Directors Report Pgnig Group 2014 EN
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DIRECTORS’ REPORT ON THE OPERATIONS OF THE PGNIG GROUP IN 2014 Warsaw, February 19th 2015 Directors’ Report on the Operations of the PGNIG Group in 2014 Contents Contents ................................................................................................................. 2 Section I: PGNiG Group ....................................................................................... 5 1. Group structure ............................................................................................................................... 5 2. Ownership interests in other related entities ................................................................................... 9 3. Workforce ..................................................................................................................................... 10 Section II: Parent’s governing bodies ................................................................. 11 1. Management Board ....................................................................................................................... 11 2. Supervisory Board......................................................................................................................... 13 Section III: Shareholding structure ..................................................................... 15 Section IV: PGNiG Group’s development directions ......................................... 17 Section V: Operating review of the PGNiG Group ............................................ 19 1. Operating data ............................................................................................................................... 19 2. Events in 2014 ............................................................................................................................... 21 Section VI: Regulatory environment................................................................... 23 1. Polish Energy Law ........................................................................................................................ 23 1.1. Licences ................................................................................................................................. 24 1.2. Changes in gas fuel tariffs ..................................................................................................... 24 2. Act on Stocks of Crude Oil, Petroleum Products and Natural Gas ............................................... 27 3. Polish Geological and Mining Law............................................................................................... 28 4. Regulatory risks ............................................................................................................................ 29 Section VII: Exploration and Production ............................................................ 31 1. Exploration .................................................................................................................................... 31 2. Joint operations ............................................................................................................................. 32 2.1 Joint operations in Poland ....................................................................................................... 32 2.2. Joint operations abroad .......................................................................................................... 33 3. Production ..................................................................................................................................... 36 4. Sales of key products .................................................................................................................... 38 5. Service activities ........................................................................................................................... 39 Page 2 of 89 Directors’ Report on the Operations of the PGNIG Group in 2014 6. Planned activities .......................................................................................................................... 40 7. Risks related to exploration and production .................................................................................. 41 Section VIII: Trade and Storage .......................................................................... 44 1. Purchases of natural gas ................................................................................................................ 44 2. Sales of natural gas ....................................................................................................................... 45 3. Electricity ...................................................................................................................................... 48 4. Storage .......................................................................................................................................... 49 5. Planned activities .......................................................................................................................... 51 6. Risks related to trade and storage.................................................................................................. 51 Section IX: Distribution ...................................................................................... 53 1. Segment’s operations .................................................................................................................... 53 2. Planned activities .......................................................................................................................... 56 3. Risks related to distribution .......................................................................................................... 57 Section X: Generation ......................................................................................... 59 1. Segment’s operations .................................................................................................................... 59 2. Planned activities .......................................................................................................................... 60 3. Generation risks ............................................................................................................................ 61 Section XI: Other Activities ................................................................................ 62 1. Segment’s operations .................................................................................................................... 62 2. Planned activities .......................................................................................................................... 63 3. Risks related to other activities ..................................................................................................... 63 Section XII: Investments ..................................................................................... 64 Section XIII: Environmental protection .............................................................. 67 Section XIV: Other information .......................................................................... 70 Section XV: Financial performance .................................................................... 73 1. Financial performance in 2014...................................................................................................... 73 1.1. Key financial and business data ............................................................................................. 73 1.2. Financial standing .................................................................................................................. 77 2. Financial management .................................................................................................................. 82 2.1. Short-term investments .......................................................................................................... 84 Page 3 of 89 Directors’ Report on the Operations of the PGNIG Group in 2014 2.2. Borrowings ............................................................................................................................ 84 2.3. Guarantees and sureties ......................................................................................................... 85 2.4. Financial risk management .................................................................................................... 86 3. Projected future financial standing................................................................................................ 87 Appendix: Statement of compliance with corporate governance rules by Polskie Górnictwo Naftowe i Gazownictwo S.A. in 2014 Page 4 of 89 Directors’ Report on the Operations of the PGNIG Group in 2014 Section I: PGNiG Group The PGNiG Group operates in the energy sector in Poland and abroad. The parent of the PGNiG Group is Polskie Górnictwo Naftowe i Gazownictwo S.A. Polskie Górnictwo Naftowe i Gazownictwo Spółka Akcyjna (PGNiG S.A.), with its registered office in Warsaw, ul. Marcina Kasprzaka 25, was established through transformation of the state-owned enterprise Polskie Górnictwo Naftowe i Gazownictwo into a state-owned stock company. On October 30th 1996, the Company was entered in the commercial register as Polskie Górnictwo Naftowe i Gazownictwo S.A. of Warsaw, under entry No. RHB 48382. On November 14th 2001, PGNiG S.A. was entered into the Register of Entrepreneurs of the National Court Register under No. KRS 0000059492. On May 24th 2005,