.32 11 14.91 120,800 tonnes bn m3 bn m3 bn m3 km

Since October 2009, our shares have also been in- Headcount as at the end of 2012, by segment (persons) cluded in the RESPECT Index of socially responsible 2011 2011 2010 2009 companies. The RESPECT Index promotes responsi- PGNiG Head Office 617 838 840 833 ble management of listed companies in the context Exploration and Production 10,990 12,054 11,592 10,800 of sustainable growth, corporate disclosure Trade and Storage 3,780 3,841 3,809 3,836 discipline, and communication with the financial Distribution 13,255 13,865 13,881 13,851 markets. As part of the assessment process for Generation 1,069 ‑ ‑ ‑ qualification to the RESPECT Index, candidate com- Other activities 2,327 2,185 2,296 2,073 panies are required to complete a survey, which Total 32,038 32,783 32,418 31,393 each year covers additional new areas and requires the companies to implement new CSR solutions in their sustainable growth management policies.

PGNiG was ranked fifth in the 2011 ‘Lista 500’ of the largest Polish businesses, compiled by the Rzeczpospolita daily newspaper and published in April 2012.

Responsible Energy 11 Introduction

Consolidated companies of the PGNiG Group

Exploration Trade Distribution Generation Other and Production and Storage Activities

Exalo Drilling SA 100% Operator Systemu Dolnośląska Spółka PGNiG Termika SA 99.99% Geovita SA 100% Magazynowania Gazownictwa Sp. z o.o. 100% PNiG Jasło SA 100% Sp. z o.o. 100% “INVESTGAS” SA 100% Górnośląska Spółka GK PNiG Kraków 100% GK PGNiG Gazownictwa Sp. z o.o. 100% PGNiG Technologie SA 100% Sales&Trading 100% PNiG Nafta SA 100% Karpacka Spółka PGNiG Serwis Sp. z o.o. 100% XOOL GmbH 100% Gazownictwa Sp. z o.o. 100% PN Diament Sp. z o.o. 100% BSiPG “Gazoprojekt” SA 75% PGNiG Energia SA 100% GK Mazowiecka ZRG Krosno Sp. z o.o. 100% Spółka Gazownictwa 100% PGNiG Finance AB 100% Geofizyka Kraków SA 100% Powiśle Park Sp. z o.o. 100%

Geofizyka Toruń SA 100% Pomorska Spółka Gazownictwa Sp. z o.o. 100% PGNiG Norway AS 100% Wielkopolska Spółka POGC Libya B.V. 100% Gazownictwa Sp. z o.o. 100% The PGNiG Kraków Group comprises PNiG Kraków S.A. and its subsidiaries – Oil Tech International F.Z.E. and Poltava Services LLC. As at December 31st 2012.

Changes in the Group’s structure ••In January 2012, PGNiG SPV 1 Sp. z o.o. executed ••In July 2012, PGNiG Poszukiwania S.A. Material changes in the PGNiG a final share purchase agreement with Vattenfall w ­organizacji (under incorporation) was formed Group’s structure in Q1 2013 AB, whereby PGNiG SPV 1 Sp. z o.o. acquired in order to consolidate PGNiG SA’s exploration ••In January 2013, the Extraordinary General 24,591,544 shares in Vattenfall Heat Poland S.A. and service operations. In December 2012, Meeting of BUD-GAZ PPUH Sp. z o.o. resolved to The shares accounted for 99.8% of the com- the Extraordinary General Meeting of PGNiG wind up the company and commence its liquida- pany’s share capital and conferred the right to ­Poszukiwania S.A. resolved to merge the com- tion process. 99.8% of total voting rights at the General Meet- pany with PNiG Kraków S.A., PNiG NAFTA S.A., ••In January 2013, the Extraordinary General ing of Vattenfall Heat Poland S.A. Also in January PNiG Jasło S.A., PN Diament Sp. z o.o. and ZRG Meeting of PGNiG Poszukiwania S.A. resolved 2012, Vattenfall Heat Poland S.A. changed its Krosno Sp. z o.o. As at the end of 2012, the to amend the company’s Articles of Association name to PGNiG Termika S.A. In H1 2012, PGNiG merger had not been registered with the Na- by changing the company name to Exalo Drill- SPV 1 Sp. z o.o. acquired a portion of PGNiG tional Court Register. ing S.A. The amendment was registered with the Termika shares from the company’s minority ••In August 2012, the General Meeting of PT National Court Register in February 2013. shareholders and thus its ownership interest in Geofizyka Toruń Indonesia LLC resolved to open ••In February 2013, the merger of PGNiG Po- the company increased to 99.9%. In December liquidation proceedings for the company. szukiwania S.A. with PNiG Kraków S.A., PNiG 2012, PGNiG SPV 1 Sp. z o.o. was merged with ••In December 2012, Mazowiecka Spółka Gazown- NAFTA S.A., PNiG Jasło S.A., PN Diament Sp. z o.o. PGNiG Termika S.A. The merger was effected ictwa Sp. z o.o. sold its entire shareholding in and ZRG Krosno Sp. z o.o. was registered with by way of transfer of all assets to the acquiring Gaz Media Sp. z o.o. back to the company by the National Court Register. company, i.e. PGNiG Termika S.A. way of retirement for consideration. ••In February 2012, Mazowiecka Spółka Gazown- ••In December 2012, Mazowiecka Spółka Ga- ictwa Sp. z o.o. increased its equity interest in zownictwa Sp. z o.o. acquired 5,000 shares in GAZ Sp. z o.o. of Błonie to 80%. Powiśle Park Sp. z o.o. from BSiPG Gazopro- ••In June 2012, PGNiG Sales & Trading GmbH jekt S.A., thereby increasing its interest in GAZ acquired 100% of the shares in XOOL GmbH ­MEDIA Sp. z o.o. to 100%. with a view to expanding its trading business in ••Also in 2012, registry courts registered transfor- Germany. mation of the following entities into joint-stock ••In June 2012, PGNiG acquired 100% of the shares companies: in MLV 26 Sp. z o.o., which was then renamed –– in January 2012 – PNiG Jasło Sp. z o.o. PGNiG Serwis Sp. z o.o. The company was –– in June 2012 – PNiG Kraków Sp. z o.o., acquired in order to provide HR and payroll, PGNiG Technologie Sp. z o.o. and PNiG finance, accounting, as well as IT services to the NAFTA Sp. z o.o. PGNiG Group. –– in July 2012 – Geofizyka Kraków Sp. z o.o., ••In June 2012, PGNiG acquired 100% of the shares Geofizyka Toruń Sp. z o.o. and in MLV 27 Sp. z o.o., which was then renamed Geovita Sp. z o.o. PGNIG SPV 4 Sp. z o.o.

12 PGNiG PGNiG on the stock exchange

2012 was a period of intense volatility on the capital markets, both in Poland and globally, which was reflected in the strong volatility of the PGNiG stock price. Towards the end of 2012, PGNiG stock peaked at PLN 5.21 (up 28% on the year’s beginning), which was a good sign for the year ahead.

Our position on the Warsaw Stock Exchange From the day PGNiG shares were first listed on PGNiG was, for the sixth consecutive time, listed the Warsaw Stock Exchange (September 23rd in the elite RESPECT Index of socially responsible 2005), they have been among the most recognis- and sustainable businesses, the first such index in able and credible listed securities. They have been Central and Eastern Europe. Our stock is also a part included in the WIG20 index since December 15th of the WIG-Paliwa (WIG-Fuels) index of fuel sector 2005 and since September 23rd 2013 also in the companies, and of the WIG-div index of listed com- WIG30, a new index compiled by the Warsaw Stock panies declaring dividend on a regular basis. Exchange. Our stock is also included in the MSCI Emerging Markets Index, compiled by Morgan Shareholder structure Stanley Capital International. As at December 31st 2011, PGNiG share capital amounted to PLN 5,900,000,000. It comprised 5,900,000,000 shares, with a par value of PLN 1 per share. The shares of all series, that is Series A, A1 and B, were ordinary bearer shares and each share conferred the right to one vote at the General Meeting. The Company’s Articles of Association do not provide for any restrictions on the exercise of voting rights attached to the Company shares.

Shareholder structure in 2011–2012 Shareholder Number of shares/voting Percentage of share capital/total Number of shares/voting Percentage of share capital/total rights attached to the shares voting rights at GM as at Dec 31 rights attached to the shares voting rights at GM as at Dec 31 as at Dec 31 2011 2011 as at Dec 31 2012 2012 State Treasury 4,272,063,451 72.41% 4,271,810,954 72.40% Other shareholders 1,627,936,549 27.59% 1,628,189,046 27.60% Total 5,900,000,000 100.00% 5,900,000,000 100.00%

Responsible Energy 13 Introduction

Investor relations As a company listed on the WSE, PGNiG is required The Investor Relations function is, however, not to fairly and reliably report on its operations and limited to obligatory activities, expressly required important corporate events at the PGNiG Group by by law. It also encompasses various other activities preparing and releasing regular reports, which are undertaken by the Company to meet the high made available on equal terms to all of the Com- expectations of all market participants, which in pany’s existing and potential shareholders. Besides consequence builds the Company’s reputation and interim reports published quarterly, these also investors’ trust, thereby reducing our funding cost include current reports on all aspects of the Com- over the long term. These include participation in pany’s activities which could have a material bear- road shows and investor conferences in Poland ing on the share price. The Company published 191 and abroad – in 2012, PGNiG’s representatives par- current reports. Since 2010, the Company has also ticipated in 14 such conferences and road shows. been publishing corporate governance reports. As part of its investor relations, the Company’s representatives, including Management Board members and directors, also held some 130 meet- ings with institutional investors. Apart from regular industry events (such as the Chemist Day or the Energy Sector Conference) and regional conferenc- es, 2012 saw a number of meetings devoted to the debt market, in connection with the record issue of PGNiG notes on the Catalyst market and the need Change in the number of PGNiG shares held in the portfolios of open- to build relations with investors who bought PGNiG end pension funds between 2011 and 2012 eurobonds in 2011.

Total 31.89% ING NATIONALE NEDERLANDEN OFE 48.56% AVIVA OFE 18.16% OFE PZU ZŁOTA JESIEŃ 66.70% AMPLICO OFE 34.00% AXA OFE 9.21% AEGON OFE 15.30% NORDEA OFE 11.62% ALLIANZ POLSKA OFE 13.66% GENERALI OFE 10.97% BANKOWY OFE 10.88% OFE POCZTYLION 32.26% PEKAO OFE 93.62% OFE WARTA −6.85% OFE POLSAT 16.61%

PGNiG shares in the portfolios of open-end pension funds No. Fund Value/price as at Dec Number of shares as Equity Change Value/price as at Dec Number of shares Equity 31 2012 at Dec 31 2012 interest 2012/2011 31 2011 as at Dec 31 2011 interest 1 ING NATIONALE NEDERLANDEN OFE 671,009,587 128,792,627 2.18% 48.56% 353,709,223 86,693,437 1.47% 2 AVIVA OFE 593,151,534 113,848,663 1.93% 18.16% 393,106,490 96,349,630 1.63% 3 OFE PZU ZŁOTA JESIEŃ 530,368,190 101,798,117 1.73% 66.70% 249,151,287 61,066,492 1.04% 4 AMPLICO OFE 234,536,533 45,016,609 0.76% 34.00% 137,065,099 33,594,387 0.57% 5 AXA OFE 213,325,195 40,945,335 0.69% 9.21% 152,965,030 37,491,429 0.64% 6 AEGON OFE 100,016,193 19,196,966 0.33% 15.30% 67,928,389 16,649,115 0.28% 7 NORDEA OFE 102,827,332 19,736,532 0.33% 11.62% 72,138,982 17,681,123 0.30% 8 ALLIANZ POLSKA OFE 89,965,175 17,267,788 0.29% 13.66% 61,985,457 15,192,514 0.26% 9 GENERALI OFE 71,407,072 13,705,772 0.23% 10.97% 50,391,256 12,350,798 0.21% 10 BANKOWY OFE 77,013,465 14,781,855 0.25% 10.88% 54,392,908 13,331,595 0.23% 11 OFE POCZTYLION 41,785,242 8,020,200 0.14% 32.26% 24,741,536 6,064,102 0.10% 12 PEKAO OFE 38,752,027 7,438,009 0.13% 93.62% 15,673,145 3,841,457 0.07% 13 OFE WARTA 26,407,463 5,068,611 0.09% -6.85% 22,199,574 5,441,072 0.09% 14 OFE POLSAT 18,356,711 3,523,361 0.06% 16.61% 12,328,112 3,021,596 0.05% Total 2,808,921,718 539,140,445 9.14% 31.89% 1,667,776,488 408,768,747 6.93% Source: Polish Press Agency (PAP)

14 PGNiG 2012 I II III IV V VI VII VIII IX X XI XII

40%

30%

20%

10%

0%

−10%

−20%

PGNiG WIG20 WIG WIG Respect Source: in-house calculations based on the WSE’s data. Paliwa Index

Responsible Energy 15 Introduction

Investor Relations also involve frequent meetings with portfolio managers in Warsaw and ongo- ing communication with equity analysts covering PGNiG shares. Time-constrained investors expect a condensed and clear approximation of the complex factors having a bearing on PGNiG’s valuation.

Our website features a dedicated Investor Relations section, where every capital market participant may find the most important updates on the Com- pany, market forecasts of the Group’s performance and the most recent stock recommendations, Price performance of the PGNiG stock sourced from research reports by brokerage Over 2012, the PGNiG stock was trading within houses covering PGNiG. the PLN 3.62-PLN 5.21 range. For a major part of the year, it was fairly stable, oscillating between PLN 3.62 and PLN 4.29. However, up to December 2012 its growth had failed to keep pace with the WIG 20 index of blue-chip names. The PGNiG stock bottomed out in the last week of February, when demand for gas was high, but the then-effective tariff did not account for the cost of gas acquisi- tion. A steep upward climb of its price started The rate of return on PGNiG stock in 2012 was 28%. after amendments to the Yamal Contract were In 2012, no dividend was paid. The rate of return agreed in November 2012 – from then on it surged on investment in PGNiG shares for those inves- by 30%, reaching its high on the last trading day tors who bought at the issue price had reached of the year. 75% by the end of 2012 (excluding dividend yield). The broad-market WIG index and the blue-chip WIG-20 index also ended the year in the green zone, having returned 24% and 18%, respec- tively. From among the indices which include PGNiG, the best performer was WIG-Paliwa, which gained nearly 35%.

16 PGNiG Corporate governance

The PGNiG Group closely observes the principles of corporate governance. The Group is honest and fair to its shareholders, treats them all on equal terms and makes General Meeting every effort to establish the best possible relations The General Meeting is PGNiG’s supreme govern- between its investors and governing bodies. ing body, through which the shareholders exercise their corporate rights, including examination and approval of the Directors’ Report, as well as adoption of decisions on dividend amounts, forms and payment dates. The General Meeting grants its vote of approval for the other governing bodies of PGNiG, appoints members of the Supervisory Board and makes decisions concerning the com- pany’s assets. Best practices The Management Board of PGNiG puts enormous Supervisory Board emphasis on compliance with corporate govern- The Supervisory Board exercises continuous super- Management Board ance principles. Since its stock-exchange debut vision over all areas of the Company’s operations, The Management Board is an executive body man- in 2005, the Company has been following the in accordance with the Rules of Procedure for aging the affairs of PGNiG and representing it in all guidelines set forth in the Code of Best Practice the Supervisory Board. The Supervisory Board is actions before court and out of court. The Manage- for WSE-Listed Companies. Reports on PGNiG’s composed of five to nine members, including one ment Board is composed of between two to seven compliance with the requirements of corporate independent member, appointed by the General members, with the precise number defined by the governance are published online at www.pgnig.pl Meeting of PGNiG for a joint three-year term. The Supervisory Board. The members of the Manage- in the Corporate Governance section. State Treasury is entitled to appoint and remove ment Board are appointed for a joint three-year one member of the Supervisory Board, as long as it term. The powers of the Management Board Culture of dialogue remains a shareholder of PGNiG. On a Supervisory include all matters connected with the manage- PGNiG is engaged in a wide-ranging dialogue with Board composed of up to six members, two are ment of PGNiG’s affairs, where such matters are the market. The Company fulfils its disclosure obli- elected by PGNiG employees, and three on a Super- not explicitly reserved for other governing bodies gations towards its shareholders and other stake- visory Board composed of seven to nine members. by applicable laws or the Articles of Association. holders by publishing reports on its activities and The Management Board operates in accordance financial statements, as well as by holding press with applicable laws and regulations, including in conferences in which its major undertakings and particular the Commercial Companies Code, as well strategic objectives are communicated to the pub- as the Company’s Articles of Association and the lic. The rules of procedure for the General Meeting, Rules of Procedure for the Management Board. the Supervisory Board, the Management Board and the Audit Committee are available online at www. Audit Committee pgnig.pl in the Corporate Governance section. The Audit Committee has acted within the Super- visory Board as its standing body since November 27th 2008. The Audit Committee is composed of at least three members of the Supervisory Board, including at least one member independent of PGNiG and any entities significantly affiliated with it, appointed by the General Meeting pursuant to PGNiG’s Articles of Association. Such member has to be competent in accounting and finance matters. The Audit Committee’s members are ap- pointed by the Supervisory Board.

Responsible Energy 17 Introduction

The business and the value chain

PGNiG is a company with a long tradition, enjoying an established position as leader on the Polish gas market. Over the years of its development, the Company has gathered valuable assets and now controls a number of segments of the energy market (natural gas production, storage, sale and distribution), which provides a robust foundation for PGNiG’s further growth and steady value increase.

The ultimate strategic objective pursued by PGNiG The Group’s main strategic objectives form its vi- SA is to deliver growth in shareholder value. With a sion to become, by 2015, a modern and efficiently view to meeting that objective, in December 2012 managed organisation, present throughout almost the Company adopted the ‘Short-Term Value Crea- the entire value chain in the gas sector, and hold- tion Strategy for the PGNiG Group in 2012–2014’. ing assets in the fuel and power sectors. Attaining The PGNiG Short-Term Value Creation Strategy is these strategic objectives will depend on activities a comprehensive document providing for a set of in three areas: activities geared towards delivery of the PGNiG ••hydrocarbon exploration and production domes- Group’s overriding objective of shareholder value tically and abroad, to ensure access to new oil creation. It further clarifies the tasks and objec- and gas reserves; tives which had earlier been set for the Company ••the power sector, focusing on the development in the PGNiG Group Strategy adopted in 2011, of gas-fired power generation in Poland; focusing on currently the most important aspects ••management of the Company’s natural gas of the Group’s operations, which include market portfolio and activities on the European gas development, production increase and reduction of trading market. operating expenses.

The activities planned as part of the Short-Term Value Creation Strategy for the PGNiG Group until 2014 focus on the delivery of 19 initiatives broken down into three business areas: ••Upstream ••Market ••Business Model

18 PGNiG Upstream area Market Access to our own reserves is a key to success. For PGNiG’s trading business is all about satisfying the this reason, PGNiG is developing its exploration and domestic demand for gas fuel through purchase production (E&P) business in Poland and abroad. and sale of natural gas. Natural gas is sold to both The updated strategy set the following strategic retail and industrial customers. Given the dynamic objectives: The PGNiG Group has also prospected for gas from changes in the legal and business environments, ••to develop the E&P business in Poland; unconventional sources. In 2012, the Lubocino 2-H the PGNiG Group is undertaking numerous steps in ••to develop the international E&P business in key horizontal well was drilled in the Wejherowo gas trading to maintain its leading position on the regions; licence area, where in December 2012 a fractur- Polish market once it becomes fully competitive. ••to enhance competences and optimise activities ing treatment had been performed in Ordovi- in the E&P business. cian formations. Fracturing operations have also The following objectives have been adopted in the been performed in Silurian rock formations in the updated PGNiG sales strategy: These objectives are being fulfilled through: Lubocino-1 vertical well, and the Opalino-2 well ••to maintain the leading position on the Polish ••Appraisal and development of unconventional was drilled. In the Tomaszów Lubelski licence area, market; hydrocarbon reserves under licences held; the Lubycza Królewska-1 borehole was drilled. It is ••to improve operating efficiency. ••Cooperation with external partners in the area the first exploration borehole designed to explore of hydrocarbon exploration and production; for shale gas in the PGNiG’s licence areas in the Actions taken to pursue these objectives include: ••Intensified exploration for conventional hydro- southern part of the Lublin Province. ••Enhancing the efficiency of sales and customer carbons in Poland; service; ••Optimisation of upstream operations outside of In addition to projects carried out on its own, on ••Implementation of an integrated product range; Poland. July 4th 2012 PGNiG signed a framework agree- ••Implementation of a new marketing policy; ment on the exploration for and production of ••Active participation in and support of the gas Our achievements to-date shale gas and oil within the Wejherowo licence area market deregulation programme; The majority of E&P tasks performed in 2011 with four other Polish companies: Tauron Polska ••Development of the power segment; focused on the exploration for and development Energia SA, KGHM Polska Miedź SA, PGE Polska ••Change in pricing rules for gas import contracts; of new fields. The Company wants to concentrate Grupa Energetyczna SA, and Enea SA. Pursu- ••Change in the structure of imported gas sources; on exploration for and production of hydrocarbons ant to the agreement, the joint operations will ••Centralisation of the wholesale trading function in Poland as it sees this as the most attractive and focus mainly around the villages of Kochanowo, at the PGNiG Group. profitable development direction. Particularly Częstkowo and Tępcz, on a part of the Wejherowo important will be the new initiatives, consisting in licence area held by PGNiG. Currently, work is Our achievements to-date exploration for gas from unconventional sources, under way to amend the agreement setting out the Imports especially shale gas, and gas from conventional detailed rules of cooperation between the parties. Following renegotiations of the pricing formula in sources in deep structures. import contracts, PGNiG has signed annexes to two The Group brought on stream three oil wells in material gas supply contracts. In 2012, the PGNiG Group was involved in explora- the BMB (Barnówko – Mostno – Buszewo) field, as tion and appraisal work either on its own or in co- a result of which crude oil production rose to 478 In October 2012, PGNiG and VNG-Verbundnetz Gas operation with partners. Eight wells were drilled in thousand tonnes in 2012. In addition, the Lubiatów AG executed Amendment No. 1 to the Lasów gas PGNiG’s own licence areas. Three wells were tested oil field and the Międzychód gas field were both sales agreement of August 17th 2006, effective un- in the Carpathian Foothills. The tests confirmed brought on stream. Their development was a part til October 1st 2016. The parties agreed on a new the presence of gas in two wells – one explora- of the LMG (Lubiatów – Międzychód – Grotów) pricing formula based on the prices of petroleum tory well (Kramarzówka-1) and one appraisal well project. products and current market prices of natural gas, (Lubliniec-12). No hydrocarbon flow at commercial as well as a new capacity charge rate. The amend- rates was recorded from the third well (Łapanów- On December 31st 2012, the PGNiG Group launched ment came into force on October 1st 2012. 6K), and the well was subsequently abandoned. production from the Skarv field on the Norwegian Continental Shelf. Furthermore, a new field, Snadd Work was also conducted at the Felsted-1 well in Outer, was discovered within the PL212E licence Denmark, however, with no positive results, and area. The field lies in the vicinity of the Snadd the well was also abandoned. Negative results of North gas field and borders the Skarv field. its exploration work in Denmark prompted PGNiG to discontinue its involvement in the exploration The PGNiG Group continued its exploration and business in that country. Licence 1/05 expired. appraisal work in Egypt and Pakistan. The explora- tion work in Egypt focused on the Bahariya licence (Block 3), and in Pakistan – on the Rehman field. In 2012, the Pakistani licensing authority (Directorate General of Petroleum Concessions) classified the Rehman field as a deposit of tight gas.

Responsible Energy 19 Introduction

In December 2012, PGNiG commenced trading in natural gas on the Power Exchange. In accordance with a decision by the President of the Energy Regulatory Office, trading on the exchange is exempt from the tariff obligation. In November 2012, PGNiG SA and OOO Gazprom Export executed an annex to the contract for sale The Company continued work on the LNG-derived of natural gas to the Republic of Poland, dated gas fuel E distribution project in the towns of Ełk September 25th 1996, effective until December and Olecko. The project involves construction of an 31st 2022, whereby the pricing terms for the gas LNG regasification station and two-step pressure supplies to Poland were changed, also retroactively reduction, metering and odorising stations in Ełk with respect to the gas volumes purchased in pre- and Olecko, and switching customers in those vious periods. The new pricing formula reflects the towns to high-methane gas. In 2012, an agreement developments that have occurred on the European was signed for EU co-financing of the project under gas market in recent years, and takes into account the Infrastructure and Environment Operational the prices of petroleum products and the market Programme. prices of natural gas. Following negotiations with OAO Gazprom/OOO Gazprom Export concluded in Distribution November 2012, PGNiG obtained an over 10% price Also in 2012, the Gas Distribution Companies reduction on the Russian gas. worked on extending and upgrading the gas network, and connecting new customers to both In order to reduce gas acquisition costs, PGNiG en- existing and newly built sections. They also re- tered into an agreement with OGP Gaz-System SA placed the most failure-prone sections of cast-iron for the provision of virtual reverse flow services on pipeline and modernised the longest operating the Yamal gas pipeline in the period from January sections of the network, whose continued use 1st 2012 to December 31st 2015. posed a safety hazard and caused substantial gas losses. In an attempt to diversify the supplies of imported gas, the PGNiG Group increased the volumes of The Gas Distribution Companies also worked on As at December 31st 2012, the PGNiG Group had gas it purchased under short-term contracts. The projects for which they concluded agreements made available a total of 1,821.5m cubic metres purchases were contracted chiefly by PGNiG Sales for EU co-financing under the Infrastructure and of working storage capacities for third party ac- & Trading. Environment Operational Programme. cess and for OGP Gaz-System SA. Of this volume, 1,796m cubic metres were made available under In 2012, PGNiG Sales & Trading began trading in Storage long-term agreements and 25.5m cubic metres natural gas in Germany through the European Until May 31st 2012, PGNiG acted as the storage under short-term agreements. Additionally, Energy Exchange (EEX) and OTC transactions. system operator. In May 2012, Operator Systemu 0.39m cubic metres of the storage capacity of the Moreover, in 2012 the company acquired 100% of Magazynowania Sp. z o.o., a subsidiary of PGNiG, Mogilno underground gas storage cavern is used the shares in XOOL GmbH, whereupon it launched became the storage system operator. The company to cover the facility’s own needs. sales of natural gas to end customers in Germany. was also granted a licence, valid from June 1st 2012 through May 31st 2022, authorising it to store gas Power Generation Sales fuels in storage facilities. The PGNiG Group continued work on the ‘Construc- PGNiG is the largest supplier of natural gas in tion of a CCGT Unit in Stalowa Wola’ project. In Poland. PGNiG’s share in the gas market is ap- In 2012, PGNiG completed the expansion of the 2012, the general contractor for the Stalowa Wola proximately 96%, the remaining 4% is held by Strachocina Underground Gas Storage Facility and unit was selected, the project execution agreement suppliers from outside the PGNiG Group, which put in service one of the caverns of the Mogilno was signed, and the credit facility agreements usually purchase gas from PGNiG. In 2012, the Underground Gas Storage Facility. As a result, securing its financing were executed. In addition, PGNiG Group sold 14.9bn cubic metres of gas, of the working capacities of those high-methane preparations for the construction of a 450MW CCGT which 13.9bn cubic metres were sold from the gas storage facilities increased to 1,821.9 million unit at the Żerań CHP plant were launched. domestic transmission and distribution systems, cubic metres at the end of 2012. The Company 0.7bn cubic metres were sold directly from the continued to work on expanding the Wierzchowice The PGNiG Group also took steps to expand its fields, and 0.3bn cubic metres were sold on the Underground Gas Storage Facility, the largest product offer by increasing the output of LNG. German market. facility of this kind in Poland, and on constructing This is particularly important on the Polish market, the Kosakowo Underground Gas Storage Facility. where trade in, transmission and distribution of In September 2012, PGNiG launched sales of elec- The expansion of the Strachocina and Wierzcho- gas are regulated businesses. In 2011, the Gas tricity to business customers (tariff groups A, B and wice Underground Gas Storage Facilities and the Trading Divisions executed projects supporting the C), and in the first quarter of 2013 it launched sales construction of the Kosakowo Underground Gas development of heat sales, modernisation of boiler of electricity to households (tariff group G). Storage Facility received EU co-financing under rooms and buildings, and projects designed to the Infrastructure and Environment Operational satisfy the needs of 23 gas sales units. Programme.

20 PGNiG Business model As new growth opportunities for the PGNiG Group emerge, we take steps to expand the scope and scale of our operations. The updated strategy set the following strategic objectives for new business areas: ••to develop the power sector; ••to reorganise the PGNiG Group; ••to enhance our efficiency as a project-oriented organisation.

Actions taken to pursue these objectives include: ••Optimisation of the HR management system at PGNiG; ••Implementation of a project/project portfolio management system; ••Establishment of a Shared Services Centre; ••Restructuring of the PGNiG Group’s core businesses; ••Restructuring of the PGNiG Group’s non-core businesses; Our achievements to-date ••Employment restructuring; Exploration and Production Distribution ••Optimisation of the storage segment at the In 2012, PGNiG consolidated its exploration and In the first quarter of 2013, the PGNiG Management PGNiG Group. well services companies within the Group’s Explo- Board approved the composition of a new com- ration and Production segment. PGNiG Poszuki- pany, PGNiG SPV4, whose role was to combine the wania SA (since February 2013 – Exalo Drilling SA) six distribution companies to form a single entity was merged with PNiG Kraków, PNiG NAFTA, PNiG with the head office in Warsaw and six regional Jasło, PN Diament and ZRG Krosno. branches responsible for field operations.

In 2012, PGNiG’s exploration and production On May 24th 2013, all the companies involved in operations were reorganised, and a Geology and the process held Extraordinary General Meetings, Hydrocarbon Production Branch was established which approved the merger between PGNiG SPV4 in Warsaw. Its role is the coordination and expert (the Acquirer) and the six distribution companies supervision of hydrocarbon exploration and pro- (the Acquirees) under Art. 492.1.1 of the Commer- duction projects, both in Poland and abroad. cial Companies Code. The procedure to register the merger in the National Court Register began on Power Generation May 27th 2013. In line with the strategic vision to transform the PGNiG Group into a modern multi-utility, in January Storage 2012 PGNiG acquired from Vattenfall AB (through As part of the reorganisation of the PGNiG Group’s its subsidiary PGNiG SPV 1) 99.8% of the shares in storage business, on May 22nd 2013 the Annual Vattenfall Heat Poland SA (whereupon the com- General Meeting of PGNiG gave its approval for pany was renamed PGNiG Termika SA). Following PGNiG to acquire shares in the increased share the acquisition of these assets, the PGNiG Group’s capital of Operator Systemu Magazynowania as business was expanded to include electricity and part of the merger between Operator Systemu heat generation. Magazynowania and Investgas SA.

In 2012, PGNiG Termika became the Group’s Support competence centre for heat and electricity In 2012, implementation of a shared services generation and for implementation of heat and centre was begun. The centre will provide finance, power projects. accounting, HR and payroll, as well as IT services. To that end, a new company under the name of PGNiG Serwis was established. The com- pany will provide its services to certain PGNiG Group companies.

Responsible Energy 21 Introduction

PGNiG’s approach to sustainable growth

Group’s stakeholder Method of dialogue Employees – current and Public consultations, Employee Council, the Communicators system retired (employees responsible for internal communication processes), daily electronic newsletter, corporate intranet, staff surveys, web chats with representatives of the Management Board, occasional events, trips for retired employees Customers Satisfaction surveys, helpline, website, Customer Service Office, dedicated business consultants Local communities Public consultations, activities of the PGNiG Foundation and donation fund, direct interaction with local authorities and organisations Business partners Dedicated business consultants, direct meetings, conferences, trade NGOs declarations, involvement in worldwide humanitarian relief efforts – in Social organisations Poland, through the PGNiG Foundation and donation fund

Suppliers Evaluation of working relationships, support for local development Suppliers of services and Stakeholders equipment Owing to the scale and reach of its operations, Research institutes, Support for vocational education at all levels, conferences, the PGNiG PGNiG has a wide array of Stakeholders. At dif- universities and other Foundation’s scholarship scheme, technical support for investment projects schools ferent stages of the value chain, our impact on Consultancies and research and relations with Stakeholders varies, as do our institutes specific commitments towards them. PGNiG strives State administration and Consultations, joint initiatives – conferences and workshops to conduct its business in a responsible manner, market regulator, with due regard for the role of social dialogue. European Commission Throughout the business decision-making process, Shareholders and investors Meetings with asset managers, participation in roadshows and foreign PGNiG looks for solutions that would benefit all of conferences for investors, dedicated newsletter, current and periodic its Stakeholder groups, taking into account both reports the economic and social aspects. This approach is Media Press articles, interviews, thematic inserts driven by the awareness that sustainable develop- ment is only possible if there is mutual understand- ing between PGNiG and its Stakeholders, and if we recognise and try to understand one another’s needs and expectations. 1 2 3 4 5 6 Factoring in the needs of the Stakeholders and the Enhancement of Efficient and Conduct of business Creation of safe and Consistent, credible Seeking out new Stakeholder communication process is also an ele- satisfaction of partnership-based in a responsible way friendly workplaces; and business expansion ment of the risk management process. existing cooperation and while caring for the effi cient opportunities in line customers and dialogue with social natural environment; communication with the principle acquisition of new and business partners; and marketing; of sustainable customers through development. improved customer care;

22 PGNiG Sustainable Development and Responsible Business Strategy The Group’s Sustainable Development and Respon- One example of Stakeholder cooperation at PGNiG sible Business Strategy was formally approved is the complex network of interconnections within by the Management Board of PGNiG in July 2009. the gas production segment. The PGNiG Sanok and Contributors to the strategy included employees Zielona Góra Branches are involved in the produc- from all operational areas of the PGNiG Head tion of crude oil and natural gas. These operations Office, as well as from branches and subsidiar- involve significant environmental impact, as well as ies of the PGNiG Group. The Group’s Sustainable involvement with local communities. Therefore, it Development and Responsible Business Strategy is is crucial to the immediate and broader environ- In this respect, suppliers of equipment as well complementary to the Group’s business strategy. ment of oil and gas production facilities that they as customers also play an important role. Their The main objective we set when formulating our operate in an environmentally friendly manner. expectations and requirements concerning product sustainable development mission is to be an ac- Modern facilities are often located in the middle quality, flexibility, the timeliness of supplies, as tive and responsible player on the Polish energy of forested areas, equipped with state-of-the-art well as maintenance of high working standards, market, which takes into consideration the needs process monitoring systems, and built with the use are a key priority for the Branches. Involvement and expectations of its various Stakeholder groups of cutting-edge technologies. with local communities entails frequent public as well as the natural environment. consultations, and also participation in the various sports and cultural events taking place in a given The Group’s CSR strategy addresses a range of region. Stakeholder relations are managed in a challenges posed by our environment, and the ac- similar manner in the segment of exploration for tions we plan result from our Stakeholders’ needs gas from unconventional sources (shale gas). For and from best practices in place at the Group, in more details, see the “....” section in each chapter. particular in the area of environmental protection and social involvement.

Sustainable development and responsible business covers all links in the PGNiG Group’s value chain, applies to all four areas of sustainable develop- ment, and rests on six strategic pillars: 1 2 3 4 5 6

Enhancement of Efficient and Conduct of business Creation of safe and Consistent, credible Seeking out new satisfaction of partnership-based in a responsible way friendly workplaces; and business expansion existing cooperation and while caring for the effi cient opportunities in line customers and dialogue with social natural environment; communication with the principle acquisition of new and business partners; and marketing; of sustainable customers through development. improved customer care;

Responsible Energy 23 Introduction

It is worth noting that since 2010 the strategic objectives have been among the criteria used to evaluate senior management staff, following their inclusion in annual MBO targets. In this way the strategic objectives are reflected in the goals set for individual employees and teams.

Since 2010, Group companies have conducted their businesses based on their own Sustainable Devel- opment and Responsible Business Strategies.

An integral part of the Strategy is the implementa- Information about this Report tion plan, which defines the operational goals cor- ‘Responsible Energy 2012’ is the fifth CSR report Figures quoted in this Report are for 2012, unless responding to each strategic objective. Apart from prepared by PGNiG based on the Global Report- otherwise indicated. defining the operational goals and steps to achieve ing Initiative guidelines and IPIECA indicators. them, the plan also specifies success measures and Furthermore, it is also based on the guidelines and Quantitative measures presented in this Report are implementation schedules, which enable the Group indicators described by the Global Compact and based on PGNiG SA data. to consistently gauge progress, as well as monitor the ISO 26000 standard. Practices presented in this the owners of individual goals. An additional part Report apply to PGNiG SA, except when described This Report has not been reviewed externally, of the plan is a list of the internal and external as practices also applying to other PGNiG Group although selected indicators and the financial data Stakeholders relevant to the respective operational companies. presented are consistent with the PGNiG Annual goals. The identification of stakeholder groups is Report and Financial Statements for 2012 and, as meant to better accommodate their needs in the This Report presents our pursuit of the objec- such, were verified by the auditors of the Annual implementation process. tives defined in the Sustainable Development and Report. Independent audits of environmental Responsible Business Strategy in the period from protection systems were carried out at PGNiG Strategy management January to December 2012. It also includes certain companies. Soon after the formal adoption of the Strategy, events/practices from 2013 and uses figures and/ a dedicated structure was established to coordi- or descriptions of the practices, rules and proce- The changes that took place within the Com- nate the processes of its implementation at the dures in place. pany’s organisation in the last year do not affect Group. Within its framework, Members of the the comparability of data included in the reports Management Board, along with the President, act for previous years. Information on the changes as Project Sponsors. Another tier is the Steering in the Company’s organisational structure has Committee, composed of the owners of strategic been presented in the ‘PGNiG – Company profile’ objectives. The Management Board’s Proxy for section. There is no need to adjust the informa- the Strategy is responsible for coordinating and tion contained in the reports for previous years. monitoring the Sustainable Development and All data in this Report has been properly sourced Responsible Business Strategy’s implementation at directly from the entities described herein, and PGNiG Group subsidiaries and branches, as well as from those persons managing the respective areas for internal and external communication of actions of the PGNiG Group’s operations. on the sustainable development and responsible business agenda. The same role at the level of the Group’s branches and subsidiaries is performed by regional CSR Facilitators. Altogether, there are several dozen persons for whom sustainable devel- opment is one of their principal duties. The Proxy is also responsible for monitoring the progress of the implementation of the strategic and operational goals, and for reporting actions scheduled for a given period to the Management Board.

24 PGNiG Calendar of corporate events

January February PGNiG SA, through its subsidiary In licensing round APA2011, the PGNiG Finance issued the first, EUR On February 20th 2012, the Company PGNiG SPV 1, acquired 99.8% of Norwegian Ministry of Hydrocarbons 500m tranche of five-year eurobonds filed a suit against OAO Gazprom and shares in Vattenfall Heat Poland S.A. and Energy awarded PGNiG Norway as part of its Eurobond Programme OOO Gazprom Export with the Arbi- (currently PGNiG Termika) for ap- interests in three exploration and established in August 2011. tration Court in Stockholm, in accord- proximately PLN 3bn. The acquisition production licences in Norway: ance with the relevant procedure. was financed by PGNiG with proceeds licence PL648S (PGNiG Norway PGNiG drafted the Gas Deregulation The suit relates to changes of the from a notes programme. With this (operator) 50%, OMV Norge AS 50%), Programme, which was put to public price terms in the long-term gas sup- transaction, PGNiG has become a licence PL646 (Wintershall Norge AS consultation. The draft was prepared ply contract of September 25th 1996 multi-utility group, supplying heat, (operator) 40%, PGNiG Norway 20%, based on documents including the executed by PGNiG SA with OAO electricity and gas to its customers. Lundin Norway AS 20%, Norwegian President of the Energy Regulatory Gazprom and OOO Gazprom Export. Energy Company ASA 20%), and Office’s recommendations for gas de- For the fourth consecutive time, licence PL350B, which is extended regulation in Poland, dated Novem- PGNiG was included in the prestigious licence PL350 (EON (operator) 40%, ber 15th 2011, as well as the Natural Respect Index, the CEE region’s first PGNiG Norway 30%, Statoil 30%). Gas Prices Deregulation Roadmap, index of socially responsible busi- Being awarded the operatorship of dated December 22nd 2011. The pur- nesses, maintained by the Warsaw the PL648S licence is a significant pose of the Programme is to create Stock Exchange. step forward for the company. This market conditions under which gas is the first operatorship awarded to prices for institutional customers can PGNiG Norway, which highlights the be deregulated. PGNiG is aware that company’s natural development. the Polish gas market may be subject to major changes post-deregulation.

Responsible Energy 25 Introduction

March May The Supervisory Board appointed Mr Marek Karabuła resigned from Ms Grażyna Piotrowska-Oliwa to the his position as member of the PGNiG position of President of the PGNiG Management Board and took the Management Board for the joint position of President of the Manage- term of office expiring on March ment Board of POGC Libya, a PGNiG 13th 2014. subsidiary conducting exploration activities in Libya. The President of the Energy Regula- tory Office approved a new gas fuel April PGNiG published its financial results tariff (Part A - Gas Fuel Supply Tariff PGNiG completed the construction of for Q1 2012. The PGNiG Group posted No. 5/2012). On average, the prices a high-pressure pipeline between the a PLN 297m net profit, down by 71% and charge rates for the supply Kłodawa Mixing Plant and the LMG oil from PLN 1bn in Q1 2011. One of the of high-methane gas type E, and and gas production facility. The pipe- main reasons behind the decline, nitrogen-rich gas types Lw and Ls line will enable the transmission of despite a 27% growth in revenue were increased by 12.5%, 12.6% and natural gas from the Dębno region, (to nearly PLN 9bn), was a negative 11.3%, respectively. The tariff came through the Kłodawa mixing plant margin on sales of high-methane gas into force as of March 31st 2012. and LMG oil and gas production facil- (-10%). This was, in turn, primarily ity, to the Grodzisk mixing and nitro- attributable to a 41% increase in gen rejection unit, and will be used as the unit purchase price of imported a storage facility to cover temporary The Stalowa Wola CHP plant signed a gas and the lack of approval for shortages of nitrogen-rich gas. contract with Abener of Spain, to be the new tariff, which PGNiG had the general contractor for the CCGT already submitted in October 2011. In accordance with a decision of the unit in Stalowa Wola. The contract, The Group’s revenue was up 27%, to President of the Energy Regulatory valued at PLN 1.57bn (VAT exclusive), almost PLN 9bn, mainly on the back Office, PGNiG implemented a new provides for construction of Poland’s of a sharp rise in gas sales volumes Gas Fuel Storage Tariff, effective until largest gas-fired CHP plant and for and inclusion of PGNiG Termika in March 31st 2013. In the new Tariff, long-term maintenance of the gas the consolidated financial state- the average rate of charges for gas turbine. ments. Once again, the Exploration storage services was reduced by ap- and Production segment recorded a proximately 7.9%. The PGNiG Management Board re- two-digit increase in revenue from solved to recommend to the General exploration services. A notice was given by BP, the Meeting transfer of the entire 2011 operator of the Skarv project, that balance-sheet profit of PLN 1.62bn PGNiG executed documents on a the launch of oil and gas production to the Company’s statutory reserve five-year note programme for up to on the Norwegian Continental Shelf fund. The PGNiG Management Board PLN 4.5bn with ING Bank Śląski S.A. would be postponed from Q2 2012 also proposed allocation of retained and Bank Pekao S.A. Under the to Q4 2012. The postponement was earnings of PLN 72.5m to the Com- programme, PGNiG may issue, for caused by a delay in the installation pany’s statutory reserve funds. In private placement, fixed or floating of risers due to adverse weather May 2012, the PGNiG Supervisory rate notes with maturities of up to conditions on the Norwegian Sea. Board endorsed the Management 10 years. Board’s proposals. PGNiG Termika completed the con- struction of a wet flue gas desul- phurisation unit at the Siekierki CHP plant. The unit supports eight of the 14 boilers installed at the CHP plant and desulphurises emissions from 70% of its generating capacity.

26 PGNiG July On July 4th 2012, PGNiG entered into a framework agreement on shale hydrocarbon exploration and produc- tion with KGHM Polska Miedź S.A., PGE Polska Grupa Energetyczna S.A., TAURON Polska Energia S.A., and August ENEA S.A. The agreement provides PGNiG published its financial results for joint exploration for, appraisal for H1 2012. In H1 2012, the PGNiG and production of hydrocarbons Group recorded a PLN 17m loss, June from geological formations covered relative to a PLN 1bn profit reported The Annual General Meeting of PGNiG by PGNiG SA’s licence for oil and for the corresponding period of the approved the financial statements gas exploration and appraisal in PGNiG Termika executed documents previous year. This loss was incurred and the Directors’ Reports on the the Wejherowo area. The area on on a five-year note programme for despite a 28% growth in revenue, to operations of PGNiG SA, as well as which the parties will operate spans up to PLN 1.5bn with four banks: PKO PLN 14.8bn, and was chiefly caused the consolidated financial statements approximately 160 square kilome- BP S.A., Nordea Bank Polska S.A., ING by factors outside the Company’s and the Directors’ Report on the tres. Estimated expenditure on gas Bank Śląski S.A., and Bank Zachodni control, such as the rising cost of gas operations of the PGNiG Group, and exploration, appraisal and production WBK S.A. As part of the programme, imports and adverse fluctuations in granted discharge to members of the at the first three sites (the Kocha- PGNiG TERMIKA may issue (in private the złoty exchange rates, which the PGNiG Management and Supervi- nowo, Częstkowo and Tępcz pads) placements) discount and interest- tariff approved by the President of sory Boards for the financial year will amount to PLN 1.7bn. bearing notes with maturities of up the URE failed to offset. 2011. The Annual General Meeting to one year and interest rates based resolved to allocate the entire net PGNiG Norway discovered a new on WIBOR plus margin. On August 28th 2012, the PGNiG profit and retained earnings for 2011, field, Snadd Outer, within the PL212E Management Board adopted a respectively of PLN 1.6bn and PLN licence area. The field lies near the PGNiG Termika S.A. issued the first resolution concerning the Voluntary 72.5m, to the Company’s statutory Snadd North gas field and borders tranche of notes with a total nominal Termination Programme. Its adoption reserve funds. the Skarv field. value of PLN 450m. was a consequence of the Agreement concerning the process of PGNiG’s PGNiG issued the first tranche of On July 30th 2012, the notes issued For the fifth time in succession, the reorganisation, concluded on August long-term notes under the note by PGNiG in June 2012 were floated Warsaw Stock Exchange announced 24th 2012 between the PGNiG Man- programme launched in May 2012. on the Catalyst market, on the mul- the list of companies included in agement Board and PGNiG’s Union The nominal value of the notes issued tilateral trading facility operated by its Respect Index. PGNiG was again Coordination Commission. was PLN 2.5bn. At the time it was the BondSpot. included in the prestigious group. largest note issue ever completed on the Warsaw Stock Exchange by a non-bank corporate issuer.

Responsible Energy 27 Introduction

September October Standard & Poor’s Financial Services PGNiG Norway and PST signed a PGNiG and VNG-Verbundnetz Gas AG PGNiG brought the Lubiatów oil field (“S&P“) reduced the rating of PGNiG contract on sale of gas produced executed amendment No. 1 to the and the Międzychód gas field on from BBB+ to BBB and placed the from the Skarv field. The term of the Lasów Gas Sales Agreement. The par- stream. The fields were developed as Company on a negative watchlist. It contract, valued at approximately ties agreed on a new pricing formula part of the Lubiatów-Międzychód- was S&P’s opinion that PGNiG’s 2012 EUR 1.3bn, is ten years. The selling based on the prices of petroleum Grotów project, whose purpose is to performance would not stand up to price will be determined with refer- products and current market prices facilitate the transport, storage and the Agency’s earlier expectations, ence to gas prices quoted on the of natural gas, and set a new capac- sale of crude oil, natural gas, liquid because of the Company’s reduced European Energy Exchange (EEX), ity charge rate. sulphur and propane-butane mix profitability brought about by the and payments for supply of gas will from the LMG oil and gas production Polish system of gas fuel tariffs, be settled in euros. facility. The launch of production which prevents the Company from from the Lubiatów and Międzychód full and prompt covering of the On September 13th 2013, PGNiG fields will contribute to increasing the cost of imported gas, and that the received the decision of the President overall crude output. After testing Company ran the risk of incurring an of the Energy Regulatory Office, and commissioning is completed, the operating loss in 2012. On the other rejecting the changes in the gas fuel LMG project will be subject to final hand, S&P assessed the Company’s tariff. acceptance. liquidity as adequate given PGNiG’s investment programme, noting the Grupa LOTOS S.A. and PGNiG signed PGNiG completed its exploration pro- available financing programmes of an agreement on joint commer- gramme in Denmark. As no commer- significant values. cial initiatives and cooperation in cial hydrocarbon flow was identified, exploration for and production of the Felsted-1 well was abandoned conventional and unconventional oil and licence 1/05 left to expire. and gas.

As exploration work in the PL350 and PL350B licence areas on the Norwegian Continental Shelf failed to confirm the assumed geology, PGNiG Norway discontinued work on the licences.

28 PGNiG December The President of the Energy Regula- tory Office approved a change to Gas Fuel Supply Tariff No. 5/2012 and extended its effective term until September 30th 2013. On average, the prices and charge rates for the Moody’s Investors Service supply of high-methane gas type E, (”Moody’s”) downgraded PGNiG’s and nitrogen-rich gas types Lw and credit rating from Baa1 to Baa2 Ls were reduced by 6.7%, 8.0% and with a negative outlook. According 10.9%, respectively. to Moody’s, the downgrade chiefly reflects the deterioration in PGNiG’s The President of the Energy Regula- operating performance versus 2011 tory Office approved new Tariffs for due to the negative margin in its Gas Fuel Distribution Services for the gas trade operations, coupled with Gas Distribution Companies. higher debt levels on the acquisition November of PGNiG Termika. The rating agency PGNiG adopted a short-term value PGNiG and OOO Gazprom Export PGNiG published its financial results pointed to the uncertain future creation strategy for the PGNiG signed an annex to the contract for Q3 2012. The PGNiG Group set-up of the Polish gas market and Group until 2014. Its objective is to for sale of natural gas to Poland. In reported PLN 48m in net profit, its possible adverse impact on the prepare the Company for operat- connection with the signing of the compared with PLN 1.3bn of net Company’s performance. Another ing on a deregulated gas market. annex, the arbitration proceedings profit for the corresponding period factor taken into account is PGNiG’s The PGNiG Group is intent on before the Stockholm Arbitration of the previous year. In Q3 2012, the evolving business risk profile related maintaining its lead in the upstream Tribunal were closed. Group’s net profit declined by 80% to growing expenditure on hydro- segment and supplies of natural gas, on Q3 2011, from PLN 319m to PLN carbon exploration and production, while also offering heat and electric- PGNiG completed the construction 65m. Cumulative loss of PLN 1.8bn which are unregulated business lines. ity. Thanks to its Short-Term Value of a high-pressure gas pipeline posted by the Trade and Storage However, the agency also noted that Creation Strategy, the PGNiG Group and fibre-optic cable with related segment for the first nine months the scale of future benefits from will be able to pursue an ambitious infrastructure from the Kościan gas of 2012 was the key driver of the the execution of the annex with investment programme, while servic- production facility to KGHM Polko- Group’s operating result. In Q3 alone OOO Gazprom Export will depend on ing its debt. wice/Żukowice. The pipeline will be the segment, which is responsible the price quoted to end users of gas. used to sell natural gas produced at for handling gas trading, reported a PGNiG Norway launched production Kościan directly to KGHM Polkowice/ PLN 320m slide in its operating result, Standard and Poor’s downgraded of oil and gas from the Skarv field. Żukowice. which ultimately arrived in negative PGNiG’s credit rating from BBB to territory at PLN -350m. In Q1–Q3 BBB- with a stable outlook. According 2012, the Exploration and Production to the rating agency, the Company segment generated an operating sustained the largest gas trading loss profit of PLN 1.2bn , more than on record as the national regulator for the entirety of 2011, when the failed to react quickly enough to profit was PLN 1.1bn. Key contribu- higher prices of imported gas in the tors included higher revenue from sales prices effective in Poland in crude oil sales, continued operating 2012. The Agency pointed out that expense discipline (particularly in the Company’s financial ratios had the area of services and employee fallen since 2011 due to negative benefits) and fewer dry wells. Strong margins on gas sales and high invest- performance was also reported by ment expenditure. S&P believed that the Distribution segment. the execution of the annex to the Yamal contract for gas supplies with OAO Gazprom/OOO Gazprom Export would enable the Company to avoid further losses and stabilise its finan- cial performance and credit metrics. The Agency perceived PGNiG’s liquidity as adequate and did not anticipate any significant changes in its business risk profile over the next two years, which was reflected in the stable outlook.

Responsible Energy 29 Workplace

30 PGNiG The PGNiG Group’s employees are its most valuable asset. Their knowledge, qualifications and commitment are not only instrumental to the Company’s day-to-day operations and achievement of its goals and tasks, but also contribute to its unique nature and growth prospects.

Awards and distinctions 3rd Congress of Active Mobility – September 6–7th 2012 – Active Mobility- Friendly Employer

Responsible Energy 31 Workplace

Dragon Boats – Pomeranian Trading Division The Pomeranian Trading Division needed a way to integrate its employees. The aim of spon- soring dragon boat teams was to encourage participation in sports, keeping in shape and supporting local sporting activities. Further- more, the Management wanted to take care of the employees’ after-hours development. Promoting active mobility, employee The tradition of dragon boat racing originated in voluntary work during the Cycling the 5th century BC, but only came to Europe in the Fridays Campaign and the Congress 1980s. The employees of the Pomeranian Trading of Active Mobility – Pomeranian Division, encouraged by the sport’s growing popu- Trading Division larity, contacted MRKS Wiking sports club and put For many years, the Pomeranian Trading Division together their own team – Top Gaz Desperados. of Gdańsk has been working with the Pomera- In return for PGNiG’s support, Wiking is providing nian Association ‘Common Europe’ (PSWE) and its employees with an opportunity to train in the participating on various initiatives, whose aim club’s boats and offering the help of a profes- is to promote active mobility among employees, sional steersman during races. The helping hand customers and the local community. of the club’s professionals was particularly useful during the team’s earliest training, when few of the enthusiasts knew what to do while paddling in such an extraordinary boat. Their first racing successes soon followed, proving the exceptional commitment of the employees. The PGNiG team competes in the FAN Mikst category, which is an amateur mixed group (consisting of both men and

The activities that we undertake are particularly focused on promoting cycling as an alternative means of transportation. As PSWE’s partner in business, we participate in the Cycling Fridays Campaign, which encourages the Gdańsk residents to cycle to work. Each year, employees of the Division volunteer in the campaign, surveying the cyclists and providing information. women). Every year, Top Gaz Desperados take Every year, the team participates in a number of top spots in their category in the Polish Amateur races (from three to six a year) and takes high posi- In this campaign, we support environment-ori- Championships. The team also participates in the tions in the standings. Working relations benefit ented and pro-social activities. The environmental opening of the racing season on the Motława river from the employee integration that occurs during aspect of the campaign and its reduction of carbon in Gdańsk, in the competition during Sea Days and training. At the same time, the Pomeranian Trading dioxide emissions play a major role. We recom- Gdańsk Days (in 2012 the team took third place), Division supports and promotes local sports. mend initiatives that reduce traffic and promote as well as in St. Dominic’s Fair (first place in the every-day active mobility. general standings in 2012). The team’s training sessions take place once a week and their com- The environment-oriented activities that we en- mitment brings a breath of fresh air to the local gage in, supporting environment-friendly forms of sporting activities, stimulating the development of mobility, have been recognised and awarded in the this discipline in Pomerania. ‘Active Mobility-Friendly Employer of the Gdańsk Metropolitan Area’ contest. The results of the contest were announced on September 6th 2012, during the 3rd Active Mobility Congress, whose aim was to highlight the benefits that stem from promoting various forms of active mobility among Polish people.

32 PGNiG The ‘Student’s Smile’ (Uśmiech Żaka) initiative – Zielona Góra Branch Internship is a method of professional training Recognition in the 5th edition of the which gives young people an opportunity to ‘Mother at Work’ (Mama w pracy) acquire new skills. contest – Lower Silesian Trading Division PGNiG’s Lower Silesian Trading Division has implemented a programme which stems from the company’s pro-family policy. Some of the programme’s many benefits are particularly appreciated by pregnant women and moth- ers and include the ability to work remotely, flexible working time arrangements for parents returning to work, co-financing on nursery and pre-school fees,

Given the large number of internships at the Branch, it was proposed that those employees ded- icating their time to taking on the difficult task of supervising an intern be rewarded. This gave rise to the ‘Student’s Smile’ (Uśmiech Żaka) initiative, which rewards all those who maintain a helpful attitude towards trainees/interns and are actively committed to their education. Such employees receive a special diploma, a small gift and a written recognition in the ‘Szejk’ magazine.

Best practices in the Mobile Sales Department – Mazovian Trading Division as well as supplements for holidays and textbooks The function of the Mobile Sales Department is for school-age children. An affordable family to care for Business Customers and acquire new healthcare package is provided under the private ones interested in purchasing electricity. While healthcare scheme available to the employees. The particular emphasis is placed on results, team Division’s pro-family programme was recognised Rescue services and firefighters building and the development of appropriate in the ‘Mother at Work’ (Mama w pracy) contest or- practice fire containment – Fire drill at relations within the team are also considered ganised by Fundacja Świętego Mikołaja (the Santa the Husów Underground Gas Storage very important. Claus Foundation), the Rzeczpospolita daily and the Facility – Sanok Branch Millward Brown SMG/KRC research institute. The A drill, codenamed ‘Husów 2012’, was carried out The Mobile Sales Department employs 14 people, contest’s judging panel rewarded those companies at the Husów Underground Gas Storage Facility 13 of whom are in direct contact with the custom- which had created favourable conditions for both on September 25th 2012 to practice fire and res- ers every day. The key factor in ensuring their working and parenting. In order to determine cue procedures in the event of a gas-well fire. strong commitment is the overlap between the which employer would receive the certificate, employee’s individual goals and the company’s anonymous online surveys of the female employ- A fire and rescue drill was held at the Husów general business objectives. ees of the companies entering the contest were Underground Gas Storage Facility. The drill was conducted. The Division was recognised in the mandatory under Art. 261.3 of the Environmental The employees support each other in their work ‘Large Company’ category. Protection Act of April 27th 2001, which classifies together. From the very beginning, those em- the Husów facility as a High Risk Establishment. ployed at the Department have enjoyed flexible By caring for mothers and their children, we are This requires it to organise exercises in implement- working hours as well as the ability to work from not only able to improve our employees’ per- ing its internal rescue operation plan, in particular home (employees are given company phones and formance, but also solidify their bond with the the operation of its fire-fighting units and in laptop computers, complete with modems for company, which in turn increases its value, making preventing, combating and removing the effects of accessing company network drives). To ensure it a workplace of choice for future young mothers. industrial disasters. maximum comfort and safety, roadside assistance We believe that any modern company needs to be coverage is provided for their company cars. open to women who wish to reconcile motherhood with professional development.

Responsible Energy 33 Workplace

The drill’s main exercise consisted in containing a jet of flaming natural gas gushing out from a train- ing wellhead at a rate of 60–100 nm3/min and a pressure of 4.5–6 MPa. Three different extinguish- The central events of the drill were a discussion of ing methods were used: the technological process of natural gas production ••a high-pressure stream of water directed from and injection, hazards arising during the produc- two fire monitors, tion, processing and storing of natural gas, organi- ••firefighting powder, sation of rescue and firefighting operations in the ••firefighting foam. ‘Safety at work’ (Bezpiecznie w pracy) event of gas-well fires, and containment of such contest promoting OHS – Sanok fires with streams of water, foams and extinguish- Having contained the fire and cooled down the Branch ing powders, and the subsequent replacement of wellhead to about 40°C, the mining rescuers re- As maintaining high safety standards in a the wellhead’s gate valve, which is a part of the placed the wellhead’s damaged 2 1/16” gate valve, workplace is a process of exceptional complex- facility’s surface equipment. with the gas stream’s pressure at 1 MPa. ity, the PGNiG Sanok Branch takes special care to regularly test its employees’ knowledge on the subject as well as to further educate them. Last year, it was proposed that a new initiative promoting OHS awareness – the ‘Safety at Work’ (Bezpiecznie w pracy) contest – be introduced into the Company’s calendar of events.

On September 10th 2012, the Contest Offices (both Central and Local), created by the Head of the PGNIG Warsaw Branch, started working on the second edition of the OHS-promoting competition. The event attracted considerable interest. A total of 91 employees entered the competition, including: ••16 from the Administrative Centre for Oil and Gas Production Facilities in Krosno, Following a seminar on the ‘Characteristics of oil The main purpose of the exercise was to deter- ••26 from the Administrative Centre for Oil and and natural gas production in Poland and assess- mine the most effective method for extinguish- Gas Production Facilities in Łańcut, ment of associated risks and hazards’, the practical ing a stream of flaming natural gas. The exercise ••18 from the Administrative Centre for Oil and part of the drill began. Those gathered practised was also intended to assess the volume of water Gas Production Facilities in Tarnów, the organisation of a rescue and firefighting opera- needed to contain the fire and give all units of the ••13 from the Administrative Centre for Oil and tion in the event of a gas-well fire with the use of National Firefighting and Rescue System a change Gas Production Facilities in Przemyśl, the Rzeszów Province’s National Firefighting and to practice joint rescue operations on natural gas ••14 from the Administrative Centre for Oil and Rescue System forces and resources, and the On- wells, evaluate and coordinate their communica- Gas Production Facilities in Ustrzyki Dolne, Site Mining Rescue Team. tion and, finally, to properly assign and coordinate ••and 4 from the Sanok region. the work of mining rescuers during fires and other The following units participated in the exercise: hazardous situations at the Production Site. On October 26th 2012, following the first stage ••National Fire Service Rescue and Firefighting of the Contest, which started at 10am at all the Unit in Łańcut, Among those watching the drill were the repre- Administrative Centres and in the Sanok Offices, six ••National Fire Service Rescue and Firefighting sentatives of the PGNiG Head Office, the Sanok teams were selected to proceed to the second, and Unit in Rzeszów, Branch’s directors and managers, as well as the final, stage of the Contest. In line with the Contest’s ••National Fire Service Rescue and Firefighting representatives of the Underground Gas Storage Rules, each team consisted of three employees. Unit in Nowa Sarzyna, Facility of the Sanok Branch, the Regional Mining ••National Fire Service Rescue and Firefighting Office in Krosno, the Provincial Headquarters of The finalists who passed the qualifications met in Unit in Przemyśl, the National Fire Service in Rzeszów, the Provin- the museum of the Bóbrka heritage site on Novem- ••National Fire Service Rescue and Firefighting cial Inspectorate for Environmental Protection in ber 15th 2012 to face the contest’s final challenge. Unit in Mielec, Rzeszów, as well as provincial, local-government, After a period of intense competition, the winners ••Provincial Inspectorate for Environmental Pro- county, and municipal authorities which may be were announced: tection in Rzeszów, involved in counteracting hazardous situations. ••First place – Team representing the Administra- ••On-Site Mining Rescue Team of the Sanok PGNiG A 10-person delegation from the Cyprus Fire Ser- tive Centre for Oil and Gas Production Facilities Branch, vice, which has experience in containing oil fires, in Ustrzyki Dolne ••Well Mining Rescue Station in Kraków, was also present. ••Second place – Team representing the Ad- ••County Police Department in Łańcut, ministrative Centre for Oil and Gas Production ••County Emergency Management Centre in Facilities in Łańcut Łańcut, ••Third place – Team representing the Administra- ••Medical Centre in Łańcut, tive Centre for Oil and Gas Production Facilities ••Volunteer Fire Department units in Markowa, in Przemyśl Husów, Albigowa, Krzemienica, Kosina, Rak- szawa, Białobrzegi, Budy Łańcuckie Lewe, Given the exceptional commitment of the par- ••IMPEL Security Agency, ticipating employees as well as their extensive ••Operations Manager at the PGNiG Sanok Branch, knowledge of OHS and fire safety, the organiser ••Employees of the Husów Underground Storage decided to reward all entrants. However, the final- Facility. ists additionally received valuable prizes.

34 PGNiG PGNiG employee satisfaction surveys Periodic PGNiG employee satisfaction surveys are among activities planned under the adopted Sus- ‘Yellow Week’ campaign at PGNiG tainable Development and Responsible Business Preventive measures may provide protection Strategy. The second survey of employee satisfac- against the serious consequences of viral hepa- tion at the PGNiG Head Office and Branches was titis. Caring for its employees, PGNiG provides begun at the end of November 2012. them with the best solutions available free of charge. Accordingly, in 2012 employees using HumanGraph, an independent research agency, the services of cooperating health care providers assisted us in conducting the survey. The key could get vaccinated, free of charge, against objectives of the survey were: viral hepatitis. ••to determine the level of satisfaction and loyalty The fourth conference on Social of PGNiG employees; Viral hepatitis A and B continue to pose a serious Dialogue at the PGNiG Group ••to identify the drivers of their satisfaction and global threat to human health, as evidenced by On February 10th 2012, the fourth conference on loyalty; their classification as being among the most com- Social Dialogue was held, during which repre- ••to obtain the employees’ views on PGNiG’s mon infectious diseases globally. The number of sentatives of the current Management Board of strengths and weaknesses as an employer; those newly infected with hepatitis A is estimated PGNiG met with representatives of the key trade ••to identify areas requiring improvement with a at 14 million annually, although only one case in unions active in the PGNiG Group to exchange view to increasing satisfaction and loyalty. ten is reported. The global hepatitis B death toll is views, experience and information on the work estimated at approximately 1 million annually. of the Group. Employees were given a choice between electronic and printed forms of the survey’s questionnaire. As the virus poses a threat to each non-vaccinated The conference was attended by around 200 rep- 8,833 employees were invited to participate in the person, it is of utmost importance to be aware of resentatives of trade unions from all entities of the survey (all employees as at November 1st 2012). the disease and know how to avoid it, as well as PGNiG Group and the PGNiG SA Employee Council, 6,501 electronic questionnaires were sent via to be aware of the beneficial effects of vaccina- led by its Chairman, Tomasz Ziembicki. Special ­e-mail and 2,332 printed copies were sent by tions, which protect and immunise the organism. guests of the conference included Radosław Mlec- mail. 3,317 filled-in questionnaires were submit- We should remember that only a full series of vac- zko, Under-Secretary of State at the Ministry of La- ted, meaning that 38% of the total workforce cinations guarantees long-term protection against bour and Social Policy; Tadeusz Chwałka, Chairman participated in the survey. In 2010, the ratio stood hepatitis A and B viral infection. Hepatitis experts of Forum Związków Zawodowych (Trade Unions at 53%. 2,153 employees filled in the electronic emphasise the need to promote vaccinations as a Forum), and Jan Guz, Chairman of Ogólnopolskie questionnaires and 1,164 the printed copies. tool for fighting these diseases. Porozumienie Związków Zawodowych (All-Poland Alliance of Trade Unions). The numbers of participants at the individual organisational units were as follows: It is important to remember that social dialogue is an important issue, and has a material bearing on Centrala, CLBP, SRGO 31% the building of proper relations between employ- Dolnośląski Odział Obrotu Gazem 52% ees and employers. The history of social dialogue Górnośląski Odział Obrotu Gazem 59% in Poland goes back to the 1980s. The 1980 August Karpacki Odział Obrotu Gazem 53% Accords and 1989 Round Table Accords are exam- Mazowiecki Odział Obrotu Gazem 35% ples of this kind of dialogue. The most important Pomorski Odział Obrotu Gazem 29% document developed after 1990 as a result of Wielkopolski Odział Obrotu Gazem 43% social dialogue was the Pact on State-Owned Oddział w Odolanowie 53% Enterprises in Transformation, which specified the Oddział w Sanoku 32% rules governing the transformation and privatisa- Oddział w Zielonej Górze 30% tion of state-owned enterprises. Oddział Geologii i Eksploatacji 27% ••DOOG – currently the Lower Silesian Trading Having discussed the most important aspects of Division PGNiG’s and the Group’s operations, the participat- ••GOOG – currently the Upper Silesian Trading ing Management Board members answered ques- Division tions asked by other participants of the confer- ••KOOG – currently the Carpathian Trading ence. The discussion addressed the development Division of the exploration and production business, gas ••MOOG – currently the Mazovian Trading Division trading divisions and distribution. The participants ••POOG – currently the Pomeranian Trading expressed their concern for jobs, in particular in Division the context of economic considerations presented ••WOOG – currently the Greater Poland Trading by the Management Board and related cost optimi- Division sation measures.

In addition to direct tallying up of the answers to the questionnaire, in line with the standard procedures followed during such surveys, the results analysis was enhanced with the computa- tion of certain ratios: NPS (Net Promoter Score), ESI (Employee Satisfaction Index) and loyalty index, as well as an interpretation model describing the effect of individual factors on the overall employee satisfaction level. Responsible Energy 35 Workplace

PGNiG Ethics Programme In 2009, we adopted the Rules of Best Practice for PGNiG Group Managers, setting out the rules for non-engagement in competitive ventures, prudent management of corporate affairs, and avoidance of any potential conflicts of interest.

Managers who fail to follow those rules are in breach of internal regulations, and may be held ac- countable. All members of the management team were placed under the obligation to read and duly The ‘Little Bird Feeder – Great Cause’ observe the Rules of Best Practice for PGNiG Group project – Pomeranian Trading Division Managers. The ‘Little Bird Feeder – Great Cause’ project The ‘Computer as a Window to the consisted of workshops organised in the late At the beginning of April 2011, the office of the Eth- World’ project – Pomeranian Trading autumn of 2012, attended simultaneously by ics Officer was established at PGNiG SA. On August Division several groups of participants. The workshops 4th 2011, the PGNiG Management Board adopted The ‘Computer as a Window to the World’ project were created for children and the elderly, Resolution No. 400/2011 on a management system was developed by employees of the Pomeranian who with the assistance of designers from the for the PGNiG Ethics Programme and the content Trading Division (POH) as part of the Volunteer- Pomorskie Stowarzyszenie Projektantów PoCoTo of the new Code of Ethics. The Management Board ing Programme initiated by the PGNiG Head Of- (the ‘PoCoTo’ Gdańsk designers Association), made it mandatory for all PGNiG Group companies fice. The objective of the project was to provide built original bird feeders to help local birds to implement the prescribed measures. Some time a complete computer workstation with Internet make it through the then-oncoming winter. after, the Ethics Committee was established. We access, for use by the charges of the Single then ran an information and training session for Mothers with Children organisation, and the Their work on the feeders was preceded by a senior management on the Code of Ethics, Ethics ‘MONAR-MARKOT Gdańsk Centre of Assistance lecture from an ornithologist, who helped the Programme management system, and possible to Neighbours’ retirement home in Gdańsk. audience understand the needs of city-dwelling ways of handling high-risk situations. Earlier on, Funds raised under the programme were used to birds. The joint work, supervised by the design- we had also held internal consultations with the finance the computer hardware, which was then ers, helped to integrate the local communities management staff, as well as academics, NGOs delivered to the centre and where it will be used involved, including the seemingly distant groups of and public administration authorities with respect for a number of years by an increasing number young and old. This type of activity teaches youth to draft provisions of the Code of Ethics and the of project beneficiaries (over 100 people cur- tolerance, while the elderly have an opportunity Ethics Programme management system. We also rently seek assistance from the centre annually). to ‘charge their batteries’ with the energy shared consulted with the Internal Audit and Control Office with them by the children. The workshop’s par- on aligning the PGNiG Ethics Programme manage- PGNiG Group volunteers assisted the centre’s em- ticipants were people who had responded to the ment system with the planned PGNiG Misconduct ployees with the selection of appropriate computer Association’s announcements, posted in nursery Management Policy and the PGNiG Misconduct hardware and other equipment for the worksta- schools and schools in the Gdańsk-Gdynia-Sopot Management Programme. As part of the consulta- tion, and installed the necessary software. The Agglomeration, at the University of the Third Age, tion process with the Shareholder Oversight Office, volunteers also conducted a series of workshops and on the local government information portal, guidelines were agreed for harmonisation of the and training sessions, including in document edit- as well as on Facebook. PGNiG Group volunteers, PGNiG SA Ethics Programme management system ing, using web browsers and how to register for working with the Association, developed the with the guidelines and procedures provided in the Internet accounts. concept of the workshops and assisted in organis- Rules of Best Practice for PGNiG Group Managers, ing and directly conducting the workshops (from adopted by the Management Board in 2009. In the modern world, it can be difficult to actively assisting in purchases to constructing the feeders). search for a job or fix official matters without a The workshops served educational and integra- computer or Internet access. It is currently mainly tion purposes and the financial assistance received on-line that job application letters are submitted, enabled streamlined implementation with use of official forms are accessed or medical specialists the purchased materials and tools. are searched for and contacted. Ultimately, the project proved a success, enabling the MONAR The project’s organisers received numerous MARKOT Centre’s charges to use Internet-based responses to the initial announcement, but due services and thus materially reduce their social to the limited space available and limited financial exclusion. assistance, were not able to admit everyone to the workshops. On the other hand, the great interest PGNiG Group employees’ involvement in devel- shown in the project attests to the demand for oping volunteering projects also contributes to such initiatives. the integration of the workforce, increases their satisfaction and improves the quality of workforce interpersonal communication.

36 PGNiG moral norms. and ethical accepted generally the on draw ards dustry in best and values corporate declared the with line in are which employees, PGNiG for conduct of rules specific contains Code Standards The Ethical PGNiG. at trust of aculture and environment cal ethi an developing of process the facilitate to expected are which values, core formulates also It stakeholders. all with relationships transparent and lasting building for foundation astrong provides which culture, corporate PGNiG’s to relevant ethics and principles moral of aset is former The Code. Standards Ethical the and Values of ment State the of consists Ethics of Code PGNiG The retaliation. of form any from protected are faith good in Officer Ethics the to misconduct possible reporting employees that is rule The ethics. of code our breached have to found persons against taken be to action seeking Board, Management PGNiG the to request relevant a submits Committee Ethics the it, justify stances circum Where Committee. Ethics the to them refer and violations ethics reported of validity the investigate to is duty Officer’s Ethics PGNiG The specific their and guidelines the discuss to Officer Ethics PGNiG the with met subsidiaries strategic several agement boards and other management staff of man the Also, Steward. Ethics an appointed and Harassment, Sexual and Mobbing Counteracting for Policy MSG the adopted MSG) Gazownictwa, Spółka Mazowiecka (formerly Gazownictwa Spółka Polska of Branch Warsaw the instance, For system. management Programme Ethics PGNiG the ing are all fully compliant with the guidelinesunderly they vary, place in put mechanisms organisational and formal individual the Although companies. 17 in Group Programme Ethics the implementing and ready, presentations we successfully began consultations completed and relevant materials the With companies. Group individual at officers byethics prepared reports reviewing and lecting col for and Group, the across Programme Ethics the of implementation the coordinating those with liaising for responsible is Officer Ethics The practices

applications. from around the world. Our stand ------place. in systems management programme ethics Group companies which had no comprehensive those of employees to available also was hotline ethics the Initially, basis. seven-days-a-week clock, around-the- on employees all to available are address e-mail and hotline A dedicated standards. and policies ethics adopted the to as doubts fying clari or questions asking and violations reporting for employees PGNiG all to open Officer, Ethics the with communication of achannel is which hotline, ethics the including deployed, were tools infrastructure ethics of anumber and developed organisational framework and were procedures an system, management Programme Ethics the of part As Strategy. Business Responsible and ment Develop Sustainable PGNiG the of block building avital is Programme Ethics adopted the standards, ethical exacting most the to run be to needs abusiness that belief firm our of expression An • • • • • Ethics: of Code our in lated articu policies and rules the of some are Below • • • • • employees. any against, discrimination or towards, ism byfavourit upon infringed being from tunity oppor equal of principle the prevent to We act remedies; possible best the identify to order in interest, of conflicts any of Officer Ethics or supervisor immediate our We inform us; to close people for or ourselves for gain financial or personal any obtain to organisation the in position our use not We do interest; of a conflict to rise give could links such extent the to entities business other with we have links actual or legal any of supervisor immediate our We inform interest; best company’s our with odds at be could us to related people of interest the or interest personal our where situations We avoid

Odpowiedzialność

systemy zarządzania K - - Partnerstwo

-

- - o

e i n le a n o k s o d dek

faced dilemmas ethical concerned have requests consultation and queries far, the of So most ures. trigger appropriate preventive or remedial meas to fail or retaliation prompt could supervisor direct his to violation the reporting that believe to reason has employee the if suggested particularly is This Officer. Ethics the to person in it delivering or ing email and Form) Report Violation Ethics of Code (PGNiG form areport in byfilling Officer Ethics the contact may employee the sor. Alternatively, supervi direct his to report to required is PGNiG, to links business with outsider an or employee, PGNiG byanother violated been has policy ethics an that suspicion areasonable has or behaviour unethical witnessed has who employee An it. outside and attitudes within and behaviour the organisation employees’ influence actually to power the have Ethics of Code the will then Only initiatives. raising awareness- in employees involving and conduct, conduct, monitoring compliance with of standards ethical promoting to daily paid is that attention more the with effective more be will programme The education. and training ethics continued and with engagement all employees through effort long-term requires Group PGNiG the across Full of the implementation Ethics Programme relationships. thosenotably occurring in supervisor-subordinate behaviours, workplace specific as well as hierarchy, management the of levels various at by employees e e ł a t kadra s b u t d r o w w r klient a e a ł l y a s E

n wspólne c c i h e j

i dobro wyzwania zaufanie Jakość l s Wiarygodność o p k o Responsible Energy aln ł t ecz e y n ośc k i i r k e o l r a z c y j e s t n e - - - 37 Workplace

Dialogue with employees Accidents at PGNiG The PGNiG Group has a strong tradition of social In 2012, a total of 26 accidents occurred at dialogue. Of around 32,000 PGNiG employees, PGNiG, in which 25 employees suffered a minor over 16,000 (approximately 50% of the total injury and one person died. headcount) are members of the more than sev- enty company and inter-company trade unions The fatal accident took place during a business that operate within the Group. In addition to trip, in the town of Bochnia, at the intersection of that, PGNiG has three employee representatives ul. Brzeska and National Road E4. Our employee’s on its Supervisory Board and one employee- vehicle was hit on the driver-side door, with the elected member on its Management Board. impact injuring the employee’s brain and medulla and, ultimately, causing his death. The Management Board’s ongoing engagement with the trade unions and the Employee Council Compared with 2011, the number of at-work ac- helps involve workers in consultations on, and keep cidents fell from 32 to 26, although unfortunately them abreast of, important corporate decisions. the latter number includes one fatality. Forty meetings with employee organisations were held in 2012 alone, including: A vital factor contributing to the organisation’s ••Fifteen meetings with Representatives of Oil and strong OHS performance is the management’s Gas Mining Trade Union Centres, commitment to health and safety across the man- ••Sixteen meetings with the Company Trade agement hierarchy. Setting an example at the top Unions (signatories of the PGNiG Collective and using diverse methods to influence employee Bargaining Agreement), and behaviour help consistently improve our health ••Nine meetings with the PGNiG Employee Council. and safety systems.

Some of the issues discussed during the meet- ings with our social partners in 2012 were the Company’s financial standing, pay changes, OHS performance, the Gas Deregulation Programme, Workplace accidents by severity and frequency at PGNiG SA implementation of key business projects by sales in 2012 and 2011 forces, gas market liberalisation (electricity sales Total accidents Minor injuries Major injuries Fatalities Frequency Severity rate strategy, changes in Business Customer Service 2011 32 32 0 0 3.7 42 and Retail Customer Service), organisational chang- 2012 26 25 0 1 2.9 38 es in the Company’s branch structure (formation of the Geology and Hydrocarbon Production Branch), implementation of employee protection measures related to the restructuring of the Branches, shifts in the management structure, development of the Voluntary Termination Programme, amendments to the Collective Bargaining Agreement, evalua- tion of and planned changes to the Performance Assessment System, and arrangements concern- ing uniform Work Rules for Company Employees (signed on December 21st 2012). Total headcount Total headcount by type of employment, type of contract and region Numerous internal regulations were adopted in as at Dec 31 2012 2012 as a result of the Company’s and social part- Number of employees ners’ joint effort, some of which stemmed from Fixed-term Indefinite duration Part time Full time the arrangements reached during the meetings Region contract contract contract contract mentioned above. Gdańsk 2 394 3 393 The share of employees represented by OHS Kraków ‑ 32 1 31 committees (comprising representatives of em- Odolanów 21 132 ‑ 153 ployees and management), which provide advice Poznań 6 512 3 515 on and monitor OHS programmes, was 50% (OHS Sanok 42 1809 1 1850 Committees operate at every Branch). Tarnów 12 775 9 778 Warszawa 64 1773 21 1816 Wrocław 5 401 ‑ 406 Zabrze 6 642 1 647 Zielona Góra 180 1994 8 2166 Total 8802

38 PGNiG Shale Gas

Task Team on Communication and Dialogue with Local Communities

In its consultations on shale gas with local communities, PGNiG quotes the research Total headcount and turnover by age, gender and region results of independent research institutes as at Dec 31 2012 and relies heavily on the knowledge of spe- Region Number of employees Turnover rate cialists working in the Company’s different departments and areas. All communication Gdańsk 396 7% activities are coordinated by the Task Team Kraków 32 0% on Communication and Dialogue with Local Odolanów 153 4% Communities. Apart from permanent Team Poznań 518 4% members (employees of the Communications Sanok 1851 4% and Marketing Department and the Geol- Tarnów 787 5% ogy and Hydrocarbon Production Branch), Warszawa 1837 13% other professionals involved in the project Wrocław 406 3% on a daily basis include employees of the Zabrze 648 2% Zielona Góra Branch and the Pomeranian Gas Zielona Góra 2174 4% Trading Division. These include specialists in Total 8802 6% communication, environmental protection, law, geology, occupational health and safety, Age group Number of employees Turnover rate HSE, etc. The Team holds weekly meetings to discuss current problems. This procedure al- <30 771 6% lows the Team to not only schedule meetings 30–39 2436 4% and designate information centres, but also 40–49 2541 3% to discuss recent news, press releases and 50–59 2662 4% developments in Europe relating to shale gas. 60–69 389 49% The Team’s systematic work has produced a 70–79 3 440% model of operations which has proved reli- Total 8802 6% able in various, sometimes difficult situations.

Gender Number of employees Turnover rate Female 3418 6% Male 5384 6% Total 8802 6%

Training hours

Average number of hours trained per Senior level managers 27 employee, by employee category Middle level managers 32 Specialists 25.5 Other 13 Managerial skills and adult education Internal training programmes YES programmes supporting continuing Co-funding external training and courses YES To improve the Team’s credibility and the ef- employment YES (master’s degree fectiveness of its communications, the Com- Study leave programmes) pany ran several days of training sessions. In Percentage of employees subject to regular performance and career development total, seven two-day workshops were held, reviews 93% which covered such areas as communication rules and group negotiations. Headcount as at the end of 2012, by segment (persons) 2012 2011 2010 2009 The Company also held an educational campaign for all employees on shale gas PGNiG Head Office 617 838 840 833 consultations. The campaign was conducted Exploration and Production 10,990 12,054 11,592 10,800 through internal communication channels, Trade and Storage 3,780 3,841 3,809 3,836 such as the monthly in-house magazine and Distribution 13,255 13,865 13,881 13,851 Intranet (online internal communications). Generation 1,069 ‑ ‑ ‑ Other activities 2,327 2,185 2,296 2,073 Total 32,038 32,783 32,418 31,393

For our most recent shale gas developments see polishshalegas.pl

Responsible Energy 39 Customers

In 2012, total sales of natural gas reached 14.9 billion cubic metres, of which 14.2 billion cubic metres was sold by the Trade and Storage segment. The gas was supplied to PGNiG’s 6.7 million customers in Poland and 17,000 customers in Germany, including households and industrial users. Approximately 4,000 PGNiG employees worked on ensuring an uninterrupted and secure service.

40 PGNiG Financial performance in 2013 The Trade and Storage segment reported a marked improvement in its operating efficiency, The Trade and Storage segment sells natural gas with operating profit coming in at PLN 325m, up imported from other countries and produced by PLN 524m on the previous year. from domestic fields. Imported gas is sourced Awards mainly from countries lying east of Poland (65% of This improvement was driven by higher margins ••30th GryfBud International Construction and demand), with gas volumes imported from on sales of high-methane gas. An increase in the Installation Trade Fair in Bydgoszcz – March countries to the west and south of Poland (ap- gas fuel tariff in March 2012 was not sufficient 24th 2012 – for the most attractive stand design proximately 11%) steadily increasing. Natural gas to benefit the margin. But what did help was the ••Invest Tor 2012 Investment Fair in the Province is sold through the distribution and transmission unit cost of imported gas, brought down in the of Bydgoszcz – March 17th–18th 2012 – for networks, and its sale is regulated by the Energy annex to the Yamal contract. Signed in November, e-Pasaż and eBOK electronic services Regulatory Office. it revised the gas supply prices for Poland, also retrospectively. An adjustment to the segment’s re- For its own needs, the segment uses three under- sult, made in the fourth quarter, to account for the ground gas storage facilities (in Mogilno, Wierzcho- revised gas import terms offset the losses incurred wice, and Husów). in the first three quarters of the year.

Responsible Energy 41 Customers

Activities promoting development of local communities – Pomeranian Gas Trading Division In 2012, PGNiG’s Pomeranian Gas Trading Divi- sion marketing specialists launched several initiatives under the ‘Eliminating Blank Spaces’ slogan, in an effort to boost further extension of the gas network to cover new areas with no gas infrastructure.

The key objective was to show local inhabitants that the environment can be protected by using The Lower Silesian Trading green energy. From all commonly used primary Division’s active efforts to improve fuels, such as coal, fuel oil and natural gas, the communication with customers latter is the most environmentally friendly energy We are aware that an attractive offer and ef- source. In Poland, after coal and crude oil, natural ficient customer service at the stage of agree- gas is the third most important primary fuel in ment execution are not the only elements that terms of consumption. Low natural gas consump- significantly contribute to the satisfaction of tion by Polish households is a result of different the modern customer. Thus, the Lower Silesian factors, one of which is limited access to the gas Trading Division launched eBOK, an efficient and system. user-friendly customer self-service platform, which allows customers registered under tariff As part of the ‘Eliminating Blank Spaces’ initiative, groups W-1.1 through W-4 to access information we held many meetings with residents of com- on gaseous fuel sales. munes with no gas infrastructure and conducted field work, which contributed to a positive decision The primary purpose of eBOK, the electronic Cus- and consent to receiving electronic documents on gas network rollout into those communes. tomer Service Point, is to provide professional and will then get email notifications on new invoices customised customer service accessible quickly together with key payment details. Original docu- and easily over the Internet. At eBOK.pgnig.pl, ments will be uploaded to eBOK as pdf files. The retail customers can perform operations on their key benefits of the eco-invoice include the ability account and check the status of consecutive pay- to browse all original copies of invoices as pdf files, ments. eBOK is also a modern solution supporting arranged by date, accessible from any place in the basic business processes, including invoicing, world on a 24/7/365 basis, with regular email no- settlements, reporting gas meter readings, and tification of new eco-invoices and their uploading managing customer feedback. Any feedback and to eBOK, email notifications on upcoming payment enquiries are received directly by the eBOK sup- dates, and access to information displayed on port team. The eBOK online service also features a eBOK on the current balance of gas payments, guide for customers of the Lower Silesian Trading including any past due payments. Division in the form of a frequently asked ques- tions (FAQ) section. All these features were tested and implemented at the Lower Silesian Trading Division and were then Another very useful eBOK feature are the SMS launched at the Upper Silesian Trading Division and notifications which inform customers of upcoming Greater Poland Trading Division, following the inte- payment dates, new invoices, etc. gration of the application with the billing systems used by those Divisions. The next step to improve the customer service system will be the implementation of an eco- In 2012, the eBOK platform developed by PGNiG’s invoice. Customers who log into the eBOK system Lower Silesian Trading Division had approximately 77,000 users, which included customers of the three Divisions. At present (August 2013), the num- ber of active eBOK accounts created by customers purchasing natural gas at the three Divisions is more than 130,000.

For more information on Internet communication with customers, see: “Internet communication with PGNiG customers”.

42 PGNiG Upgrading of the helium purification, liquefaction and storage unit at the Odolanów Branch The only source of helium, a non-renewable resource, is natural gas. More specifically, only certain helium-rich deposits. In 1977, PGNiG SA was the first non-US company to begin recov- ering helium, at its Odolanów nitrogen rejec- tion plant. Since 2009, the Company has also recovered helium at the Grodzisk Wielkopolski nitrogen rejection plant. New gas network rollouts: Chęciny and Sitkówka Nowiny communes – A modernisation project facilitating this was begun Carpathian Trading Division in March 2010 and ended in January 2012, and saw As the largest gaseous fuel supplier in certain a new hydrogen removal unit, helium liquefier and areas of the Kielce Province where new gas in- liquid helium storage tank placed in operation. frastructure is being constructed, PGNiG carries This upgrade has ensured reliable operation of the out communication and information activities for EU’s single helium unit and has made it possible to retail customers and businesses in a transparent process additional quantities of helium from the ni- manner, and in consultation with local self- trogen rejection unit in Grodzisk Wielkopolski, and government units. to refine it by removing excess hydrogen. Apart from enhanced efficiency, the modernised helium These activities require the full commitment and Apart from operating the information centres, we unit brings measurable energy savings, mainly use of all resources to conduct information and also distributed information materials to apart- resulting from a lower (by 40%) consumption of advertisement campaigns at the initial stage, and ments located in the direct vicinity of the planned electricity by the helium liquefaction system, as later, to acquire customers. As part of its work with gas distribution pipeline. well as reduced (by more than 80%) consumption the Chęciny and Sitkówka-Nowiny commune self- of liquid nitrogen in the helium storage system. government units, our activities were focused on: The area covered by the gas network rollout was a ••Making contact with residents by holding ‘blank space’ on the gas network map of the Car- Reliable and effective operation of the upgraded meetings directly in villages – at schools, of- pathian Trading Division in Tarnów. Thanks to the helium unit is particularly important to European fices, after-school clubs, fire stations etc. (ten campaign conducted in 2012 to promote natural customers in these times of disruption, expe- meetings), gas we directly called at more than 1,200 apart- rienced by other production plants around the ••Holding meetings with the representatives of ments located directly along the planned routes of globe. businesses located on the route of the planned gas pipelines. At the meetings, we spoke directly gas pipeline, with more than 700 commune inhabitants, all of Another project aimed at enhancing energy ef- ••Organising information centres open each week whom received dedicated information materials. ficiency was the modernisation of the natural gas at local self-government units (Chęciny and Moreover, relevant information was published in dehydration unit, completed in September 2012. Sitkówka-Nowiny), to provide a comprehensive the ‘Wiadomości Chęcińskie’ and ‘Głos Nowin’ local The project involved replacement of process heat- service to customers - providing general infor- newspapers, which are bought by most residents ers and alteration of the control system for the ab- mation on natural gas, issuing connection terms, and businesses in the area of the new gas infra- sorber replacement sequence. The resulting annual signing connection agreements, and signing structure. One noticeable effect of the information energy savings amount to more than 21,000 GJ. comprehensive agreements, etc, campaign was the fact that potential customers ••Disseminating knowledge on PGNiG SA by dis- made contact with the Carpathian Trading Division tributing fliers, posters and placing information units on their own initiative. on the websites of Commune Offices and in the local press. As a result of our information activities, potential customers submitted 152 requests for connection terms, 38 of which were submitted by local busi- nesses. Although the entire local gas network has not yet been placed in service, the local interest in gas supply services is significant.

We intend to continue our activities in the two communes and use the experience gained in new areas: Małogoszcz and Włoszczowa.

Responsible Energy 43 Customers

Internet communication with PGNiG customers In 2012, the Customer Service System Develop- Central Agreement with Poczta ment Section of the Gas Trading Department at Polska S.A. – several million złoty the PGNiG Head Office completed work on the saved creation of an Internet-based communication Over the last few years, the correspondence sent system for household customers of Polskie Gór- by Polskie Górnictwo Naftowe i Gazownictwo nictwo Naftowe i Gazownictwo. In line with our 2. Providing a simple, intuitive way of guiding the to its customers has been handled by Poczta corporate standard, we expanded the part of the customers to areas which might interest them, Polska. In 2012, the Customer Service Standard www.pgnig.pl website devoted to households, such as the Customer Service Centre search engine, Office at the Trade Department of the PGNiG DLA DOMU. the eBOK login screen or the eco-invoice service. Head Office launched, for the second time, a ten- der procedure for services concerning receipt, transport and delivery of mail to PGNiG custom- ers. Following the first tender procedure, an Agreement was signed with Poczta Polska S.A. in December 2008.

The tender negotiations, which continued until late 2008, concerned a number of terms related to outgoing mail collection points, proper prepara- tion of outgoing mail, adjusting the envelopes to the requirements of Poczta Polska S.A., planned volume of post to be handled, etc. The main objec- tive of the procedure was clear from the start – PGNiG wanted to leverage the economies of scale to reduce the unit cost of mail delivery, obtain the status of a key customer with Poczta Polska S.A. The project has been designed to provide retail 3. Adding a new feature, whereby the customers and ensure higher standards of service. customers with an easy and intuitive means of can send a message to a specific Customer Service accessing products and services which have been Centre using intuitive tools, such as interactive In January 2010, the PRZESYŁKA AGLOMERACJA introduced recently, such as the eBOK (electronic maps, which facilitates locating individual Cus- (URBAN MAIL) service was introduced as part of customer service office) or eco-invoices, or will be tomer Service Centres, thus allowing customers to a pilot scheme. The service, designed by Poczta introduced in the future. Another objective was to send their correspondence directly to the indicated Polska for its key customers, consists in receiv- facilitate Internet-based communication with the address. ing, transporting and delivering mail in urban customers and, thanks to the contact form avail- areas (county capitals and towns with populations able on the website, provide a unified communi- 4. Integrating messages sent by customers using exceeding 20,000). cations tool aligned with customer expectations, contact forms with the Contact Centre system as well as to integrate this tool with the newly to enhance correspondence management and In response to the needs of its customers, in implemented PGNiG Contact Centre system to response time, ensure more standardised replies, January 2012 Poczta Polska significantly expanded ensure appropriate customer communication and consistently high quality of customer commu- the area covered by the Urban Mail scheme. In quality standards. Finally, the project was to serve nication and timeliness, and create a history of consequence, more than 79% of the total volume as a tool through which Gas Trading Divisions could individual customers’ requests. of PGNiG’s assorted post is delivered through the communicate with their customers via the corpo- Urban Mail system, which is the cheapest service rate website and present their operations. 5. Allocating space on the corporate website to offered by Poczta Polska. To note, after using the specific Gas Trading Divisions (currently Trading Urban Mail for two years it is clear that the benefits We attained these objectives by: Divisions), allowing them to publish personalised of the discount policy, driven by mail volumes 1. Launching the following services concerning re- content relevant to their customers, such as news, increasing year after year, fully offset our efforts tail customers and individual Gas Trading Divisions announcements, features on the history of the and give us satisfaction at saving millions for the as part of the www.pgnig.pl website: Division, and presentation of its management Company each year. ••‘Find the nearest Customer Service Centre’; staff. The personalised content is managed directly ••‘Sign in to eBOK’; by each Gas Trading Division. To ensure proper ••‘View your eco-invoice’; management of the site, we organised training ••‘News from your gas distribution company’. courses for employees responsible for publishing The services are featured in the ‘Dla Domu’ the articles. (Households) area of the site, which acts as a hub rerouting customers so that they can access spe- 6. Creating and adapting Internet addresses so cific content or applications over the Internet. Their as to enable customers to find desired con- layout is based on our corporate website template tent more easily, for instance by launching and visual design, ensuring that the interface www.ebok.pgnig.pl and www.eko-faktura.pgnig.pl mechanism operates in a way that is familiar to users of our website. 7. Ensuring the customers’ safety by introducing security certificates for web pages containing sensitive data, e.g. eBOK or eco-invoices.

44 PGNiG Customer satisfaction survey The opinions of our customers are not only im- portant, but also a valuable source of informa- tion, which is why in 2012 PGNiG once again car- ried out a wide-scale comprehensive customer satisfaction survey, covering both households and business customers – large global companies and micro-enterprises alike.

The survey used a single, consistent methodology. Very good marks were given to the employees responsible for customer contact, i.e. Assistants/ As part of the project, we carried out interviews Agents (business customers) and employees at In addition, the discount on registered mail PGNiG with as many as 4,729 companies and 2,446 house- the Customer Service Centres (for businesses and has been receiving since January 1st 2011 has al- holds relying on our services. households). lowed us to save over one million złoty throughout 2012. With the end of the agreement between In 2012, the synthetic index describing satisfaction However, the Customer Service Centres were PGNiG SA and Poczta Polska S.A. fast approach- with PGNiG and accounting for all customer groups praised not only for their employees, but also for ing, in mid-2011 the companies began working on combined was 80%, up from 76% in 2011. overall operating efficiency. The respondents were preparation and execution of another agreement, the least satisfied with the price of services and with a view to maintaining continued receipt, Of all customer segments, retail customers are the tariffs. transport and delivery of mail. After settling the most satisfied with their gas supplier – the largest detailed terms, the agreement, which positioned percentage, an impressive 87%, admitted they In the opinion of our customers, the quality of PGNiG among Poczta Polska’s top key customers, were very satisfied or quite satisfied. Retail cus- our products and services and customer-oriented was signed on October 31st 2011, with effect until tomers are also more likely to recommend PGNiG approach (customer care and smooth cooperation) the end of 2013. as a gas supplier to someone else. are the two key drivers of customer satisfaction. PGNiG received good marks from customers in The charges for postal services are given in the Both households and corporate customers of both of these areas. In their opinion, PGNiG is both Common Mail Services Price List for Domestic PGNiG gave their highest praise to the following easy to work with and trustworthy. Most of our Delivery. PGNiG SA signed the agreement with the areas: respondents also believe that PGNiG is managed by proviso that each calendar year it would receive ••product – use of natural gas, efficient and competent staff. discounts defined in a separate annex. The size ••deliveries, of the discount depends on a number of factors, ••customer service agents, Overall satisfaction with PGNiG (percentage of re- including the declared volume of mail to be sent in ••quality of services and products, spondents who indicated they were ‘very satisfied’ a given calendar year, the type of outgoing mail, ••invoicing. or ‘quite satisfied’): the volume of outgoing mail sent from one collec- ••Retail customers – 87% (statistically significant tion point, as well as the execution of preparatory improvement relative to 82% in 2011) activities prior to sending. ••Corporate customers – 76% (up from 75% in 2011) ••Business customers – 76% (statistically signifi- cant improvement relative to 72% in 2011) ••Micro-enterprises – 76% (up from 72% in 2011)

Business customers believe that PGNiG outper- forms their electricity supplier in terms of reliabil- ity and honouring commitments, overall customer service quality, and clarity and transparency of procedures.

On the other hand, electricity suppliers are supe- rior with respect to prices, the flexibility of their of- fers, and the possibility of negotiating those terms of the agreement which are not related to prices.

The best part of PGNiG’s offer is the product itself – natural gas, which receives the highest praise from all customer groups.

Responsible Energy 45 Shale Gas

Joint shale gas projects by PGNiG and GRUPA LOTOS On September 17th 2012, PGNiG and LOTOS Shale gas workshops for local self- signed an agreement on joint exploration for government and the media conventional and unconventional oil and gas. To meet the expectations of the local com- munities and the local self-government, in July 2012 PGNiG conducted a series of educational workshops.

The first series of workshops was carried out in Launch of a website devoted to the Gdańsk Province (Gdańsk, Olsztyn, Krokowa, shales and Starogard Gdański, on July 11th, 13th, On September 26th 2012, a new website was 19th and 20th, respectively). The choice of the launched by PGNiG, devoted to shale gas explo- locations was not accidental. Work is the most ration and production. The new website is a part advanced in PGNiG’s Wejherowo licence area. of the nationwide information campaign con- The results so far give hope for commercial gas ducted by PGNiG SA, the key purpose of which is production. Besides local self-government rep- to disseminate knowledge of shale gas and pro- resentatives, the workshops were also attended vide reliable information on all related aspects. by journalists. The initiative to organise the workshops was spurred by the untrue informa- The polishshalegas.pl website not only provides tion on shale gas production which has from the most important news and all basic informa- The objective of this agreement is to intensify time to time appeared in the media. tion on shale gas and its exploration and produc- exploration work under the seven licences held tion technologies, but is a source of knowledge by PGNiG in the provinces of Szczecin, Gdańsk, During the workshops, representatives of local on all the environmental, legal and economic Olsztyn and Lublin. Pursuant to the agreement, self-governments and journalists had an oppor- aspects of its extraction. Ultimately, the website Grupa LOTOS will obtain interests in each of the tunity to become acquainted with the hydraulic will also include a collection of reports and licences, but PGNiG keeps the operator status for fracturing technology and to find out what publications on gas, as well as commentary by all of them. substances are contained in the fracturing fluid. scientists and experts. As one of its key features, The workshop participants also learned about the website will include PGNiG’s reports and The Management Boards of PGNiG and LOTOS the legal aspects of shale gas exploration and other publications prepared on the basis of ex- were of a single mind about the fact that the production, including the related rights of the ploration work that has already been completed. agreement is of considerable importance for local self-governments and the obligations that These will encompass mainly the practical rather Poland’s energy security and that it should must be met by the exploration companies. than the theoretical research and analyses of the translate directly into higher domestic produc- environmental impact of exploration work. The tion of both oil and gas. Both PGNiG representatives and independent plan for the website envisages the possibility of experts took part in the workshops. other parties contributing to its content. Under the agreement, the two corporations plan to set up a working team whose task will be to During the workshops, examples of long-standing define the detailed technical, economic and legal relationships with local communities in natural aspects of their work together. gas production in Pomerania were presented, with a particular focus on the benefits to the local In addition, PGNiG and LOTOS are interested in communities which may also arise from potential entering into cooperation as far as trading in future production of shale gas. Altogether, the the crude extracted by PGNiG is concerned. The workshops were attended by nearly 150 people. first samples of the crude have already been The workshop participants pointed to the fact delivered to the Gdańsk refinery, where they that education on shale gas, as well as unre- will be analysed. If the results of these analyses strained discussion of the issue, help build aware- are positive, LOTOS will consider purchasing the ness and reduce distrust. Despite the numerous crude from PGNiG. publications which appeared in 2012 and earlier, there is still considerable demand for unbiased knowledge about shales, particularly at the local community level. The existence of such demand was indicated not only by the results of surveys carried out among the workshop participants, but also by the experience of the PGNiG representa- tives working in the local information points which the Company opened as early as in June and July in selected communes of the Gdańsk Province (including in Krokowa, Gniewino, and Liniewo). PGNiG will be organising the next series of workshops and open meetings with residents of the areas where exploration work is being or will be conducted. The workshop participants also received information brochures.

46 PGNiG PGNiG in 12 Blue Gas Programme projects As the Leader of the Polish Technologies for Shale Gas Consortium, Polskie Górnictwo Naftowe i Gazownictwo SA submitted to the National Centre for Research and Development 12 applications as part of the Blue Gas Pro- gramme competition, for a total budget amount of approximately PLN 219m. Half of that amount will be covered by a subsidy from the National Centre for Research and Development, and the other half will be provided by industry partners in the Consortium.

By participating in the Programme, PGNiG will The Blue Gas – Polish Shale Gas Programme was PGNiG SA obtains the Shale Gas have influence on developing innovative techno- announced in September 2012 by the National Company of the Year award logical solutions, especially pro-environmental Centre for Research and Development and the On January 19th 2012, during the Shale Gas ones, that can find practical application in future Industrial Development Agency. The objective Awards gala, Polskie Górnictwo Naftowe gas exploration and production. of the Programme is to provide support to large i ­Gazownictwo SA won the Shale Gas Company of cross-disciplinary research and development the Year award from Petroleum Club Magazine. Apart from PGNiG, the Consortium includes other projects, involving the development of solutions Polish exploration and production operators, which will lead to the dissemination of innova- The award was granted to the Company in rec- such as Lotos Petrobaltic (industry partners), tive technologies for shale gas production. The ognition of its overall organisational effort made the AGH University of Science and Technology, main objective of the Blue Gas Programme is as part of operation of its shale gas exploration the Oil and Gas Institute, the Gdańsk University consistent with the strategic plans of PGNiG projects. The distinction was particularly impor- of Technology, and the Warsaw University of to intensify exploration for and production of tant given the ambitious shale gas exploration Technology (scientific partners). hydrocarbons from unconventional deposits. The plan being implemented by PGNiG SA and the Programme covers three main thematic groups: challenges involved in these exploration plans, Currently, only PGNiG is present in all the ••Exploration for, appraisal, stocktaking and faced not only by the Company. competition areas, while the other Consortium detailed description of potential shale gas members are participating in selected projects. reserves and their classification, As was pointed out during the award ceremony, This is attributable to the different business ••Development and production of unconven- Europe’s energy security may depend on Polish needs of the industry partners, and reflects the tional reserves and technological aspects of shale gas resources. Poland has been at the competencies of the universities and institutes. obtaining access to unconventional resources, forefront of shale gas exploration developments. In those projects where besides PGNiG other and In the medium and long term, shale gas may re- industrial partners are present, the Company’s ••Environmental protection. duce the dependence of EU countries on imports financial contribution is 1/2 or 1/3 of the budget. The above groups are additionally classified into of energy carriers. Depending on the level of the contribution, 12 detailed thematic areas. PGNiG will obtain access to the full results of the work (1/2 of the budget) or will have the pos- The entire Programme budget allocation to sibility to apply the results in practice in future consortiums including large corporations is hydrocarbon production (1/3 of the budget). In PLN 220m, with PLN 110m a subsidy from the Na- the majority of cases, PGNiG makes its contribu- tional Centre for Research and Development, and tions in non-monetary form, which addition- PLN 110m a (monetary or non-monetary) con- ally enhances the attractiveness of the project. tribution from the industrial parties. Optionally, PGNiG’s in-kind contributions might include, this amount can be doubled by a commercial for instance, making available to the scientific loan from the Industrial Development Agency. parties the results of its core analyses, 2D and 3D 12 content supervision teams were set up during seismic surveys, analyses of production materi- the preparation of the competition applications. als, etc. The competition winners are to be an- These teams included scientific representatives, nounced within a month or two. If the decision responsible for the scientific and research con- of the competition’s organisers is positive, the tent, as well as industrial representatives, whose next stage will consist in the Consortium Leader task was to adjust the content to the industry’s (PGNiG) signing detailed agreements on project needs. Each application was prepared by a group financing by the National Centre for Research of a dozen or so scientists led by prominent and Development. This can be expected to take figures in the given area, working in close coop- place in the first quarter of 2013. The next stage eration with the industry representatives. Over will involve implementation of projects which 100 academics, mostly professors, have been successfully obtain financing from the National involved in our Consortium’s entire project. Centre for Research and Development. For our most recent shale gas developments see polishshalegas.pl

Responsible Energy 47 Environment

48 PGNiG For the PGNiG Group Companies, environmental protection is a matter of paramount importance, and their ecological efforts primarily consist in managing work processes in an effective, efficient and environmentally friendly manner. The great commitment of the management staff as well as proper preparation of our employees translates into our ability to demonstrate and improve the environmental performance of the PGNiG Group and its products and services, in line with the requirements of international standards.

Responsible Energy 49 Environment

Implementation, maintenance and improvement of EMS and HSE A majority of the PGNiG entities have imple- mented, certificated and maintain the Environ- mental Management System (EMS) based on the Table 1 – Environmental Management Systems at the PGNiG Group PN-EN ISO 14001 standard, which is in many cas- (end of 2012) es integrated with other systems, such as qual- Date ity, HSE or information security management implemented/ Date systems. The only entities where the EMS is yet PGNiG entity certified Certifying entity recertified to be implemented are the Gas Trading Divisions PGNiG SA branches (currently Trading Divisions) and PGNiG Tech- Head Office July 2009 Det Norske Veritas July 2012 nologie, Naftomet Branch, in Krosno. It should Odolanów Branch May 2003 LRQA December 2012 be noted, however, that 2012 saw the beginning Sanok Branch* November 2004 Det Norske Veritas November 2010 of preparations to implement a system-based Zielona Góra Branch* April 2002 TÜV Nord April 2011 management model at these entities. Lower Silesian Gas Trading Division none Upper Silesian Gas Trading Division none In 2012, the first steps were also taken to imple- Carpathian Gas Trading Division none ment the environmental management system in Mazovian Gas Trading Division none the Gas Trading Divisions. The Environmental Pro- Pomeranian Gas Trading Division none tection Division in Warsaw conducted preliminary Greater Poland Gas Trading Division none environmental reviews, including an analysis of Strategic companies of the PGNiG Group environmental documents, information on existing Dolnośląska Spółka Gazownictwa May 2005 Det Norske Veritas June 2011 environmental impacts, as well as fulfilment of Górnośląska Spółka Gazownictwa October 2004 Polskie Centrum Badań October 2010 legal requirements set forth in applicable regula- i Certyfikacji SA tions, interviews with authorized employees, and Pomorska Spółka Gazownictwa SA December 2005 Polski Rejestr Statków S.A. June 2008 field trips. At the moment, the individual Divisions of Gdańsk fulfil most of the requirements of the ISO 14001 Karpacka Spółka Gazownictwa September 2009 UDT-CERT n/a standard in full or in part. Mazowiecka Spółka Gazownictwa SA June 2012 DEKRA Certification Wielkopolska Spółka Gazownictwa SA May 2011 TÜV SÜD n/a The next step was to summarize the results of the PGNiG Termika December 2007 Det Norske Veritas December 2010 reviews carried out at all of the Divisions. A sum- Core companies of the PGNiG Group mary report was created, which specified the tasks Geofizyka Kraków* November 2001 Bureau Veritas BVQI June 2012 that will need to be performed to implement the Geofizyka Toruń* January 2004 LRQA March 2011 environmental management system in the Divi- Poszukiwania Nafty i Gazu Kraków* November 2009 Bureau Veritas BVQI n/a sions. In addition, proposals concerning the scope Poszukiwania Nafty i Gazu Jasło* November 2001 TUV Munich December 2010 and structure of the Environmental Management Poszukiwania Nafty i Gazu NAFTA of Piła* June 2000 TUV Munich December 2010 System at the Trading Divisions were made. Poszukiwania Naftowe Diament August 2003 TUV Munich January 2010 TÜV SÜD Poland ZRG Krosno January 2006 TUV Rheinland October 2012 Non-core companies of the PGNiG Group Gazobudowa Zabrze September 2001 UDT-CERT of Warsaw October 2010 Naftomontaż December 2004 TÜV SÜD Munich October 2011 Naftomet none ZRUG May 2006 TUV Saarland e.V. May 2012 GAZOPROJEKT March 1998 Polskie Centrum Badań i January 2012 Certyfikacji SPVs of the PGNiG Group INVESTGAS December 2001 TUV Munich November 2012 *Companies with an HSE (Health, Safety and Environment) system.

To optimise the environmental management In 2013, following the preliminary reviews, as the system it was proposed to implement the environ- next stage of preparation for the implementation mental management system covering all Trading of the EMS in the Trading Divisions, the strategy Divisions. To minimize the costs of implementing for the EMS implementation and a detailed work the EMS, it was also proposed to use system docu- schedule were determined, and preparation of ments functioning within the EMS at the PGNiG documents began. Head Office to develop a common environmental policy and system documentation for all Trading In summary, 2012 saw the end of preparations for Divisions of PGNiG SA. Coordination and supervi- the implementation of the environmental manage- sion of the functioning of the system (audits, ment system at the Trading Divisions. inspections) would be supported, among others, by employees of the Environmental Protection Divi- sion of the Geology and Operation Branch and the Trading Department of the PGNiG Head Office.

50 PGNiG At all PGNiG entities that had environmental man- agement systems in 2012, as many as 2,790 initial periodic, and advanced training courses were held.

At the PGNiG Head Office, the periodic training was held on an e-learning basis. The training was devoted chiefly to matters related to the EMS com- pliant with the PN-EN ISO 14001:2005 standard. The training was completed by 531 employees, or nearly 70% of the Head Office staff (total work- force: 759 employees). All employees completed In accordance with the main principles of the the training with positive results. As many as 263 PN-EN ISO 14 001 standard, environmental man- people, or nearly 50% of the employees participat- agement systems are proof that a company has ing in the training, had 100% correct answers, and assumed certain environmental obligations. The 147 completed the training with a 95% score. The EMS applied by the PGNiG Group companies shows Head Office gave initial training to a total of 73 that they seek to maximally reduce their negative people as part of their professional duties. environmental impact, comply with all environ- mental requirements stipulated in the legislation In 2012, the PGNiG Group held 43 advanced EMS In 2012, Mazowiecka Spółka Gazownictwa (now and regulations, and are committed to continuous training courses, making a total of 16 more than in Mazowiecki Oddział Polskiej Spółki Gazownictwa) improvement in environmental performance. the previous year. A total of 958 employees were completed the certification process for the Envi- trained, or nearly 25% fewer than in 2011. It should ronmental Management System compliant with One of the basic requirements of the PN-EN ISO be noted that at a majority of the companies the PN-EN ISO 14001 standard, implemented in 14001 standard, which enables the implementation presented data refers to a specific group of people June 2011. All seven entities of the PGNiG Group of these commitments, is to identify any environ- who repeatedly attend specialised training dedi- where a recertification process was required in mental emissions referred to in the regulations as cated to environmental management systems. 2012, namely the PGNiG Head Office, the Odola- “environmental aspects”. Identified, evaluated and nów Branch, Karpacka Spółka Gazownictwa (now presented in a list, environmental aspects are the All PGNiG Group entities which have implemented Karpacki Oddział Polskiej Spółki Gazownictwa), foundation upon which environmental objectives environmental management systems in accordance Investgas, ZRG Krosno, Oddział ZRUG of Pogórska within the functioning of environmental manage- with the PN-EN ISO 14001 standard are required to Wola, and Gazoprojekt, fulfilled the obligations ment systems are built. Streamlining this area is develop a schedule and procedures for conduct- for maintenance of the authorisations previously therefore one of the key issues required for carry- ing internal audits. Internal audits, in addition to granted to them. The exception is Pomorska ing out analyses in all PGNiG Group companies and reviews carried out by senior management, act as Spółka Gazownictwa (now Pomorski Oddział for selecting areas of particular interest to the oil the main control mechanism for companies as they Polskiej Spółki Gazownictwa), which, as in previous and gas industry. make it possible to evaluate compliance with the years, decided not to conduct the recertification. PN-EN ISO 14001 standard and the effectiveness of However, it still has a functioning environmental In accordance with the requirements of the PN-EN the environmental management system, as well as management system. ISO 14001 standard, an EMS training system has related documentation. been designed for the individual entities of the It should be emphasized that in 2012, the PGNiG PGNiG Group. The system encompasses at least Pursuant to the PN-EN ISO 14001 standard, internal Group was joined by Termika PGNiG, which has three different training types. audits may be performed by company employees had a certified environmental management system or by specialised external companies. In 2012, 407 since 2007, and in 2010 it conducted a recertifica- The first type is introductory training for new certified internal auditors participated in auditing tion audit, which again confirmed the conformity employees, designed to explain the basic issues the environmental management system at the of the system with the PN-EN ISO 14001 standard. related to the EMS, requirements of the PN-EN PGNiG Group. This was 93 more than in 2011. ISO 14 001 standard, and the functioning of the In 2012, the number of companies with certified environmental management system in a given According to the data collected in 2012, a total of environmental management systems within the PGNiG Group entity. Training of the second type 517 internal audits were carried out at the PGNiG PGNiG Group rose to 22. is conducted periodically to remind employees, Group entities, which is 38 audits fewer than in among other things, of the importance of acting 2011. Generally, the frequency of internal audits On the other hand, 2012 saw no change in the in accordance with the Environmental Policy and may depend of their nature and the extent of EMS number of the PGNiG Group entities having in place other procedures designed in connection with the implementation at a given PGNiG Group entity. an international health, safety and environmental implementation of the EMS. As part of periodic protection system (HSE). Work on the development training, employees are also informed about sig- and implementation of an operator HSE System at nificant, actual or potential, environmental impacts PGNiG SA was under way. Representatives of the resulting from employee activities. Advanced Sanok and Zielona Góra Branches and employ- courses are organised as part of professional ees of the Environmental Protection Division at improvement of the key staff and internal auditors the PGNiG Head Office participated in working supporting the functioning of the environmen- meetings on the development of HSE standards tal management system at the individual PGNiG for environmental protection in the exploration, Group entities. production and tankless storage of hydrocarbons at PGNiG SA.

Responsible Energy 51 Environment

Reducing emissions of greenhouse gases and other air pollutants Air pollution emissions for 2012 are presented for the PGNiG Group companies exclusive of PGNiG Termika, which joined the Group in 2012 The PGNiG companies emit air pollutants in the Carbon dioxide coming from fuel combustion in but, given the different nature of its business, form of gases and particulates in the course of heat sources and industrial processes accounts has not been taken into account when aggregat- their hydrocarbon exploration and production, and for approximately 90% of all emissions, followed ing the companies’ emissions. gas distribution operations, as well as investment, by methane (approximately 9.4%), and other PGNiG Termika is Poland’s largest producer of heat upgrade, overhaul and maintenance projects. substances produced mainly in industrial pro- and electricity in high-efficiency cogeneration. The The pollutants are a product of burning of fuels in cesses. Methane is released into the atmosphere company operates a number of plants in Warsaw: internal combustion engines of vehicles and ma- during routine and emergency discharges of gas the Kawęczyn and Wola Heating Plants and the chines, in industrial processes and heat sources, in from pipelines and distribution network facilities, Siekierki and Żerań CHP Plants, as well as the processes involved in the production and process- production facilities of the hydrocarbon production Pruszków CHP Plant in Pruszków. ing of crude oil and natural gas at the production divisions, and during siphoning of oil or gas from facilities and in the distribution network and gas wells by the exploration companies. The companies of the PGNiG Group are cutting pipelines, as well as in auxiliary activities (painting, down their emissions of greenhouse gases and welding, wood processing, galvanic processing, In aggregate, in 2012 the PGNiG companies other pollutant gases and particulates into the etc) at all companies, including in particular the released approximately 432,000 Mg of pollutants atmosphere by: service divisions of PGNiG Technologie. into the atmosphere. For information on their key ••using gas as a low-emission fuel, types and emission volumes (in excess of 1 Mg), ••monitoring the consumption of fuels, Emissions into the atmosphere may be controlled see Table 3. ••reducing the energy intensity of their techno- (through point and stationary emission sources) or logical processes, uncontrolled (e.g. in the painting process). The aggregate amount of pollutants released into ••upgrading or replacing the sources of heat used the atmosphere went down 35% relative to 2011, for their own needs. The numerous processes operated by PGNiG com- which is attributable to lower carbon dioxide emis- panies produce more than one hundred and forty sions (Figure 2 – logarithmic scale). 2012 also saw a different substances released into the atmosphere. year-on-year decline in emissions of the following The pollutants released into the atmosphere substances, produced mainly by fuel combustion

include mainly gases (primarily SO2, NOx, CO, CO2, in heat sources and industrial processes: sulphur

and CH4), particulates (from fuel combustion, silica dioxide (down 4.7%), carbon oxide (down 22.8%)

particulates, carbon and graphite particulates and nitrogen oxides ( NO2 equivalent) (down 11%), and others), hydrocarbons, aldehydes, alcohols, as well as particulates (down 18.5%). The lower acids, heavy metals, metallic and non-metallic emissions are due to reduced volumes of fuel elements. Air pollutants released as a result of burned by gas compressor stations and engine fuel combustion in internal combustion engines of compressors. vehicles are not included in the total pollution load as there is no up-to-date data on emission factors (EF) for calculation of emissions of pollutants from engine fuels.

Figure 2 – Aggregate volumes of main gas pollutants released into the atmosphere in 2010–2012 (thousand tonnes, logarithmic scale)

241 2012 Carbon 312 2011 monoxide 278 2010

579 Nitrogen 649 dioxide 601

2,327 Sulphur 2,442 dioxide 1,795

387,789 Carbon 621,148 dioxide 621,988 10 100 1000 10 000 100 000 1 000 000

52 PGNiG Figure 4 – Volume of methane emissions generated by the PGNiG Group companies in 2010–2012 (in Mg)

17,154 6,419 16,823 83 2012

13,649 6,292 15,231 566 2011

19,477 4,247 15,445 431 2010

Distribution Production Odolanów Branch Exploration

Table 3 – Main types of pollutants released into the atmosphere in 2012 In 2012, CO emissions from our facilities covered Substance Volume [Mg] 2 by the CO emission trading scheme reached carbon dioxide 387,789.156548 2 Based on the classification of installations included 85,470 Mg. In the above trading period, installa- methane 40,479.535241 in the EU ETS, PGNiG’s installations generating CO tions participating in the scheme were those of the sulphur dioxide 2,326.688025 2 emissions qualify as E.1.1 operations (combustion Odolanów and Zielona Góra Branches, as well as the nitrogen dioxide 578.796877 installations other than units for incineration of Mogilno Underground Gas Storage Cavern Facility. carbon oxide 241.00375 hazardous or municipal waste)*, and currently the aliphatic hydrocarbons 124.085437 following four PGNiG SA facilities are covered by the Given the prospects of additional PGNiG installa- xylene 13.079246 EU ETS as their rated thermal input exceeds 20MW: tions being included in the EU ETS in 2013–2020, ethane 12.870564 ••Mogilno Underground Gas Storage Cavern Facil- namely the LMG Oil and Gas Production Facility and hydrogen sulfide 10.555662 ity (number under the Polish National Allocation the Wierzchowice Underground Gas Storage Facil- total particulates 9.818129 Plan (KPRU): PL-898-08) ity, which to date have not been allocated free CO2 aromatic hydrocarbons 8.761550 ••Odolanów Branch – boiler house and process emission allowances, work is underway to obtain gasoline 7.284577 gas heaters (number under the Polish National the required permits to participate in the EU ETS propane 4.323178 Allocation Plan (KPRU): PL-562-05) and to review the facilities in terms of their entitle- crude oil hydrocarbons 2.808625 ••Odolanów Branch – gas compressor station ment to free allowance allocation. methyl ethyl ketone 2.486581 (number under the Polish National Allocation ethyl alcohol 2.225661 Plan (KPRU): PL-950-08) Under the second trading period, from 2008 to toluene 2.209559 ••Zielona Góra Branch; Dębno Oil and Gas Produc- 2012, total emissions from the installations reached butyl acetate 2.090081 tion Facility (number under the Polish National 408,017 Mg of CO2, against the free allowance allo- methyl alcohol 1.941200 Allocation Plan (KPRU): PL-563-05) cation of 499,910 Mg. The allocation for 2013–2020 aliphatic alcohols 1.781472 has not yet been approved by way of a regulation butane 1.723426 of the Minister of the Environment. acetone 1.317924 butyl alcohol 1.104220 * Types of installations covered by the Emission Trading other 5.029656 Scheme and threshold values referring to the production Total 431,634.293495 capacities of the installations are based on the Regulation of the Minister of the Environment of July 27th 2009 Methane emissions generated by the PGNiG (Dz. U. No. 136, item 1120). companies in 2012 totalled 40,479.535 Mg, up 12% relative to 2011 (Figure 4). This growth was largely driven by an 18% increase in methane emissions from the distribution networks and a 10% increase Table 5 – Carbon dioxide emissions from the installations covered by in emissions produced in the course of nitrogen re- the EU ETS in 2012 moval at the Odolanów Branch (venting emissions). number assigned under the emission allowance actual emissions balance On the other hand, the volumes of methane emis- Installation National Allocation Plan allocation [Mg] in 2012 [Mg] [Mg] sions generated by the hydrocarbon production Mogilno Underground Gas Storage Cavern divisions as well as losses (venting emissions, e.g. Facility PL-898-08 26,642 10,311 16,331 from crude oil tanks) went up by a mere 3%, while PGNiG SA Odolanów Branch PL-562-05 11,181 12,678 -1,497 at the exploration companies methane emissions PGNiG SA Odolanów Branch PL-950-08 30,495 31,856 -1,361 measured during the siphoning of oil or gas from PGNiG SA Zielona Góra Branch, wells declined by more than 112%. Dębno Oil and Gas Production Facility PL-563-05 31,664 30,625 1,039 99,982 85,470 14,512

Responsible Energy 53 Environment

Water and wastewater management The supply shortage and deteriorating quality of water from domestic sources represent impor- tant problems for the PGNiG Group in terms of quality, economic, and environmental aspects, which is why steps aimed at protecting water resources are of vital importance. PGNiG Group companies draw water from their own ground- water intake points, or directly from the mains.

This water is used for social needs and for indus- trial processes. Changes in water consumption that are observable from year to year are explainable primarily by the amount of process water used (i.e. the number of exploration and investment projects executed).

In 2012, mains water consumption decreased from 508.14 thousand cubic metres to 331.51 thousand cubic metres, while water intake from the com- pany wells slightly increased (see Figure 6).

Figure 6 – Ground and underground water drawn in 2010–2012 by supply source (in thousands of cubic metres)

347.14 332.54 2012

508.14 326.08 2011

438.73 330.66 2010

Mains water Water from company intakes (surface and ground sources)

Wastewater generated by PGNiG Group entities Table 7 – Volumes of wastewater generated by PGNiG Group entities is discharged to the wastewater system (under in 2012 contracts with water supply and wastewater col- Wastewater discharged into the wastewater Wastewater discharged into water lection operators), to groundwater or into the soil Organisational unit collection system [in cubic metres] and soil [in cubic metres] (in compliance with existing water permits), fol- Head Office 7,797.00 0.00 lowing their pre-treatment or full treatment at the Gas Trading Divisions 17,739.59 814.00 Group entity’s own wastewater treatment plants. Production 23,244.00 8,305.00 Household and industrial wastewater is discharged Distribution 177,091.80 0.00 into the wastewater collection system. Rainwater Geophysical Service Divisions 52,473.60 0.00 collected on the premises and from access roads Exploration 44,900.80 0.00 is either discharged into the wastewater system or Other companies 35,807.13 674.00 into the groundwater and soil. TOTAL 359,053.92 9,793.00

The total volumes of wastewater discharged into the wastewater collection system, transported In 2012, the volume of wastewater discharged into from Group entities’ own septic tanks to waste- the water and soil decreased, as did the volume of water treatment plants, as well as discharged into wastewater discharged to the wastewater collec- groundwater and soil is presented in Table 7. tion system (see Figure 8).

54 PGNiG Figure 8 – Volumes of wastewater generated by PGNiG Group entities in 2010–2012, by place of discharge (in thousands of cubic metres)

9.97 507.94 2012

34.85 431.51 2011

29.12 490.96 2010

Wastewater discharge to groundwater and soil Wastewater discharged to wastewater collection system

Waste management All PGNiG Branches and Companies generate waste; they operate in compliance with legal requirements pertaining to waste manage- ment, having obtained necessary permits and decisions.

The waste management objective of PGNiG Group Figure 9 – Aggregate volumes of generated waste (excluding unsorted entities is to reuse waste or reduce its volume to municipal waste) in 2012 the minimum.

All Group entities which have environment man- agement systems in place have implemented ef- fective waste management procedures. Following these procedures, the Group has managed to: Landfilling 32% Recovery 45% ••Identify environmental aspects related to waste, by determining all areas where waste is gener- ated and contamination may occur, ••Determine a method for minimising the volume of waste, primarily including waste sent to landfill sites (which is to be limited to unsorted municipal waste only), ••Determine preferred waste handling methods; preference is given to waste recovery (limited only by the availability of processing technolo- gies or, sometimes, by financial constraints); Processing 23% this is followed by pre-sorting, which results in waste that is ready for recycling.

Waste processing that requires specific precautions The volume of waste generated in 2012 dropped or measures is conducted by specialist contrac- by about 6% in comparison with the figure for tors holding the necessary licences (administrative 2011. Figure 10 presents methods of waste man- approvals), selection of which is handled by the agement across the Group in 2010–2012, except Group entities themselves. for drilling waste.

A total of 84.7 thousand Mg of waste was gener- ated by the entire PGNiG Group in 2012, excluding municipal waste submitted for recovery, process- ing or landfilling (Figure 9).

Responsible Energy 55 Environment

Figure 10 – Drilling waste management methods in 2010–2012 (%)

32 23 45 2012

17.62 37.70 44.68 2011

7.89 76.07 16.05 2010

Landfilling Processing Recovery

The total amount of waste generated annually In 2012, over 21 thousand Mg of drilling waste In drilling waste cleaned of environmentally by PGNiG Group entities depends on the amount was landfilled. For this purpose, we mainly used harmful substances, materials containing heavy of drilling waste generated by the Exploration our own landfill site in Wronowo, which meets all metals and hydrocarbons, the content of those Companies and Hydrocarbon Production Branches. legal requirements. The owner of the site is Spółka contaminants is within the limits permitted for In 2012, drilling waste (the rock cuttings and drill- Poszukiwań Diament of Zielona Góra (currently their content in soil. Accordingly, contaminant-free ing mud from oil and gas well drilling) accounted owned by Exalo Drilling). The site accepts solid and drilling waste is treated to give it the consistency for ca. 64% of all waste generated by the PGNiG liquid drilling waste, generated by both Diament of natural soil and then used for purposes of land Group (including unsorted municipal waste) – 14% and the other PGNiG Exploration Companies and reclamation (e.g. at landfill sites). Entities directly less than in 2011. Bits of rock are separated from Hydrocarbon Production Branches. involved in waste recovery include PNiG Jasło drilling mud on vibrating screens or by other (currently owned by Exalo Drilling), which reuses devices, such as desanders and desilters. Waste drilling waste at the excavation pit in Tarnogród. drilling mud is generated when circulation mud In 2012, 48% of total drilling waste generated was is exchanged for another kind (as required by managed, 12 thousand Mg less than in 2011. the drilling technology), or when well drilling is completed and drilling fluid is no longer necessary. Drilling waste also includes process water mixed with drilling mud, cement slurry and other fluids from well treatments. The different drilling waste management methods used in 2010–2012 are shown in Figure 11.

Figure 11 – Drilling waste management methods in 2010–2012 (in thousand Mg)

21.42 8.32 27.88 2012

17.39 9.98 40.16 2011

15.12 9.68 36.55 2010

Landfilling Processing Recovery

56 PGNiG 14.4% of total drilling waste generated in 2012 was processed (mainly incinerated). The percentage share of processed drilling waste in total drilling waste generated did not change when compared with the 2011 figure. However, the quantity of processed drilling waste decreased by 16% year on year.

A material proportion of waste generated by the Figure 12 presents efficiency ratios for environ- PGNiG Group entities (excluding unsorted municipal mentally friendly waste management initiatives, waste) represents waste from crude oil refining, relating to the waste managed (recovered = sold) natural gas purification, containing sulfur and and neutralised (including by landfilling) in 2012, phenols (14.4%), as well as repair and construction excluding unsorted municipal waste, but includ- waste generated during road repair and recon- ing drilling waste. The figure directly indicates struction, rubble, concrete and scrap metals gener- the directions of initiatives undertaken by the ated during construction, repair and replacement individual Branches and Companies of the PGNiG of pipelines (12.8%). Another significant waste type Group in the area of waste management. As seen is sorted municipal waste, representing 1.53% of in Figure 12, in 2012 it was only at the Geophysical total waste generated, and waste generated during Service Divisions, Exploration Companies and the the abandonment operations on waste pits (1%). Head Office that the quantity of waste recycled or sold was higher than that of waste neutralised. The Exploration Companies were able to achieve such a high ratio thanks to their economic use of drilling At PGNiG SA, unsorted municipal waste (code waste, while the Geophysical Service Divisions 200301) represents 5% of municipal waste gener- made economic use of scrap metal and paper. ated at the Company. On the other hand, at the However, the quantity of managed waste does not Head Office and Gas Trading Divisions, the quantity always translate to profit, because a certain pro- of unsorted municipal waste was five times higher portion of waste is delivered for recovery for free, than the quantity of the other waste generated. or Group entities bear the costs of waste transport It is only at the Production Divisions that unsorted and acceptance for processing. municipal waste represents 3% of municipal waste generated.

Figure 12 – Efficiency ratios for waste management initiatives at the PGNiG Group entities in 2012

5 4.88

4

3

1.97 2

1.23

1 0.40 0.18 0.26 0.49 0 Trade Gas Trading Hydrocarbon Exploration Geophysical Service Other Head Office Divisions Production Branches Companies Divisions

Responsible Energy 57 Environment

Pro-environmental projects, capex The PGNiG Group implements a number of In 2012, the focus of pro-environmental work was Upgrade work in 2012 focused on air pollution projects designed to benefit the environment, on counteracting air pollution, with the highest mitigation, wastewater management and water many of which contribute to a reduction in capex (87.7% of the total figure) incurred by the protection, as well as waste management. Work atmospheric emissions, the safety of land, soil Gas Distribution Companies (currently branches undertaken by Gas Distribution Companies (whose and underground water, as well as reductions in of Polska Spółka Gazownictwa). The funds were expenditure represented 95.2% of the total the amount of generated waste. These include spent on construction of new and replacement upgrade capex) included boiler house recon- projects to replace cast-iron pipelines, purchase of existing cast-iron pipelines with PE pipelines, struction, replacement of CO boilers, upgrade of advanced drilling equipment, feed gas into pipe- reduction of atmospheric emissions of methane, pressure reduction stations, cathodic protection of lines in an emission-free way, purchase mobile roll-out of the gas supply system in off-gas areas gas pipelines, and reconstruction of gas pipeline double-shell fuel storage tanks, etc. (which will contribute to reducing pollutant emis- network and connections. Work undertaken by sions), purchase of CNG-fuelled cars, construction Hydrocarbon Production Branches (4.1% of total As regards investment and repair work, the follow- of rainwater and meltwater drainage and pre- capex) included replacement of storage tanks for ing projects are worthy of note: treatment systems, and reconstruction of pressure produced water, reconstruction of a produced ••purchase and installation of double-shell storage reduction stations. water injection station and loading facilities, as tanks, vibrating screens, centrifuge units, wash- well as upgrade of infrastructure and facilities at ers, oil containers, tanks for waste, produced The second largest capex (6.2% of the total) on production sites. Exploration Companies, Trading water and methanol, purchase of a municipal air, soil and underground water protection, water Divisions and Geophysical Service Divisions un- waste incinerator, purchase of a wastewater injection facilities and storage tanks for produced dertook upgrades of buildings along with central treatment container, etc., water was incurred by the Hydrocarbon Produc- heating installations, process facilities, including ••construction of water injection facilities, conver- tion Branches. the vibrating screen repair shop, and air condition- sion of wells into injection wells, ing systems. Capital expenditure on upgrade work ••construction and upgrade of a sanitary sewage The expenditure of Exploration Companies ac- incurred by all entities of the PGNiG Group in 2012 system, and washing facilities with separators of counted for 4.3% of the total capex on waster- totalled more than PLN 99m. oil derivatives, water management and water protection, waste ••purchase of sorbents and neutralising agents, management, as well as soil and underground wa- The total cost of repair work incurred by all entities ••purchase of new, highly efficient engines and ter protection. The funds were spent to purchase of the PGNiG Group in 2012 amounted to more power generator sets for drilling sites hydrophobised polypropylene sorbents, drilling than PLN 5.9m. The amount was spent mainly on ••construction and upgrade of gas-fired boiler mud clean-up systems, double-shell fuel storage repairs of boiler houses, gas network, improve- houses and co-generation systems to reduce tanks, advanced washer units, a municipal waste ment in thermal insulation of buildings, removal emissions from power-generation sources, incinerator and a rainwater storage reservoir at of roof coverings, parking lot surfaces, production ••replacement of cast-iron pipelines with PE the production waste disposal facility, and to install site pipelines, spillage bunds, including in tanks pipelines, upgrades and repairs of pressure flooring in oil and lubricant containers. used for storing process water, etc. reduction stations, ••repairs of gas-fired boilers, metering and water- The total amount of capital expenditure incurred Looking at the period 2010–2012, the amount of ing systems, thermal insulation of buildings, by all entities of the PGNiG Group in 2012 was in pro-environmental expenditure on new invest- repairs of sewage and drainage systems. excess of PLN 103.5m. ment projects and upgrade work rose, with a slight decrease in capex on investment projects relative to 2012. However, the significant annual budget of pro-environmental capex allows us to permanently mitigate the PGNiG Group’s adverse environmental impact (Figure 13).

Figure 13 – Pro-environmental capex on new investment projects and upgrades, and cost of repair work in 2010–2012 (PLN m)

5.95 99.44 2012 103.52

3.72 69.77 2011 131.80

7.98 34.01 2010 70.62

Renovation Upgrade Environment-friendly projects

58 PGNiG Shale Gas

For our most recent shale gas developments see polishshalegas.pl

Non-mandatory environmental monitoring PGNiG faces new challenges as a result of its on-going exploration for unconventional sources of natural gas, including shale gas. New technologies or different work conditions may require taking additional measures to minimise environmental impact. The authorities that issue environmental decisions and determine the Meeting with environmental NGOs conditions for obtaining hydrocarbon explora- Environmental organisations are stakeholders tion licences specify the monitoring of individual of key importance in the dialogue on shale gas. elements of the environment as being one of the PGNiG has held formal dialogue sessions with PGNiG Code of Responsible Gas and conditions to be met to carry out exploration representatives of such NGOs as the WWF, the Oil Production work. However, PGNiG frequently extends the Climate Coalition, the 2004 Green Party and the PGNiG is committed to conducting its explora- range of tests it performs beyond the mandatory Eco-Development Foundation, in accordance tion works with particular care for both the HSE tests prescribed in the decisions. with the international AA1000 standard. (Health, Safety and Environment) duties and communication aspects, reaching beyond the Among those invited to the session held in De- requirements of simple information provision in cember 2012 were nationwide organisations that the most reliable and transparent manner. are vitally interested in the issue of exploration for and production of gas from unconventional sources. The purpose of the dialogue session was to gain a better insight into the NGOs’ expecta- PGNiG tions towards PGNiG SA, particularly as regards Code PGNiG performs pre-drilling, pre-fracking and environmental protection and safety, as well as of Responsible post-fracking as well as post-drilling tests communication of those issues. This was pre- Gas and (including soil surveys, groundwater and surface ceded by one-on-one meetings with individual Oil Production water surveys and additional analyses of post- NGO representatives intended to give us a better fracking fluid content). Within the work area understanding of their expectations and help as well as within the wider work impact area, us prepare for the general session. A follow-up inventories of flora and fauna are made and the report was also drafted, including all questions possible effects of the work’s environmental im- and concerns raised by the invited organisations, pact on the area designated for the drilling pad which is available here. are assessed. Preparatory work, drilling, frack- ing as well as well abandonment is frequently Educational video and internet carried out under environmental supervision. cameras Additionally, noise levels are measured and seis- An educational video about shale gas production mic monitoring is conducted at selected sites. was also produced to help illustrate the shale gas exploration process. The computer animated Inspections by the Provincial film explains the process of exploration for and Environmental Protection Inspector production of shale gas in Poland. PGNiG has PGNiG’s wells are also inspected by the compe- installed internet cameras near each borehole to tent authorities, such as the Pomeranian Provin- continuously monitor gas production operations The Company fully complies with the Golden cial Inspectorate for Environmental Protection at each site (the streams are available through a Rules of the International Energy Agency. Based in Gdańsk, as part of their oversight duties of dedicated website at polishshalegas.pl). on these Rules, PGNiG has developed the Code the process of exploration and appraisal of shale of Responsible Gas and Oil Production that, gas reserves. apart from environmental matters, also focuses on such issues as building positive relations During the inspections performed by such with communities living in the areas of planned authorities, no instances of pollution of the soil exploration and production activities. and water environment have been found. No instances of illegal sewage discharge, fuel or chemical leakages or improper storage of waste have been recorded. Work carried out, among others, by PGNiG on the Opalino-2 well on the Wejherowo licence and the Wysin-1 well on the Stara Kiszewa licence has been inspected by the competent authorities.

Responsible Energy 59 Local communities

60 PGNiG PGNiG has for many years been involved in activities with its local communities. We are obligated by our tradition of supporting the areas of importance to our stakeholders to constantly strengthen and improve our efforts. While doing so, we also try to reach out to as many residents of the areas of our operations as we can. Also, the PGNiG SA Ignacy Łukasiewicz Foundation supports efforts for sustainable development. In its social activities, the Foundation tries to address the challenges related to educational projects, focusing mainly on safety issues and promotion of the sciences, as well as the development of local communities and promotion of health, culture and sports. For more details, see www.lupkipolskie.pl/lupki-w-polsce/dialog-spoleczny.

Responsible Energy 61 Local communities

Environmental protection is an urgent issue and its effect on the quality and safety of our lives is growing. Educating children at as early an age as possible is of the utmost importance in creating pro-environmental awareness. The Centre for Ecological Information and Education of Gdańsk, the organiser of the ‘Let an Apple Hit Your Head’ contest, has for years been involving the young- est children in creative activities with a view to instilling pro-environmental attitudes in them. STARTER for inter-sector dialogue and As a partner of the initiative, the Pomeranian cooperation in the Gdańsk region – Trading Division has been actively supporting the Pomeranian Trading Division initiative since 2007. The ‘Let an Apple Hit Your On December 12th 2012, a meeting was held in Head’ interdisciplinary contest is addressed to Gdańsk, attended by representatives of the busi- primary and junior schools of Gdańsk and Sopot. ness community, local government and NGOs, The contestants, acting in small groups, develop who together make up the Forum Inicjowania Day for Safety – Pomeranian Trading attractive presentations on selected subjects from Rozwoju STARTER (STARTER Development Division environmental protection, biology or sustain- Promotion Forum), for which the Pomeranian On July 29th 2012, the town of Dębki on the able development. In 2012, the tasks included Trading Division was among the key Partners. Baltic coast played host to ‘The Safe Commune developing a recipe for blending natural cosmetics, During the meeting, information was dis- of Krokowa – Dębki 2012’ festival. Polskie Gór- experimenting with the action of natural antibiot- seminated on its new project, the Development nictwo Naftowe i Gazownictwo was a sponsor ics, and designing a green and environmentally Promotion Forum. and honorary patron of the event. sustainable city. Each group of contestants could also suggest their own subjects within the scope The Forum is a long-term periodic initiative, de- The festival was organised with a view to attract- of the contest. Participating in ‘Let an Apple Hit signed to actively foster development by engaging ing visitors’ attention to safety issues. Visitors Your Head’ teaches pupils how to think conceptu- in strong inter-sector cooperation in the region could, in particular, familiarise themselves with ally and approach subjects creatively, and gives and focusing on the partnership between NGOs, equipment used by emergency services and them teamwork skills. Teachers are allowed to businesses and local government. The concept participate in games. Employees of the Gdańsk Gas support contestants with their knowledge and sug- ensures constant development and strengthening Plant and Żarnowiec Oil and Gas Production Facility gest information sources, but ultimately it is the of the partnership, with the strength of the Forum had their own stand, at which they spoke to those contestants themselves who independently run the lying in the exchange of experience between its interested about shale gas exploration. experiments and draw conclusions. Partners-participants and their joint implementa- tion of best practices. The Forum is overlooked by the Programme Board (one member of which is Urszula Rożnowska, Director of the Pomeranian Trading Division) and the Honorary Committee, composed of representatives of the Gdańsk Special Economic Zone and Agencja Rozwoju Pomorza SA. The Forum’s partners are key business entities of the region.

STARTER initiated the meeting on the Development Promotion Forum, disseminated information on this nascent initiative, and enabled the participants to discuss and agree on the detailed definition of project development directions and ways of win- ning the cooperation of further regional partners. ‘Let an Apple Hit Your Head’ – The growing interest of schools in the project Our involvement and participation in the project Pomeranian Trading Division attests to its success: schools participating in the primarily consists in contributing to the devel- School-age children are among the most impor- contest once, re-enter it in subsequent years, and opment of the Growth Strategy for the Gdańsk tant target groups of our educational projects. each year, new schools also participate. In 2012, Province until 2020. The added value for us is the We see the need to promote knowledge of the quantitative criterion for entry was the number dialogue with the regional community, the building environmental protection, energy sources and of persons qualified to participate. 36 groups of of partnership relations with representatives of the their safe and rational use, because educa- primary school children (ca. 90 people) and 31 public administration, NGOs and entrepreneurs. tion of today’s children in this field will, in the groups from junior high schools (ca. 80 people) The Forum’s main challenge for the coming years future, translate into the strengthening of good, entered the contest, assisted by chaperones/edu- is to create a climate promoting mutual develop- environment-friendly habits in their everyday cators (ca. 40 people). The contest will continue to ment, based directly on the Growth Strategy for lives. Involvement in the ‘Let an Apple Hit Your be run in the coming years. The competition round the Gdańsk Province until 2020, by creating a Head’ (Bęc jabłkiem w głowę) pro-ecological of each edition is preceded by methodology/didac- platform comprising workshops, information cam- contest is a good step along the path to fulfil- tics training for teachers and educators. paigns and financial assistance programmes. ment of this objective. Pupils from Gdynia’s schools will also be invited to participate in next year’s contest.

62 PGNiG Charity benefit for the children at Tarnów’s Special Educational and Training Centre Supporting the ‘Hanka’ Children’s Home in Dębica – Carpathian Trading Division In 2012, a charity campaign was begun in sup- The ‘Not Alone – Santa’s Visit’ project, run with the port of the children at the Special Educational ‘Not Alone’ Youth Assistance Club, was a one-off and Training Centre in Tarnów, who dreamt of project. However, the Division plans to continue going on a trip to Krakow. working with the Club by joining other initiatives involving its members, all of which are designed Before Easter, a traditional Easter cake-baking to foster the children’s playfulness and ability competition was announced among the employees to integrate. of the Carpathian Trading Division. The cakes and ‘Help to Please the Children’ concert – pastries prepared by our colleagues were then sold The School Bag Project – Pomeranian Carpathian Trading Division at a special fair, held as part of the Division’s of- Trading Division The Carpathian Trading Division (formerly the ficial Easter party, with the funds raised from their The School Bag Project, a response to disabled Kraków Gas Plant), in the course of its implemen- sale presented to the centre’s children. students’ needs, is a continuation of the Pomera- tation of the CSR strategy, conducts numerous nian Trading Division’s work with the physi- relevant initiatives, such as assisting those Another fund-raising event was organised to assist cally disabled children of the ‘Not Alone’ Youth institutions, associations and organisations that the children from the ‘Hanka’ Children’s Home in Assistance Club. The goal of the project was to come to the aid of the most needy. Dębica. PLN 6,500 was allocated for clothes and encourage the Division’s employees to provide toiletries for the children, as well as cleaning sup- active and direct assistance to the students, One of the projects in this area supported by the plies for the centre. to stimulate their creativity and empathy. We Carpathian Trading Division in 2012 was the ‘Help wanted our employees to feel that their help was to Please the Children’ charity concert (Pomóż Not Alone – Santa’s Visit – personal and of benefit to specific individuals, to dzieciom sprawić radość) at the TS Wisła Sports Pomeranian Trading Division help them perceive it as more ‘real’. Hall in Kraków, on March 8th 2012. The concert Pomeranian Trading Division employees were was organised by the Society of the Friends of among those taking part in the ‘Not Alone – Children (Towarzystwo Przyjaciół Dzieci). The Santa’s Visit’ project to integrate young people Kraków Gas Plant (renamed as the Carpathian Trad- in the care of the Youth Assistance Club. The ing Division) has been working with the Society for project involved several stages, almost ten years now. It is important to note here that the funds delivered as part of the Divisions’ the first of which was a trip to a bakery in a Gdańsk sponsorship activity are used not only to finance shopping centre, to bake some Christmas cookies. the organisation of charitable events, but also – The bakery owners’ kindness and the engagement and primarily – to finance holiday trips for children of the trip’s organisers resulted in a unique op- from low-income families. portunity for the kids to see how a bakery works, and to prepare their own Christmas treats. Division Theatrical performance for the employees accompanied the children on their visit youngest patients of the children’s to the bakery. The second stage of the event was hospital – Carpathian Trading Division held at the Miniatura Theatre in Gdańsk, where On March 20th 2012, thanks to the involvement the Youth Assistance Club’s members watched a of the Carpathian Trading Division (formerly the performance of The Dog on an Ice Floe. They then The Division’s employees came up with an idea Kraków Gas Plant), patients of the Saint Louis had a party, during which a visiting Santa Claus of collecting stationery, backpacks and other Provincial Children’s Hospital of Kraków (Wojew- handed out Christmas presents, bringing smiles to school supplies for the children and for others ódzki Szpital Dziecięcy im. Św. Ludwika) were the faces of the clearly delighted children. Division in need. The project was begun in July 2012 and given a didactic performance of EKO-KOTEK volunteers also accompanied the children on their lasted through the summer holidays, with appeals (ECO-KITTY) by the Studio Yapa troupe. Studio theatre visit and party. for help with the collection sent to all Division Yapa was established by a group of actors and employees via internal channels. The effects were actresses who decided to use their enormous It is of crucial importance for children with dis- immediate – special boxes set up at the Division’s stage experience and acting gifts to establish a abilities to build relations with others. The Club’s offices in Gdańsk were soon filled. Other regional professional theatre for children and youth. disabled children’s participation and involvement offices, for example in Elbląg and Olsztyn, also sent in additional forms of activity, mainly through play, school supplies for the young students. The staff’s The play was designed to make its young audi- was an opportunity to break down the psycho- engagement in and commitment to the collection ences aware of environmental protection issues. logical barriers preventing them from integrating exceeded our expectations. For the duration of the The play’s characters promote care for nature with people outside their own circles. The effects event, an information board was put up, featur- among children. Playing with children, the per- of these efforts are hard to measure, but the joy ing pictures of some of the children for whom the formers taught them how to manifest this care in and smiles of all thirty participants that day were a items were being collected. The grand finale took their everyday lives. Through the colourful stage clear sign of the event’s success. place on August 30th at the Gdańsk Zoo. During a scenery and funny dialogue, the performance festive, jolly event, accompanied by several bands evoked smiles on the faces of the audiences and playing live music, one hundred school bags gener- allowed them, if temporarily, to be immersed in ously filled with school supplies were handed to the world of theatre magic. After the performance, the children. the spectators were given gift sets, which proved another source of much joy.

Responsible Energy 63 Local communities

Disabled Persons’ Dignity Day – Pomeranian Trading Division On May 15th 2012, on the square near the parish offices in Trąbki Wielkie the Disabled Persons’ Dignity Day was organised by the Caritas branch of the Gdańsk Archdiocese, with priests Janusz Steć and Boleslaw Antoniów in charge of the event. The festivities, attended by nearly 500 guests, featured presentations by pre- school children and students from the Trąbki Wielkie community.

Patients of disabled people’s centres from the Gdańsk Country and students of nearby schools attended the event. Among those who gave performances were pre-school school children Artists for Children. The Sheltering Art from Trąbki Wielkie, children from the Giemlice – Pomeranian Trading Division Rehabilitation and Training Centre, school bands ‘Artists for Children. The Sheltering Art’ is a pro- from Czerniewo, Trąbki and Warcz, as well as rep- ject designated to promote the creative transfer resentatives of the Nursing Home in Damaszka. of art to everyday life, where it can respond to Lower Silesian Trading Division to the people’s needs, especially disabled people. The rescue of children Polish MPs had declared 2013 the Year of the Disa- integration of children with both artists and In 2011, the Lower Silesian Trading Division (for- bled. Thanks to this, and other efforts, intellectual with their disabled peers is a crucial part of the merly the Wrocław Gas Plant) began supporting disability is becoming less of a taboo subject in project, which ran from the 1st to the 3rd of the ‘To the Rescue – Saving Kids with Cancer’ Polish society. As a consequence, people’s ap- June 2012. Foundation. This relationship is based on the proach to disability is also changing, and in Trąbki principle that its financial support should be ac- Wielkie, people with intellectual disabilities are no As part of the project, three-day workshops were companied by the active involvement of PGNiG’s longer considered an oddity. The Disabled Persons’ held, which included classes combining science employees in the Foundation’s efforts. With 20 Dignity Day was a special day, when the centres’ and art, as well as those developing the children’s years of history, the Foundation is a public ben- patients met the town’s population and proudly creativity and intellect, and artistic workshops (in- efit institution which continues to help hundreds presented their achievements, feeling that this was cluding painting, sculpture, spatial design) for both of children hospitalised in the Wrocław Medical their day. Their carers were also happy to have able-bodied children and children with disabilities. University Clinic for Paediatric Bone Marrow brought smiles to their charges’ faces. Protective covers for wheelchairs were the high- Transplantation, Oncology and Haematology, light of the event. These are round guards mount- headed by Professor and Habilitated Doctor The new definition of disability states that it is not ed on the wheels that prevent the user’s hands Alicja Chybicka. individual limitations, but external barriers which from becoming entangled in the spokes. They prevent active participation in life are what makes come in various styles and designs, and also have Thanks to the outstanding achievements of Pro- one disabled. The Convention that introduced this artistic and aesthetic value. The covers designed fessor Chybicka’s team, the clinic is not only the new definition of disability defines it as a social and decorated by the artists during the workshop largest and one of the best paediatric haematology problem, not as the individual problem of the af- were manufactured by Superoslony.pl and given and oncology centres in Poland, but also boasts fected. The Disabled Persons’ Dignity Day was an to the children free of charge. Volunteers from the European fame and recognition. However, the opportunity for the intellectually disabled to come Trading Division took part in the event, working excellent medical staff and highly efficient treat- out, to manifest their presence among us, and to with the children in the artistic workshops. It also ments, with a success rate of more than 80%, are show that they also play, study, work, laugh, love provided art materials and office supplies for use not enough. The conditions in which doctors and and are loved. during the workshops. All in all, the event attracted children struggle with cancer require our immedi- more than one hundred participants. ate attention, as the clinic’s building no longer meets some of the current standards. Lacking a transplant ward, the pre-war building with its nar- row halls and overall poor condition, hardly offers a safe environment for little patients whose natural immunity has been significantly impaired due to illness and treatment. For that reason, the Founda- tion has devoted the last two years to helping the Wrocław Medical University build a new oncology clinic, the ‘Cape of Hope’, which will provide com- prehensive world-class diagnostics and treatment, substantially improving the children’s chances of making a full and speedy recovery. All year round, the Division develops financial solutions for the Foundation and supports all initiatives aimed at helping the Foundation.

64 PGNiG ‘Pre-schooler’s Safety Academy’ project – Greater Poland Trading Division The main purpose of the Pre-schooler’s Safety Academy is to educate pre-school children about road safety and other related issues. Several years ago, PGNiG became a partner of the pro- Educational talks in pre-schools and ject, organised in cooperation with the Preven- primary schools – Carpathian Trading Concert of Hope – Lower Silesian tion Division of the Municipal Police Department Division Trading Division in Poznań. To carry out this exciting initiative, the Market- The Concert of Hope – a fundraiser for the paedi- ing Section of the Carpathian Trading Division atric haematology clinic – was attended by over As part of the initiative, meetings and educational contacted representatives of institutions, schools six hundred guests, including the employees of demonstrations are held in pre-schools to encour- and kindergartens located in the area of its op- the Lower Silesian Trading Division. Interest- age safe behaviour on the way to/from school, erations, including librarians from the Municipal ingly, the performers who appeared on stage to teach children how to play safely at school, Public Library in Jarosław and the Provincial were not professional artists, but exceptional outdoors or at home, and to familiarise them with Pedagogic Library in Przemyśl, Jarosław Branch, members of Lower Silesian society. the most common road signs. The guests invited who initiated the ‘Happy Times with Books’ are usually members of the police force, firefight- programme. As part of the project, invited The billing therefore included Professor Marek ers or representatives of programme partners, guests periodically visited four pre-schools in Ziętek, Rector of the Wrocław Medical University, such as PGNiG. Jarosław to read literary works about their jobs Agnieszka Aleksandrowicz, President of the ‘To and teach children about the merits of using the Rescue – Saving Kids with Cancer’ Founda- The initiative was carried out between December natural gas. Altogether, 400 children took part in tion, Professor Alicja Chybicka, and Professor Jan 2011 and June 2013 at 30 pre-schools in Poznań the meetings. Miodek. Also appearing that night were Martyna and its vicinity, with children at each one divided Wojciechowska, an ambassador for the clinic, and into three age groups. To teach them about safety During the first part of each meeting, a PGNiG em- Paweł Rańda, an oarsman who won the silver issues, instructors used play and toys, such as a ployee in dress uniform read aloud poetry pieces medal during the Beijing Olympic Games. Proceeds sponge town and a carwalker, as well as aware- such as Janczarski’s ‘The Miner’s Hat’, or Kubiak’s from the tickets helped finance the construction of ness-building games, educational books and safety ‘In the Mine’. The second part consisted of a casual the Cape of Hope, the new paediatric haematology reflectors. The children also received educational conversation about the use of natural gas as an clinic which is to be located on ul. Borowska. materials describing specific dangerous situations, environmentally-friendly source of energy, also for instance, natural gas use. tackling issues of gas safety at home. The Division also supports this noble cause by sell- ing plastic bottle tops, container lids and deodor- ant tops donated by its employees.

Wrocław sport relief for little patients – Lower Silesian Trading Division The Lower Silesian Trading Division has been supporting local sports events for several years now. Last year – and in the years before – the Di- vision (formerly the Wrocław Gas Plant) was one of the key sponsors of the Wrocław Marathon.

The 2011 marathon proved to be exceptional, as it included a marathon relay race, which was the key event of the ‘Run for Hope’ charity drive. The mon- ey raised was donated in full to the construction of the Cape of Hope. Over the years, we have also Another part of the initiative saw information Outside Jarosław, the programme was carried out repeatedly supported the Lower Silesian Games for brochures for children and parents printed and directly in schools and pre-schools – in total, some Paediatric Cancer Patients organised by the Faculty distributed, outlining basic safety rules for kids 2,500 children attended the meetings in 62 loca- of Physiotherapy of the Wrocław Academy of and the correct way of handling gas and electric tions. Each child was presented with a paper ver- Physical Education, the Wrocław Medical University appliances. The programme attracted considerable sion of the miner’s shako, with colouring pictures, Clinic for Paediatric Bone Marrow Transplanta- interest among pre-schools, and is still ongoing. puzzles and riddles about natural gas printed on tion, Oncology and Haematology, and the ‘To the the inside, as well as green gadgets. Rescue – Saving Kids with Cancer’ Foundation. Focusing on safety education and promotion of Every year, distributed materials encourage PGNiG environmentally friendly approaches, PGNiG’s employees and Customers to help the little patients initiative was welcomed by our Customers – the by donating 1% of their tax to the Foundation. parents and guardians of the children. Given the substantial interest in these kinds of initiatives expressed by educational institutions, we intend to expand the programme to include more schools.

Responsible Energy 65 Local communities

‘Oil and gas – time to make their Miners from the mountains to the sea Initiatives implemented with the acquaintance’ – Pomeranian Trading – PGNiG Zielona Góra Branch Foundation of the Silesian Heart Division Educational meetings entitled ‘Miners in pre- Disease Centre: the ‘Say Yes to In July 2012, the Pomeranian Trading Division schools/schools’ (Górnik w przedszkolu/szkole) Transplantation’ programme – launched an educational programme for primary run by the Zielona Góra Branch are one of the Carpathian Trading Division and middle school students from areas covered company’s largest initiatives of this kind. Working with the Foundation of the Silesian by shale gas exploration licences, entitled ‘Oil Heart Disease Centre (Fundacja Śląskiego Cen- and gas – time to make their acquaintance’. In November and December 2012, nearly eight trum Chorób Serca), we implemented a number thousand children had a unique opportunity to of social initiatives encompassing various By engaging in these activities, we want to encour- meet oil drillers and learn about how crude oil activities, to establish a connection with local age children to study natural sciences, especially and natural gas are produced and how these communities by conducting presentations on disciplines related to production of natural gas and resources can be used. The initiative, now several the company and its products. This allowed us crude oil in the area. As part of the project, in No- years old, is gaining momentum as more and more to reach more than 100,000 people of differ- vember and December 2012 the Division’s employ- pre-schools and schools are interested in inviting ent ages, from children and youths to adults, in ees worked with the Zielona Góra Branch to organ- miners, dressed in traditional uniforms, to conduct order to reinforce certain awareness-building ise special lessons for students in selected schools educational meetings. initiatives aimed at improving the quality of life. across Pomerania. During the meetings, children were acquainted with PGNiG, learnt about the The low social awareness of organ and tissue history and customs of Miners’ Day, were shown transplantation, which has proved critical in saving the miners’ uniforms and told about the many ap- lives and sustaining vital functions, makes it essen- plications and advantages of natural gas and crude tial that we stress the importance of organ dona- oil. At the same time, older children (Years 5 and tions as the transplant waiting list is very long. 6) and middle-schoolers studied various methods of producing natural gas from conventional and Just like last year, in keeping with its active involve- unconventional sources. Additionally, each meeting ment in the lives of local communities, PGNiG SA focused heavily on rational and safe use of energy joined the country-wide ‘Say Yes to Transplanta- carriers. In total, the programme consisted of 41 tion’ (Tak dla Transplantacji) programme of the lessons with 1,586 participants. Foundation of the Silesian Heart Disease Centre of Zabrze. Its main objective is to promote the idea Women’s Safety Academy – Greater of life-saving transplantation, encourage healthy Poland Trading Division living habits, help people with disabilities, and PGNiG is a partner of the Women’s Safety Acad- help finance the construction of module C, which emy programme, which was designed to educate will house the Cystic Fibrosis Treatment and Lung women and teach them self-defence. Transplantation Centre.

The initiative consists of a series of workshops and lectures during which women learn about ways of reducing the probability of falling victim to crime, the psychological aspects of criminal behaviour and methods of coping with everyday stress and risks.

Participants are taught not only the basics of self- defence, but also how to act in dangerous situa- tions. In consequence, they become more aware of the psychological aspects of self-defence and feel more self-assured. As part of the programme, the Division’s female personnel learned self-defence under Robert Moskwa, a European Karate Champi- onships medallist.

66 PGNiG ‘Cops for Tots’ – Greater Poland Trading Division PGNiG has been supporting the Surgery and Transplantation Department of the 5th Au- tonomous Public Teaching Hospital in Poznań for several years.

‘Cops for Tots’ is an initiative of the Poznań Police Department. PGNiG provides financial support to the hospital and partners its charity events, send- Miners donate blood – PGNiG Zielona Arm in arm with the Polish Red ing its employees to prepare special fun zones for Góra Branch Cross almost from the very start – children and raise funds for the hospital. We also Among the staff of the Zielona Góra Branch and Carpathian Trading Division visit the hospital’s paediatric wards throughout Poszukiwania Naftowe Diament (currently Exalo The collaboration between the Carpathian Trad- the year. Drilling) there are many honorary blood donors, ing Division (formerly the Kraków Gas Plant) who are also members of the Nafta Honorary and the Kraków Regional Division of the Polish PGNiG GAS CUP – Greater Poland Blood Donor Club, which in 2012 alone managed Red Cross is a long-standing tradition. By taking Trading Division to collect nearly 140 litres of blood. part in various Polish Red Cross initiatives and In 2008, the Kalisz Gas Plant joined ranks with projects, the Division has for many years had the the Szczypiorno Kalisz Handball Sports Club to In 2013, the Club’s members, alongside many opportunity to bring help to those in need. promote handball, encourage an active approach residents of Zielona Góra, participated in four to sports, and facilitate the exchange of experi- public blood donation drives. A special blood dona- Funds given to the Polish Red Cross are primarily ences between sports teams. tion bus stopped at the Branch’s offices on two used to aid large, low-income families, children occasions. A total of 59 litres of the vital fluid were who are victims of transport accidents as well as Our combined efforts led to the creation of the collected. Apart from the scheduled events, four those affected by natural disasters. Each year, the PGNiG GAS CUP, which is designed to advocate emergency actions took place when blood was Polish Red Cross reaches out to more than 2,000 physical activity as the key to a healthy lifestyle needed urgently. families in the Province of Kraków. and promote handball among the children, youths and other residents of Kalisz. In 2012, the Carpathian Trading Division once again partnered a charity event organised by the January 2012 saw the next edition of the PGNiG Kraków Regional Division of the Polish Red Cross. GAS CUP Handball Tournament, in which eight The event, a music concert named ‘Help Others’ teams, representing various primary schools in (Pomóż innym), took place on February 2nd in the Kalisz and in the region of Kalisz, participated. The Auditorium Maximum lecture hall complex of the tournament, which was held under the honorary Jagiellonian University in Kraków. The proceeds patronage of the Mayor of Kalisz and the Polish were used to fund the statutory goals of the Handball Federation, lasted two days and attracted Polish Red Cross. A variety of artists performed a lot of interest. Among the spectators enjoying at the concert, including Grzegorz Halama and the competition were the representatives of the Andrzej Sikorowski. Szczypiorno Kalisz Sports Club, the NIKE Student Sports Club, local government, the Kalisz Gas Plant, in addition to the teachers, parents, and friends of the competing players, as well as handball enthusiasts. The tournament attracted huge media attention, receiving extensive coverage in the press, radio, and local television, as well as on the Internet.

The project was enthusiastically received by both the participants themselves as well as sports fans and local authorities. In their effort to promote handball and advocate physical activity as a key to health, the organisers of the competition and the employees of the Kalisz Gas Plant were joined by businessmen, sports enthusiasts and teachers.

Responsible Energy 67 Local communities

OSTRZESZOWSKI CROSS-COUNTRY RACE – Greater Poland Trading Division Held regularly since 1965, the Ostrzeszowski Cross-Country Race is one of the most popular running events in Poland. The Race is renowned for its international character, great running distance variety and diverse age profile of the participants, as well as the grand opening in keeping with official Olympic etiquette.

The spectators can observe a 21,000-metre-long half marathon and the competition of women and Talent show in Kalisz – PGNiG GAS men in the open category. In 2011, for the first CUP 2012 Energy in Youth – Greater time in the history of the race, pre-schoolers were Poland Trading Division allowed to join in the competition, on a 300 metre In January 2012, Kalisz saw a variety of events route, and also Nordic walking enthusiasts were organised by PGNiG, including not only the given the opportunity to prove their skills. European Handball Championship, which proved a great source of excitement to the sport’s The Division also partnered in the 2012 enthusiasts, but most importantly the PGNiG GAS ­Ostrzeszowski Cross-Country Race. This time the CUP 2012 Energy in Youth, a handball tourna- Division’s employees and their children joined ment for primary schools in Kalisz. The project the competition. Apart from Polskie Górnictwo was designed to advocate physical activity as a Naftowe i Gazownictwo, the 47th Cross-Country key to a healthy lifestyle and promote handball Race was also partnered by the Polish Athletics among the children, youths and other residents Federation, the Polish Olympic Committee and the of Kalisz. The tournament began with an elimination stage Polish Paralympic Committee. held on January 27th 2012 in the sports hall of the An announcement was published on Facebook a 7th School Complex, where eight teams repre- The purpose of the initiative is to advocate physical month before the event, which was the first step senting various primary schools in Kalisz and in activity as a key to health and promote fam- in a campaign aimed at promoting the competition the region of Kalisz played the first matches. The ily sports. Among those taking part in the race in Kalisz. Quizzes were organised by the city’s local emotions were overwhelming. The PGNiG GAS were children and adults, students and teachers, radio station and fanpage, in which the contestants CUP 2012 handball tournament, which was held members of sports clubs as well as unassoci- could test their knowledge of handball and win under the honorary patronage of the Mayor of ated athletes, both Polish and foreign. The 48th special supporter kits (each included a scarf with Kalisz and the Polish Handball Federation, lasted Cross-Country Race was met with great interest the PGNiG logo, face paint and a calendar of the two days and attracted a lot of interest. Among of the city’s as well as the county’s residents and Polish Handball Federation). At a press conference the spectators viewing the competition were the was well-received by local athletes and teachers, held a week before the tournament, the event’s representatives of the Szczypiorno Kalisz Sports attracting some 3,000 people (participants, fans, programme was discussed and the city’s residents Club, the NIKE Student Sports Club, the Kalisz Gas parents, local government representatives). were officially invited to spend the day with PGNiG. Plant, the 7th Primary School authorities, as well as What is more, second-division handball players of the friends of the competing players. the Kalisz team, together with their coaches and members of the board of the Kalisz Sports Club, The best four teams advanced to the final stage of conducted handball lessons in schools that quali- the competition. Next day, the finalists faced each fied for the competition. To the young handballers, other in the Kalisz Arena to fight for the highest the very opportunity to hone their skills under the prize, cheered on by hundreds of supporters. instruction of experienced players was a great honour, motivating them to continue their hard The tournament attracted considerable media work. This collaboration between two genera- attention, receiving extensive coverage in the tions of athletes was also the main message of the press, radio, and local television, as well as on PGNiG GAS CUP promotional clip. the Internet.

68 PGNiG The taste of Venice in Jarosław – Carpathian Trading Division On January 8th 2012, a New Year concert was held at the Fryderyk Chopin National School of Music in Jarosław, as part of the ‘Jarosław County Mayor Invites’ cycle.

World Cup in Szklarska Poręba ‘Bieg This year’s first meeting with classical music had Gwarków’ cross-country ski run – the atmosphere of the Venetian Carnival, carefully Lower Silesian Trading Division built by Orkiestra Kamerata Krakowska conducted The World Cup in cross-country skiing was held by Rafał Jacek Delekta. A prominent soprano, Edyta in Poland, in Szklarska Poręba, for the first time. Piasecka-Durlak, a soloist of the Kraków Opera, The Polish queen of winter sports, Justyna Kow- was the star of the evening. alczyk, was one of the participants. The timing of the concert coincided with the Grand PGNiG 11th Provincial Indoor Football The event had a great atmosphere. In the tourna- Finale of the Great Orchestra of Christmas Charity, Tournament for Students of Special ment, the team of Vranov nad Toplo’u proved to be therefore an auction was held during the interval, Schools – Carpathian Trading Division unrivalled, having won all the elimination matches, where interesting objects could be purchased. On March 20th 2012, the Jasło Town Sports and the semi-finals against the hosting team of the Some of the most exciting ones included a silver Recreation Centre hosted the PGNiG 11th Pro- Centre for Children with Special Educational Needs pastoral cross from an anonymous donor, obtained vincial Indoor Football Tournament for students of Jasło and the finals against the Centre for Chil- from John Paul II, and ‘Obrazek Marysi’ – a picture of special schools, organised by the Jasło Centre dren with Special Educational Needs of Frysztak. painted on glass by a secondary school student of for Children with Special Educational Needs, Jarosław, who for a few years has been using an with the cooperation of the ‘Lider’ Students’ In 2012, the Lower Silesian Trading Division in insulin pump received from the Great Orchestra of Sports Club. Wrocław (formerly the Wałbrzych Gas Plant) Christmas Charity. was one of the main sponsors of the 23rd Bieg PGNiG provided sponsorship for the tournament. Gwarków race, which was held on January 29th in World Press Photo Exhibition in In addition, the tournament obtained support from Andrzejówka near Wałbrzych. Over 600 competi- Poznań – Greater Poland Trading the Jasło County Council and the Jasło Municipal tors, both from Poland and abroad, participated in Division Office. Participation in this project gave us the the race. Once again Poznań was the location of the Polish opportunity to promote physical culture among première of the World Press Photo exhibition, children and youngsters attending special schools The Bieg Gwarków cross-country ski run which was held under the auspices of PGNiG. and to create conditions to break the barriers asso- A thick layer of snow and slightly frosty but very ciated with the young people’s handicaps through sunny, beautiful weather, created exceptional scen- World Press Photo is the most prestigious photo sporting rivalry and building relationships with the ery for this year’s race. contest in which reporters from all over the globe local communities. Such activities are fully compat- compete for awards. Jurors of this year’s edition ible with the PGNiG Group’s Sustainable Develop- The oldest participant was nearly 83, while the had to rise up to the challenge of evaluating over ment and Responsible Business Strategy. youngest racers were two or three years old. 101,254 pictures, of which they had to choose the The spectators did not disappoint either: they ap- best shots in nine categories. This year’s edition Six teams from the Rzeszów Region and two peared in great numbers to offer encouragement of the contest was won by Samuel Aranda, whose teams from Slovakia (Vranov, Svidnik) – in total to many more than just their favourite racers. photograph shows a woman holding a wounded over 100 young sports lovers – registered for the As the number of people wishing to participate relative following anti-president protests in Yemen. tournament. During the competition, a showpiece has been steadily growing, plans have emerged The award-winners included two Polish photojour- training was held by the Jasło Blacks 1910 Sports to spread next year’s run over two days. Having nalists: Tomasz Lazar and Tomasz Gudzowaty. Club, who have been visiting the pupils of the Jasło in mind the senior participants, and well as those Centre for Children with Special Educational Needs who wish to prove themselves, a 5km run was for many years to support the school administra- organised for the first time, with a reward in the tion and educators in their work and to encourage form of a completion certificate. Winners of the the children and youngsters to practice sports. particular categories were handed medals by the Wałbrzych Town Mayor, Roman Szełemej.

Responsible Energy 69 Local communities

Policies on participation in public life and lobbying PGNiG has been looking for social support for its activities, also at the lowest levels of local self-government administration and among local communities. To the extent our rights allow us to do so, we try to foster the implementation of good legal solutions and to cooperate with the state administration. As one of the largest infrastructural and power industry investors, we have been involved in social consultations and lobbying at the EU level.

We have been using our experience in the educa- tional activities in which we are involved, as well The experience of our experts is employed by the as in the social dialogue on shale gas exploration teams working on the formation of our country’s and production. As part of the public consultations energy and fuel policy. carried out under the Act on Lobbying Activities in the Law Making Process, dated July 7th 2005, we We have been committed to effectively supporting reported our commentaries, postulates and conclu- the interests of PGNiG and the entire Polish energy sions concerning the legal acts of key importance sector before the EU institutions and international to our and the whole industry’s operations. These organisations. PGNiG’s representative office in related primarily to the following legal acts: Brussels has shown particular involvement in this ••Act on Hydrocarbon Production and Taxation area: it actively participates in meetings of EU and the Hydrocarbon Fund, institutions, industry organisations and the thinks ••Energy Law, tanks operating in Brussels. ••Gas Law (draft), ••Geological and Mining Law, Furthermore, its activities include: ••Act on Stocks of Crude Oil, Petroleum Products ••Monitoring of the European laws on hydrocar- PGNiG SA has also been actively participating in and Natural Gas, and on the Rules to be Followed bons from unconventional resources, including providing opinions for drafts of legal acts related in the Event of Threat to National Fuel Security the following environmental regulations: to protection of the environment in Poland. The or Disruptions on the Petroleum Market, –– EU Water Framework Directive, Company environmental protection services ••Environmental Protection Law. –– Directive on the management of waste from submit their comments on any new regulations extractive industries, affecting the business of PGNiG SA, proposing new, –– Regulation on registration, evaluation, author- broadened wording of articles/paragraphs, or isation and restriction of chemicals (REACH), deletion of certain provisions. As part of consulta- –– Directive on the assessment of the effects tions on laws to be enacted or amended, opinions of certain public and private projects on the were provided concerning amendments to the environment, Environmental Protection Law, the Waste Act, and –– Directive on environmental liability with the Geological and Mining Law. The Company’s regard to the prevention and remedying of environmental protection services obtain interpre- environmental damage. tations on the scope and type of environmental ••Monitoring of changes in the directive establish- obligations of PGNiG SA from the competent ing the Emissions Trading System (ETS). government and local self-government authorities, ••Monitoring of work by the European Commis- including the Ministry of Environment and District sion on proposals concerning the sufficiency of Directorates for Environmental Protection. generation in the internal market and optimi- sation of public aid towards building a more efficient power system. ••Monitoring of work related to the establish- ment of laws for the wholesale energy market, including: –– Markets in financial instruments directive, –– Regulation on OTC derivatives, central coun- terparties and trade repositories, –– Regulation on wholesale energy market integ- rity and transparency.

70 PGNiG In 2012, we introduced a new type of scholarship for secondary school leavers. This is a ‘bridge’ scholarship for the best students who have gradu- ated from one of secondary schools that teach specialised oil and gas industry skills. In accord- ance with the Fund rules, a scholarship from the Fund may be sought by students who have passed the Polish Baccalaureate (matura) and come from families in a difficult financial situation. In 2012, the The PGNiG SA Ignacy Łukasiewicz The ‘Projektor’ Students’ Voluntary Work Foundation awarded in total 26 scholarships. Foundation Programme The PGNiG SA Ignacy Łukasiewicz Foundation The ‘Projektor’ Students’ Voluntary Work Pro- Employee Voluntary Work Programme was established in November 2004 by PGNiG gramme of the Polish-American Freedom Founda- In order to meet the expectations of employees, SA as its sole founder and donor. The activities tion is implemented by the Voluntary Service we launched a PGNiG Employee Voluntary Work of the PGNiG SA Foundation include provid- Promotion Foundation and is the continuation of Programme, as many of us want to help others. ing support, in the broad sense, to culture and more than five years of joint effort. the national heritage, working for the benefit In the first, pilot edition of the programme, a of knowledge and education in the area of As part of the programme, volunteering students grant contest was announced. The first edition of fundamental sciences, technical sciences and conducted educational workshops entitled ‘Young the PGNiG Employee Voluntary Work Programme sports, with rivalry being viewed as a tool in the Nobel’ for children living in small towns and villages. was addressed to employees of the Pomeranian education of children and youngsters, as well as By prompting their active participation in interesting Trading Division and PGNiG Branch in Zielona Góra, fostering health protection. experiments and shows, ‘Young Nobel’ encourages and carried out in the territory of the Province of children and youngsters to broaden their knowl- Gdańsk. The purpose of the competition was to In the programmes currently pursued by the Foun- edge in many areas, particularly in sciences. ‘Young provide financial support to an organisation se- dation, a special role is played by: Nobel’ covered 809 educational projects engaging lected by an employee. This assistance is targeted 1. education and learning, particularly with respect 12 thousand students and 11 educational picnics in at associations, foundations and institutions, and to fundamental and technical sciences, which 1,445 students from 35 schools participated, provided on the initiative of employees and with 2. protection of health and popularisation of sports and all of that during just one year! their participation. among children and youngsters.

Summary of the Foundation’s operations in 2012 We have closed another year of the Foundation’s operations. It was an intense year, full of positive emotions, but also a time of changes. We have embarked on new projects, focused on both PGNiG employees and external beneficiaries. Our efforts have not gone unnoticed – in 2012 the PGNiG SA Ignacy Łukasiewicz Foundation was granted a dis- tinction in the ‘Positivist of the Year 2011’ contest, in the Education and Science category.

During 2012, the Foundation received 578 ap- The Ignacy Łukasiewicz Schools The pilot edition of the Employee Voluntary Work plications, of which 79 were granted a subsidy. In Since 2008, the Foundation has been cooperat- Programme, carried out from November 2012 accordance with its mission defined in its Articles ing with schools that bear the name of Ignacy until February 2013 may be shortly summed up as of Association, the Foundation provided support to Łukasiewicz. 24 schools sponsored by the Founda- follows: both health-promoting and educational projects. tion obtained funds for extracurricular classes for ••5 projects, We have co-financed the purchase of disposable children and youngsters, and for the purchase of ••148 hours, medical equipment for an oncology hospice, we teaching aids necessary to conduct those activities. ••11 employees, provided assistance for ongoing clinical research Nearly two thousand students participated in the ••876 beneficiaries. and we supported the first medical aid training programme, which altogether consisted of over programme for volunteer firefighters. We helped 1,400 school hours. Some of the funds were al- The interest in the pilot edition of the Employee schools in purchasing teaching aids and we facili- located by the schools to trips to such places as the Voluntary Work Programme has confirmed that it is tated the carrying out of a series of 20 concerts of Gas Museum, where we hosted students from the an initiative that the Company’s employees expect. classical music in modern arrangements for young Krosno-based school complex ‘Naftówka’. Therefore, we hope that we will soon announce a schoolchildren. These are just a few of the projects new grant contest, this time addressed at all PGNiG which obtained assistance from our Foundation. The Scholarship Fund employees. For more on the Foundation’s activi- The choice is always very difficult, because the As we do every year, we rewarded the best post- ties, see www.pgnig.pl/pgnig/fundacja. aid that the Foundation is able to provide is only secondary school and university students studying a drop in the bucket. Also, we try to promote the fields related to the oil and gas industry, by grant- projects which we have been consistently sup- ing them one-off scholarships. porting for years, believing that this way we can achieve durable changes for the better. Responsible Energy 71 Shale Gas

Strategy for communication and dialogue with local communities as part of shale gas exploration activities In late 2011, the President of the Management Board appointed a Working Team for Stake- holder Relations Management and Corporate Communication on Shale Gas.

The Team’s key role is to coordinate the Com- pany’s communication activities in these areas, including through cooperation with PGNiG Group companies. Concurrently, the strategy for com- munication and dialogue with local communities was devised, presenting an action plan and a set of tools adjusted to individual stakeholder groups. In view of the general interest in shale gas, at the very beginning it was assumed that Educational video series, press PGNiG’s communication activities would be ad- campaign, newsletter on shale gas, dressed to the general public, with a particular mailbox, information materials, focus on the needs of local communities in the conferences areas where PGNiG is conducting or will conduct Recognising shale gas as an important issue to Moreover, over 4,000 Internet users receive a exploration operations. many Poles, PGNIG launched several educational monthly newsletter which compiles the most campaigns in the media aimed at disseminat- recent information on the development of shale Social surveys ing key information on shale gas exploration gas technology and exploration activities. The To successfully prepare local operations, we had and production, addressing the most frequent newsletter’s subscribers include representatives to conduct surveys to assess the local commu- concerns about the safety of such operations for of public administration authorities, the Sejm nity’s knowledge and expectations of potential the environment, landscape and people. (lower house of the parliament), the Senate, exploration work in their area. We conducted the media, local self-government units and two rounds of surveys, whose results showed environmental organisations. In addition, the that the locals knew little about shale gas and [email protected] address was created, to its exploration and production technologies, but which any additional questions to PGNiG special- that they wished to learn about the potential ists may be submitted. benefits and associated risks. These findings helped us better plan our education and com- The Company’s media activity is supported by munication strategy. BTL communication, and includes leaflets and brochures distributed directly to households, as The surveys also revealed that the local inhabit- well as posters, display walls and roll ups. Fur- ants were mostly interested in the potential ther, PGNiG representatives attend many confer- impact of the investment on their everyday As part of the campaign, the TVP Gdańsk channel ences in which shale gas is discussed, including life, with less attention paid to the production broadcast a video on shale gas several dozen the Economic Forum in Krynica and Forum for technology itself (although some knowledge of times, which was seen by more than 280,000 New Ideas in Sopot. the technology is necessary). Inhabitants chiefly viewers. wanted to know when and where the operations would be carried out, what nuisance they would In addition, the Company conducted com- experience, whether they would be expropri- munication activities with the local press and ated, whether the price offered for their land radio stations. Apart from the local media, the would be attractive, who would make a profit information campaign was conducted in na- from the investment and how much it would be, tionwide newspapers and magazines, including and whether the investment was safe for the Fakt, Super Express, Gazeta Wyborcza, Rzecz- environment and people. pospolita, Puls Biznesu, Wprost, Dziennik Gazeta Prawna, and Newsweek. The media ran a series One positive sign was that more than 50% of of articles, information campaigns, thematic the inhabitants of individual communes showed supplements, advertorials, and educational sec- strong or moderate support of shale gas projects tions on shale gas. Educational activities were in the vicinity of their households. also carried out on the Internet, including on the Gazeta Wyborcza and Fakt news websites.

72 PGNiG Meetings with commune authorities, local residents, information centres, study visits Apart from informational and educational activi- ties conducted as part of public consultations, PGNiG meets directly with stakeholders affected by shale gas production investments. Local community members are mostly interested in the impact of the investments on their everyday life. Inhabitants want to know when and where the operations will be carried out, what nuisance they will experience, whether they will be expropriated, whether the price offered for their land will be attractive, and most of all whether Commune Consultation Councils Support for local initiatives the investment is safe for the environment. To ensure that local communities participate in PGNiG strives to address the key expectations the shale gas dialogue to the greatest extent local communities have towards the Company as Before launching each investment in a new possible, we launched a project to establish an investor, not only those regarding informa- commune, PGNiG holds a meeting with the local Consultation Councils, with members elected in a tion and education, but also those concern- authorities to discuss the work schedule, the gas vote held by local inhabitants. ing various forms of support and creation of exploration technologies to be used, their poten- shared value. tial impact on local life, etc. A separate meeting is then held with the inhabitants, in which they Support for local initiatives constitutes a sig- have an opportunity to resolve any doubts and nificant part of PGNiG’s community activities. sometimes engage in debates. No problem re- The Company sponsors open-air events and mains unaddressed. Moreover, in each commune festivals, where it informs inhabitants about the an information centre is set up: PGNiG’s special- activities it is carrying out in a given commune. ists are available for all inhabitants who arrive at In line with the inhabitants’ expectations, the the Commune Office on a specified date. In 2012 Company invests in communal infrastructure, and 2013, the information centres were open for finances equipment for schools and day care several dozen days. centres (provision of teaching aids, co-financing of sports fields renovation, co-financing of As the inhabitants of areas where shale gas audio-visual equipment, purchase and co-financ- exploration operations are carried out perceive ing of sports equipment), and finances purchases persons who have been at a drilling site as the of equipment for local emergency services (co- most reliable source of information, PGNiG financing of fire service equipment). organises study visits to drilling rigs, such as those in Dębki, Żarnowiec and Lubocin. The visits As part of volunteering projects, PGNiG em- may be made by those commune inhabitants ployees support local organisations, such as who express an interest in participating and Koło Pomocy Dzieciom i Młodzieży o Niepełnej first notify a representative of their Commune Sprawności Ruchowej (Support Group for Office. Drilling sites were also visited by foreign Children and Youth with Mobility Impairments), delegates: representatives of the European Com- Polska Unia Aktywności Mobilnej (Polish Union mission, the UK Minister for Environment and The first Consultation Council was set up in De- of Active Mobility), or Pomorskie Stowarzyszenie Agriculture, representatives of the French parlia- cember 2012 in the Krokowa commune. The idea Projektantów PoCoTo (the ‘PoCoTo’ Pomeranian ment, researchers from Lithuania, journalists to establish the Council was formed by PGNiG, Designers Association). from Germany, the Netherlands, etc. After filing together with self-government authorities of a relevant request, all interested parties may the Krokowa Commune. The Council is a social visits a drilling rig site, remembering to observe body representing the needs and expectations of OHS rules, which they learn at the beginning of the local community in its relations with PGNiG. the visit. It is composed of representatives of inhabitants, social organisations, local media, the Commune Council, as well as the Head of the Commune. Further councils will be established in other communes. The Commune Consultation Councils will serve as an official platform for continuous dialogue between local communities and PGNiG, making it possible to consult important issues re- lating to exploration for gas from unconventional sources. The purpose of such councils is to com- municate reliably the concerns, needs and ex- pectations of the local community to PGNiG, crea- tively and proactively seek constructive solutions For our most recent shale gas that are satisfactory to all parties, and to provide developments see reliable reports on the Company’s activities. polishshalegas.pl

Responsible Energy 73 GRI indicators

74 PGNiG PGNiG’s ‘Responsible Energy 2012’ report was prepared primarily on the basis of the reporting indicators of the Global Reporting Initiative. This is an independent stakeholder network, whose mission is to develop and popularise unified guidelines for economic, environmental, and social performance reporting worldwide. It enables objective comparisons of CSR activities pursued by various companies. Besides principles and guidance, the GRI guidelines contain a system of indicators that companies may opt-in to include in their reporting.

Responsible Energy 75 GRI indicators

This report discusses 16 indicators (level C). The In addition, the report contains indicators indicators relating to estimates and calculations and guidelines under the Global Compact and as used herein were prepared and compiled in ac- ISO 26000. cordance with the International Financial Reporting Standards endorsed by the EU.

Strategy and GRI indicators ISO profile Analysis and 1.1 1.2 6.2 strategy pp. 8–9 pp. 8–9 p. 17 Organisational 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 profile p. 1 pp. 10– pp. 10– p. 79 pp. 10– pp. 10– pp. 10– pp. 10– p. 24 pp.31, 12 12 12 12 12 12 33, pp. 18– pp. 18– pp. 18– pp. 18– pp. 18– 41 21 21 21 21 21 Report 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 7.5.3 parameters (3.13 z GRI) p. 24 p. 24 p. 24 p.79 pp. 22– p. 24 p. 24 p. 24 p. 24 p. 24 p. 24pp. 56–57 p. 24 p. 24 34 and p. 76 and p. 76 Governance, 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.14 4.15 4.16 4.17 6.2 commitments p. 17 p. 17 p. 17 p. 17 p. 17 p. 17 p. 17 p. 17 p. 17 p. 17 p. 24 pp. 8–9 p. 22 p. 22 p. 22 p. 22 p. 17 and engagement

Economic performance indicators Global GRI IPIECA ISO 26000 Page Compact indicators Aspect: Economic performance P9, P10 EC1 SE13 6.8; pp. 10–12 6.8.3 Aspect: Indirect economic impact EC8 6.8; pp. 60–71 6.8.4

Society performance indicators Global GRI IPIECA ISO 26000 Page Compact indicators Aspect: Community P5 SO1 6.8; pp. 60–71 6.8.5; 6.8.7

76 PGNiG Environment performance Global GRI IPIECA ISO 26000 Page indicators Compact indicators Aspect: Water P7, P8, P9 EN8 E6 6.5; p. 54 6.5.4 Aspect: Emissions, effluents, and EN16 E1 6.5; pp. 52–53 waste 6.5.5. EN18 6.5; pp. 52–53 6.5.5. EN21 E9 6.5; p. 54 6.5.3. EN22 E10 6.5; p. 55 6.5.3. Aspect: Overall EN30 6.5 p. 58

Labour practices & decent work Global GRI IPIECA ISO 26000 Page performance indicators Compact indicators Aspect: Employment LA1 6.4; pp. 11, 38–39 6.4.3. LA3 6.4.4. pp. 32–35 Aspect: Occupational health and LA7 HS3 6.4; p. 38 safety P1, P2, P3, 6.4.6. P4, P5, P6 LA8 HS2 6.4; pp.32–35 6.4.6. Aspect: Training and education LA11 SE17 6.4; p. 39 6.4.7. LA12 SE17 6.4; p. 39 6.4.7.

Product responsibility Global GRI IPIECA ISO 26000 Page performance indicators Compact indicators Aspect: Product and service PR5 6.7; pp. 42–45 labelling 6.7.6

Responsible Energy 77 Additional information

78 PGNiG Express your opinion

Dear Reader, We would like to thank you for reading this, our fifth ‘Responsible Energy’ report. We hope that it has contributed to your knowledge and understanding of PGNiG’s activities. Acknowledgements

This year, as last year, we decided to publish the following address: Communications and Market- We would like to thank all those report exclusively in electronic form, and after ing Department, PGNiG SA, ul. M. Kasprzaka 25, who have contributed to PGNiG’s browsing it, we would be grateful if you would 01-224 Warsaw, Poland, marking the envelope fifth CSR Report. share your opinions and comments with us. ‘CSR REPORT’.

Dialogue with our Stakeholders is one of our top With many thanks, priorities. We would like our activities to satisfy Marzena Strzelczak your needs and expectations to the greatest pos- Management Board’s Proxy for Sustainable Devel- sible extent, and for our future reports to better opment and Responsible Business Strategy present the issues of interest to you. This is why Communications and Marketing Department, we’re asking you to send your comments to the PGNiG SA

Responsible Energy 79 Additional information

Glossary of key CSR terms

Community action Social dialogue Global Compact short-term social initiatives carried out on a exchange of information between parties, most An initiative of the former UN Secretary General one-off or regular basis to help a given group or frequently related to common problems and social Kofi Annan to introduce a new framework for person. An example of a one-off community action affairs. Parties participating in social dialogue may businesses by supporting, among other things, is the ‘Krewniacy’ initiative, which promotes dona- include both public and private entities, entrepre- respect for human rights, the application of labour tion of blood for patients in need of transfusions. neurs and non-governmental organisations. The standards, and business activities conducted in success of such dialogue is chiefly determined harmony with the environment. The Global Com- Employee Opinion Survey by good cooperation and the reliability of the pact is supported by various NGOs and more than A tool for investigating the level of job satisfaction information. 1,000 companies from around the world, including among the employees of a given company. The re- Pomorska Spółka Gazownictwa and PGNiG SA. sults give an insight on the most satisfying aspects Dialogue with stakeholders in of their jobs, and reveal potential problems and accordance with AccountAbility’s The ‘Grasz o staż’ initiative areas of conflict that may negatively affect their at- AA1000 standards the longest running internship competition in titude and commitment. This information can help the international AccountAbility AA1000 standards Poland. Launched in 1996 and organised by the the company to better adjust its employee policies are a useful tool in developing and managing Gazeta Wyborcza daily and PricewaterhouseCoop- to the needs and expectations of its workforce. stakeholder relations. The standards help compa- ers. Each year, the winners are awarded paid nies build their relations with stakeholders on trust internships and other prizes (such as post-graduate Declaration on Sustainable and open dialogue, thus contributing to the crea- studies or training programmes, books and materi- Development of Polish Business tion of social capital. They focus on stakeholder re- als etc) funded by the participating companies (previously: Declaration on lations and provide support for their management. and NGOs. Sustainable Development in the The series comprises the following standards: Polish Energy Sector) ••AccountAbility Principles Standard – AA1000APS, HSE (Health, Safety, Environment) a declaration initially signed on June 17th 2009, ••AccountAbility Assurance Standard – AA1000AS, rules of conduct for health and safety at work and containing statements by its signatories that ••AccountAbility Stakeholder Engagement Stand- environmental protection, as defined by interna- they understand and are willing to implement ard – AA1000SES. tional regulations. the principles of sustainable development in their policies. The declaration was signed by the largest Philanthropy Stakeholder companies in the Polish energy sector: EDF Polska, charitable activities which demonstrate care for any entity with an interest in a company’s opera- Enea, GAZ-SYSTEM, GDF SUEZ Energia Polska, the common good, carried out by persons, organi- tions. These may include third parties, such as Tauron, Vattenfall Poland, and PGNiG, the initiator sations or companies to benefit people in need. persons, communities, institutions, organisations of the project. On June 17th 2010, the declaration Such activities mainly involve providing financial or public authorities, and related entities, such as was signed by three more companies – Fortum or material support, and in modern societies company employees or shareholders. Power and Heat Polska, Grupa Lotos and Polskie are chiefly carried out through foundations and Sieci Elektroenergetyczne Operator. Later, the associations. SRI (Socially Responsible initiative was also joined by Dalkia Polska and Investing) PKN Orlen. During a conference on June 14th 2011, Responsible Business Forum an approach to business operations which treats the Declaration was then signed by Dolnośląska a non-governmental organisation whose mission is the company’s benefit and society’s well-being on Spółka Gazownictwa (now Dolnośląski Oddział to promote the principles of responsible business equal terms. Socially responsible investors favour Polskiej Spółki Gazownictwa), Górnośląska Spółka as a standard applicable in Poland, with the aim those companies which comply with or promote Gazownictwa (now Górnośląski Oddział Polskiej of increasing the competitiveness of companies, the principles of sustainable development, envi- Spółki Gazownictwa), Karpacka Spółka Gazownict- enhancing social satisfaction with them, and im- ronmental protection, human rights protection and wa (now Karpacki Oddział Polskiej Spółki Gazown- proving the condition of the natural environment. consumer protection. ictwa), Mazowiecka Spółka Gazownictwa (now The Responsible Business Forum includes a number Mazowiecki Oddział Polskiej Spółki Gazownictwa), of Polish companies, including PGNiG. Pomorska Spółka Gazownictwa (now Pomorski Oddział Polskiej Spółki Gazownictwa), Wielkopolska Spółka Gazownictwa (now Wielkopolski Oddział Polskiej Spółki Gazownictwa), PKP Energetyka, and Energa SA. In 2012, the Declaration was signed by Talisman Energy Polska, Aurelian Oil & Gas Poland, and Strzelecki Energia Sp. z o.o. In 2013, Gaspol SA and Lafarge joined the signatories. Therefore, the group of signatories included companies from outside the industry, which resulted in the change of the Declaration’s name.

80 PGNiG Social campaigns Social programme Organisational structure activities aimed at changing or preventing a certain planned activities aimed at providing a solution the relationships between different positions attitude or behaviour by a given group of people. to, or preventing a specific social problem; may within a company, also applicable to its subordi- Social campaigns are carried out using mass media be implemented independently or as a joint ef- nate organisations and associations. The purpose (traditional media, unconventional methods) fort by public institutions, businesses and social of organisational structure is to clearly define and are supported by numerous entities. These organisations. the division of duties and hierarchy of powers. include companies, social organisations and public A strong organisational structure facilitates ef- authorities whose assistance to the initiators of the CSR report ficient management of the company. campaign may take different forms, be it financial, a company’s comprehensive report on its im- material or in the form of services. A company’s plementation of sustainable development and Voluntary work involvement in a social campaign strengthens its corporate social responsibility strategy. It focuses the involvement of company employees in volun- image by presenting it as an entity with an active on economic, social and environmental aspects of tary work for the benefit of social organisations. interest in its environment, and is an opportu- the company’s operations. Employees volunteer their time and expertise to nity for it to build stronger relationships, both carry out various types of activities for people between its employees and between itself and CSR (Corporate Social in need, often also improving their skills in other particular groups. Responsibility) areas. Depending on the policy adopted, the a business strategy based on the assumption that company supports voluntary work by its employ- Company Code of Values/Ethics a company should voluntarily take the public inter- ees by allowing them to do so during working the code of values adopted by a company, defin- est into consideration in its pursuit of economic hours, or by providing material, logistic or financial ing its organisational culture. A common code of objectives. CSR promotes the observance of ethical assistance. values promotes higher awareness of unwritten principles, employee rights, human rights, as well principles and company rules among employees, as a respect for the social and natural environ- Sustainable development allowing them to build a closer relationship with ment in which a company operates and makes its a development strategy wherein political, eco- their company and the other employees. decisions. It is generally accepted that a company’s nomic and social activity is conducted in such a policy should provide not only for achievement of way as to avoid or limit its impact on the natural Value chain economic objectives, but also implementation of environment. The aim of sustainable development clearly defined activities performed by specific corporate social responsibility principles. is to ensure that natural resources are used in a companies which form a common value system. way which allows future generations to also utilise A value chain clearly demonstrates mutual de- Local community them. The concept of sustainable development is pendencies between companies and the process of the people living in a specific area and bound included in the Environmental Protection Law – adding value to a product. by social relationships, common traditions and Dz.U. of 2001, No. 62, item 627, Art. 3.50. culture. A local community can define a locality, Cause-related marketing commune, housing estate, town or city district. an intermediate form of marketing between com- mercial and social marketing that involves support- Sponsorship ing a social cause while strengthening the image of a mutual agreement between two parties: a spon- the company. The implementation of cause-related sor and a sponsoree, in which the sponsor provides marketing very often involves three parties: the the sponsoree with financial or material resources company, social organisations and consumers. or services in exchange for promotional activity. Sponsorship involves planned and intended activi- ties designed to impute a positive image to the sponsoring company.

Responsible Energy 81 Additional information

Glossary of industry terms

Biogas plant PGNiG Group Distribution network a plant which ferments substrates, such as energy the Polskie Górnictwo Naftowe i Gazownictwo a gas network of low, medium and high pressure, crops, livestock waste, distillery waste, and meth- Group. other than a mine pipeline or a direct pipeline. The ane from landfill sites, into biogas. The resulting responsibility for network traffic rests with the gas fuel can be combusted on-site by small cogenera- LNG (Liquefied Natural Gas) distribution companies. tion units (0.5–2 MW). natural gas in a liquid state, with a temperature of -163°C. During the liquefaction process the gas SGT CCS (Carbon Capture and Storage) is cooled to -163°C, which also reduces its volume the abbreviated name of System Gazociągów a process of capturing carbon dioxide from flue 630 times. Tranzytowych EuRoPol GAZ SA. The company is gasses to reduce its emission into the atmosphere, responsible for natural gas transmission along the thus mitigating its negative impact on the environ- LLDP Polish section of the Yamal transit pipeline, which ment. Because of the limited use for captured Local Land Development Plan. connects the Russian Federation with Western carbon dioxide, one important issue related to the Europe. process is the compression of CO2 and its storage OGP GAZ-SYSTEM in underground caverns that used to hold hydro- the abbreviated name of Operator Gazociągów Gas distribution company carbon deposits. Przesyłowych GAZ-SYSTEM S.A. The company an energy company distributing gas fuels, respon- was established on April 16th 2004 under the sible for network traffic in the gas distribution CNG (Compressed Natural Gas) name PGNiG Przesył Sp. z o.o. as a wholly-owned system, the ongoing and long-term security of natural gas compressed at a pressure of 20-25 subsidiary of PGNiG. On April 28th 2005, 100% of the system’s operation, as well as the operation, MPa and used as vehicle fuel for spark ignition and its shares were acquired by the State Treasury. maintenance, repair and necessary extension of compression ignition engines. Currently, OG PGAZ-SYSTEM operates as a gas the distribution network, including the intercon- transmission system operator under a licence is- nectors with other gas systems in the relevant Distribution sued by the Polish Energy Regulatory Office. geographical area. transport of gas fuels to customers via distribution networks. Transmission System Operator Environmental Management (TSO) Systems Exploration and Production, E&P an energy company involved in the transmission of the systems defined in the ISO 14001 standard, one of PGNiG’s operating segments. The companies gas fuels, responsible for network traffic in the gas based on the principles of comprehensive quality operating in this segment are engaged in explora- transmission system, the ongoing and long-term management. The main assumption of environ- tion, geophysical and geological work, as well as security of the system’s operation, as well as the mental management is to reduce the negative im- production of natural gas and crude oil. operation, maintenance, repair and necessary pact of human activity on the natural environment. extension of the transmission network, including This can be achieved by application of uniform Shale gas the interconnectors with other gas systems. management principles governing access to envi- gas from shale formations. The United States is ronmental resources, elimination of the negative the largest shale gas producer in the world. In Underground Gas Storage Facility environmental impact of business activities and Poland, there has been a surge in interest in shale the PGNiG Group is the exclusive owner of the rational consumption of natural resources. gas, which – according to estimates – lies here at underground gas storage facilities in Poland. These depths ranging from 500 metres to 4 kilometres, in are six high-methane gas storage facilities, five URE (Urząd Regulacji Energetyki) a diagonal belt stretching from central Pomerania of which are located in worked-out natural gas the Energy Regulatory Authority. Under applicable to the Lublin region, and within the foreland of the caverns, with the sixth located in the salt caverns regulations, the President of URE is responsible Sudety Mountains. under Mogilno. for approving the tariffs submitted by holders of licences which authorise them to conduct business Natural gas Transmission involving trade in and storage of gas fuels. a natural mixture of paraffin hydrocarbons, transport of gas fuels through transmission net- primarily consisting of methane (up to 98% in high- works to distribution networks or end customers methane gas). Natural gas is often found in the connected to the transmission network. form of deposits in the Earth’s crust. Transmission network Direct gas pipeline a gas network of low, medium and high pressure, a gas pipeline used for the transmission of gas fuel other than a mine pipeline or a direct pipeline. The directly to customer installations, bypassing the responsibility for network traffic rests with the main gas distribution network. Transmission System Operator.

82 PGNiG Shale gas

Shale gas Gas fuel Proppant natural gas obtained from shale rock, character- a mixture of combustible and non-combustible a type of sand added to a fracking fluid (with prop- ised by a high content of organic matter but low gases, natural or manufactured, approved for use pant concentration of 4.5%), applied in hydraulic porosity and permeability. The first attempts to as a source of energy in households, municipal fracturing operations. A proppant prevents frac- extract gas from shale formations date back to the services, industry and transport. tures in shale rock from closing and allows gas to 19th century. In 2011, the global shale gas market flow more easily within the formation. was worth USD 27 billion. As regards its compo- Hydraulic fracturing (fracking) sition, shale gas does not differ from gas from the process of creating fractures in rock formations Shale gas deposit conventional sources with the use of a special fracking fluid, which is pockets of natural gas trapped in shale rock. a mixture of water and sand (99.5%) and chemi- Shale cal additives (0.5%). Hydraulic fracturing is a well Horizontal borehole a fine-grained sedimentary rock whose charac- intensification method, used to extract natural gas a directional borehole whose trajectory in its teristic feature is fissility. The mineral content of from shales. end section is horizontal or close to horizontal. shales may vary – most often clay minerals prevail, It is drilled along gas-bearing layers. Horizontal but they may also contain quartz, feldspar, carbon- Drilling pad boreholes are of key importance in shale gas pro- ates and organic matter. As shales may contain a site accommodating an assembled and fully duction. They help expand the territorial scope of layers of mudstone or sandstone, an appropriate operational drilling rig, along with all the technical exploration without the need to enlarge the area adjective should be used in their names (e.g. argil- infrastructure and necessary auxiliary facilities. occupied for that purpose on the surface. Hori- laceous shale, arenaceous shale, mud shale). In zontal drilling technology minimises the need to favourable conditions, natural gas was generated Shale gas production facility acquire land necessary to search for and produce in those shales that were rich in organic matter. In (shale gas production site) a small area of land with hydrocarbons. Poland, gas-bearing shales are found at depths of wellheads used to collect hydrocarbons extracted 2.5 km or more. from pads. The hydrocarbons are then gathered Underground aquifers and transported for sale to wholesale and retail rock layers which contain free water (i.e. water Well customers. capable of moving) in open spaces (pores and a completed borehole drilled in a rock formation fractures). If the temperature of the water is high, for investigation, exploration, documentary or pro- Production wellhead it is called thermal water. Water-bearing layers can duction purposes. Boreholes are drilled on the ba- enables receipt/injection of gas/fluids into a well. be encountered along the entire drilled section. sis of an Operations Plan approved by the Regional The wellhead is a steel assembly resistant to high Mining Authority (Okręgowy Urząd Górniczy). pressures and fitted with valves to enable flow Drilling rig All work must be conducted in compliance with control. Production wellheads are designed for a set of devices including a mast or derrick, power Polish law and safety regulations. The structure of various pressures. Only a wellhead whose opera- generation equipment, mud systems and all tools a borehole must meet all the safety requirements tional pressure is higher than the highest pressure necessary to drill boreholes. defined in the applicable laws. For this reason, in the borehole can be installed in that borehole. several strings of cemented casing are placed in a The wellhead is mounted on the casing head. well to ensure its tightness, joined by a casing head on which the production wellhead is mounted.

Responsible Energy 83 Polish Oil & Gas Company (­PGNiG SA) 25 M. Kasprzaka St., 01‑224 Warsaw, Poland tel. +48 22 589 45 55, fax +48 22 691 82 73 www.pgnig.pl