Annual Report 2018 Pgnig - Polish Oil and Gas Company ANNUAL REPORT
Total Page:16
File Type:pdf, Size:1020Kb
Annual Report ANNUAL REPORT 2018 PR Department E-mail: [email protected] 2018 PGNiG - Polish Oil and Gas Company Marketing Department Phone: +48 22 106 45 92 Investor Relations Division Phone: +48 22 106 43 22 Phone: +48 22 106 48 46 Phone: +48 22 106 47 97 E-mail: [email protected] View the Annual Report online Website: ri.pgnig.pl Visit www.en.pgnig.pl PGNiG - Polish Oil and Gas Company to view the Annual Report in interactive format or download it as a PDF file Head Ofice 25 M. Kasprzaka, 01-224 Warsaw Phone: +48 22 106 45 55 Legend Website: pgnig.pl Notes in the margins refer to information highlighted in the Report. key to acronyms and abbreviations used in the Report websites containing additional information aupplementary information, definiotions and comments 07.12.2018 OPEC’s decision 19.12.2018 to reduce oil Contents 12.11.2018 production by LNG supply Calendar of events in 2018 US dollar exchange rate 1.2m barrels per contract with against the zloty at annual day from January Port Arthur LNG, 25.01.2018 highs (PLN 3.84). to June 2019. LLC. PLN President of URE’s decision to reduce the prices and rates of network fees under the PSG Distribution Tariff by 7.37%. 02.10.2018 08.11.2018 29.01.2018 PAO Gazprom and OOO Gazprom Export file LNG supply Agreement with Energinet for the provision of gas 26.06.2018 a complaint to reverse the partial award issued contract with 8 Letter from the Chairman transmission services, as part of the 2017 Open Agreements with Port by the Arbitration Institute. Cheniere Season procedure of the Baltic Pipe project. Arthur LNG, LLC and Marketing of the Supervisory Board Venture Global LNG, Inc., 28.09.2018 International, LLP. 01.03.2018 setting out the key terms of LNG supply contracts with Venture a contract for LNG supplies. Global Calcasieu Pass, LLC oraz Venture 10 Letter from the President PPX gas price at annual peaks Global Plaquemines LNG, LLC. (PLN 208/ MWh). 23.06.2018 OPEC’s decision 24.12.2018 of the Management Board to increase oil PGNiG included 08.03.2018 production by 1m in the Stoxx Agreement for the barrels per day from Europe 600 12 Environment and shareholders provision of a PLN July 2018 30.06.2018 index. 450m loan to ECSW Arbitration Institute issues a partial ad hoc award in by PGNiG and BGK. the arbitration proceedings brought by PGNiG against PAO Gazprom and OOO Gazprom Export concerning 56 Strategy the price of gas under the Yamal contract. 78 PGNiG in 2018 23.01.2018 26.07.2018 18.10.2018 WIG20 at 2,630 points President of URE’s Agreement – the highest level for decision to increase for the 104 Exploration and Production almost 10 years. the price of gas fuel purchase by 30.11.2018 06.12.2018 02.03.2018 under the PGNiG OD PGNiG UN Final investment Acquisition of Contract with Retail Tariff by 5.9%. of interests decision of hydrocarbon 122 Trade and Storage Naftogaz in the Gaz-System and exploration, following the Tommeliten Energinet regarding appraisal and 19.01.2018 suspension of 24.09.2018 Alpha field. the construction of production rights 138 Distribution Agreement with GAZ- gas deliveries the Baltic Pipe. in Ras Al Khaimah PGNiG is (UAE). SYSTEM for the provision to Ukraine by included in the of gas transmission Gazprom. FTSE Russell services, as part of index. 146 Generation the 2017 Open Season 09.05.2018 Norwegian Ministry of Petroleum and Energy 29.10.2018 procedure of the Baltic PGNiG Management Board’s decision to pay Pipe project. approves geological documentation and field development plans for Ærfugl and Skogul. 25.09.2018 interim dividend from the 2018 net profit. 154 Other segments PGNiG Management Board’s proposal to the EGM 14.03.2018 19.04.2018 20.07.2018 concerning amendments to 160 Financial results President of URE’s decision to increase Agreement between PGNiG OD and LOTOS Asfalt PGNiG AGM’s decision the Articles of Association 03.10.2018 the price of gas fuel under the PGNiG OD for joint provision of LNG bunkering services. on the allocation of enabling the payment of Brent oil prices on annual peaks - over $ 86 per barrel. Retail Tariff by 1%. net profit for 2017. interim dividend. PGNiG share price in 2018 172 Corporate Governance January February March April May June July August September October November December 193 Converters and dictionary 194 Contact This publication is printed on paper fully FSC certified products are sourced from forests recycled from waste paper, bleached without managed in a way beneficial to both the environment chlorine gas. and local communities, i.e. in line with the Forestry Best Practice. ANNUAL REPORT 2018 PGNiG − Polish Oil and Gas Company Business Exploration & Production The entire process of oil and gas exploration and production, from geological analyses, Model to geophysical surveys and drilling work, to field development and hydrocarbon production. Storage The gas storage The transmission activities and services system operated by in underground facilities. Distribution OGP GAZ-SYSTEM SA The transmission of gas over the distribution network to Trade (retail sale) retail and corporate customers. Sales of natural gas to households and small & medium companies. PSG’s Trade (wholesale) distribution Sales of natural gas network to the biggest industrial customers and PPX. Electricity Generation network The production of heat and electricity, as well as execution of major natural gas-fired projects in the power sector. Heat network 2 ANNUAL REPORT 2018 3 Contents 8 Letter from the Chairman of the Supervisory Board 10 Letter from the President of the Management Board 12 Environment and stakeholders 56 Strategy 78 PGNiG in 2018 104 Exploration and Production 122 Trade and Storage 138 Distribution 146 Generation 154 Other segments 160 Financial results 172 Corporate Governance 193 Converters and dictionary 194 Contact 4 ANNUAL REPORT 2018 5 Model of value creation 6 ANNUAL REPORT 2018 7 Letter from the Chairman of the Supervisory Board Ladies and Gentlemen, As Chairman of the PGNiG Supervisory the PGNiG Supervisory Board in 2019. Without Board I am proud that for the third consecutive doing so, it would be hardly possible for the In 2018, the Polish economy confirmed its gro- Given these developments, the PGNiG time PGNiG secured a top spot in the ‘Transpa- Company to expand its operations in any busi- wing role in Europe – with GDP up by more Management Board once again proved extre- rent Company of the Year’ competition organi- ness segment in the long term. than 5%, we were one of the fastest-develo- mely effective, as confirmed not only by the sed by the Institute of Accountancy and Taxes The beginning of 2019 and the lack of ping economies in the European Union. Never- record high profit delivered in 2018, but also and the Gazeta Giełdy Parkiet daily. macroeconomic stability seen on the gas and theless, last year was certainly a difficult period by a number of key initiatives supporting the The Supervisory Board’s activities are oil markets show that the PGNiG Management for businesses operating in the gas and oil sec- PGNiG Group Strategy for 2017–2022 (exten- strongly focused on the information policy and Board and the Group employees have a period tors. The prices of raw materials remained high ded until 2026), approved in March 2017. corporate governance – each Member of the of hard work ahead. Further improvement for most of the year, which undoubtedly bene- Effective supervision over the progress in Supervisory Board knows that these are fun- of processes will not only enable delivery of fitted upstream companies, such as the PGNiG the strategy implementation was also among damental issues for every company which is sound operating and financial performance in Group. However, we should also take into the priorities of the PGNiG Supervisory Board in mature and open to dialogue. Fulfilment of the short term, but will also make it possible to account the multitude of factors which, from 2018. Last year, the PGNiG Management Board disclosure requirements has long ceased to remain optimistic about the Company’s deve- the perspective of management tasks, proved made a number of crucial decisions to diver- be a mere regulatory burden for us. On the lopment in 5, 10, or 15 years’ time. On behalf to be a major challenge. I am referring here sify gas supply sources, including the execu- contrary, we perceive it as a great opportu- of the PGNiG Supervisory Board, I can say that to fluctuations in commodity prices, the pro- tion of long-term contracts for LNG imports nity for the Group’s development, for exam- we are ready for that. We will continue to sup- gressing decoupling of gas prices from oil pri- from American partners, or the acquisition of ple because it strengthens our image as a tru- port all promising solutions which, when mate- ces, a rapid expansion of the LNG market, and the Tommeliten Alpha licence on the Norwe- sted trading partner and increases security, rialised, may increase the PGNiG Group’s value important decisions concerning the energy gian Continental Shelf. The effects of initiati- making us better placed to successfully com- and improve Poland’s energy security. sector, made both at the national level (inclu- ves geared towards increasing Poland’s energy pete on the challenging commodity market. ding adoption of the National Energy and Cli- security and improving the PGNiG Group’s I would like to assure you that maintaining a Respectfully yours, mate Plan for 2021–2030) and on the interna- terms of trade will be felt in the coming years high degree of transparency and compliance Bartłomiej Nowak tional arena.