Polish Oil and Gas Company

Company Overview

May 2018 Agenda 1. PGNiG Group & Polish Gas Market

2. PGNiG Segments

Exploration and Production

Trade and Storage

Distribution

Generation

3. Strategy, CAPEX

4. Appendix – Changes in segments presentation according to IFRS 15, financial results Agenda

PGNiG Group and Polish Gas Market Poland’s no.1 integrated group in the oil and gas sector

4 The biggest industrial Polish company on the Warsaw Stock Exchange**

The share price of PGNiG and WIG20 from January 2012 together with the rate of return. Listed on WSE since September 2005 PLN rate of return 8.0 PGNiG WIG20 (relative rate) *** 80% Market cap, of PLN 35.5bn 7.0 (EUR 8.3bn, USD 9.7bn)* 60% 6.0 Significant share in WIG 20 40% based on number of shares in 5.0 20% the index: 5% 4.0 0% Third largest company on

3.0 -20% WSE**

2.0 -40% Q1'12 Q3'12 Q1'13 Q3'13 Q2'14 Q4'14 Q2'15 Q4'15 Q3'16 Q1'17 Q3'17 Q1'18

PGNIG PKN Orlen PZU PKO BP PGE BZWBK PEKAO Shareholders (as at March 31, 2018)

PLN bn 55 Free Float PKO BP 50,3 28.12% Average daily 45 turnover in Q1 2018: PLN 24.7m BZ WBK 35,6 State Treasury 35 PGNiG 35,5 71.88% PKN Orlen 35,4 PZU 32,4 PEKAO 29,9

25

PGE 17,7 15 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18

* PGNiG = 6.15 PLN and EUR/PLN = 4.30; USD/PLN = 3.67 (as at May 23rd 2018) / ** in terms of market cap as at May 23rd 2018 /*** WIG20 quotation chart, taking into account relative changes in percentage in relation to the PGNiG exchange rate 5 Gas market in Poland: Low consumption with growth potential Natural gas sales by sector in the world Natural gas consumption by country in 2016 in 2016

bcm 90 2016 80.5 Non-combusted 5% 80

70 64.5 Transport 1% 60 Buildings Inputs to 21% 50 power 39% 40 28.0 29.0 30 17.3 20 10.6 7.8 8.7 8.9 Industry 10 33%

0 Czech Republic Austria Hungary Romania Poland Spain Ukraine Italy Germany

Natural gas sales by sector by PGNiG in Poland in 2017 and 2016 Primary energy consumption by fuel in 2016 2017 Others 2% 100% Power Plants 5% 4% 12% 9% 16% Nuclear energy 10% 8% 80% 2016 Residential and 27% 43% Renewables Commercial 29% 37% 60% 40% Natural gas

40% 43% Oil Industry 51% 49% 20% Coal 17% 0% EU Poland Source: BP Statistical Review 2017, BP Energy Outlook 2018 / Gas consumption comprises sales, as well as in-house consumption and change of inventories 6 Gas market worldwide

Primary energy consumption by fuel Natural gas demand m t oil eq. 40% 5,000 Oil 4 707 4 426 4 148 Asia Pacific 4,000 3 861 30% 3 534 Africa Coal Oil 27% 3 204 Gas 26% 3,000 2 874 Middle East Gas Coal 21% 2 499 20% Europe & Eurasia 2 182 1 920 S & C America 2,000 1 767 Renewables 14% North America 10% 1,000 Hydro Hydro 7% Nuclear Nuclear 5%

Renewables 0% 0 1990 1995 2000 2005 2010 2016 2020 2025 2030 2035 2040 1990 1995 2000 2005 2010 2016 2020 2025 2030 2035 2040

Annual LNG supply by region Annual LNG demand by region m t m t 500 400 345 413 334 392 318 296 MENA* 400 361 North America 340 300 265 311 240 246 Latin America 279 284 Australia 300 Asia (without JKT) Other 200

200 North America MENA*

100 Europe 100 South Asia

Japan/Korea Africa /Taiwan 0 0 2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020

* Middle East-North Africa / Source: IHS, BP Energy Outlook 2018 7 Exploration & Production

Agenda Operating segments Trade & Storage of PGNiG Group

Distribution

Generation PGNiG Group’s financials 2010-2017

PGNiG Group’s EBITDA** 8th biggest company in Central and Eastern Europe* PLNbn 7.5 6.6 3rd biggest oil company in the 6.4 6.0 5.6 6.1 region* 6.0 4.4 4.6 3.9 Stable EBITDA level due 3.1 2.4 2.2 4.5 3.5 3.4 to diversified inflows sources 1.2 2.0 0.6 0.6 3.0 1.0 0.8 1.9 0.5 0.2 2.3 2.6 2.5 1.5 2.0 2.3 1.7 1.6 1.6 0.7 0.8 0.8 0.0 -0.1 0.5 0.5 0.5 -0.4 2010 2011 2012 2013 2014 2015 2016*** 2017 -1.5 Heat and Power Generation Distribution Trade and Storage Expoloration and Production

EBITDA breakdown

PGNiG Group’s revenue and net profit 2017 Trade & Storage -7% PLNbn Expoloration & 40 36,46 Revenue 35.86 Production 10% 34.30 33.20 59% 35 32.12 2016

28.73 43% 30 37% 23.00 25 21.28 13% Distribution 20 38%

15 Generation 13% 10 Other segments’ contribution to EBITDA in 2017: -3%; in 2016: -3% 2.82 Net profit 2.92 5 2.46 1.63 2.23 1.92 2,14 2.35

0 2010 2011 2012 2013 2014 2015 2016 2017

* Source: TOP 500 CEE 2017 / ** EBITDA 2010-2015 before intra-group eliminations and excluding „Other segments” *** restated, -0.2 PLNbn of other segments not presented on chart 9 Exploration & Production summary

Production volumes PGNiG SA is a leader in production of gas and crude mm boe 50 oil in Poland 40.3 38.8 38.9 39.2 39.1 37.6 37.9 40 Average daily production – over 4.9 2.1 3.1 4.2 3.5 3.9 3.4 30.9 31.3 31.4 114,000 boe** 6.0 5.8 5.6 5.9 6.1 6.4 6.1 30 3.4 3.6 3.7 2.4 3.1 4.0 3.7 4.5 4.5 4.5 PGNiG’s resource base 20 in Poland***: 27.2 27.9 27.8 27.2 26.0 25.8 25.0 24.8 24.5 25.1 10 proved gas reserves 538 mm boe (86.1 bcm)* proved oil reserves 124 mm boe 0 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F (17.4 m tonnes) Natural gas Poland Natural gas Abroad Crude oil and condensate Poland Crude oil and condensate Abroad

Oil & Gas concessions in Poland***: Reserves of natural gas and crude oil 23 exploration/appraisal mm boe Crude oil/NGL/Condensate Gas 25 combined licences 1,000 854 860 847 213 production 805 796 795 768 770 800 Exploration & Production 600 680 685 675 activities: 643 622 589 609 632 400 54 production facilities in Poland over 2 thousand producing wells 200

174 175 172 162 174 179 161 163 0 2010 2011 2012 2013 2014 2015 2016 2017

* High-methane gas equivalent; ** As at March 31st 2018; *** As at December 31st 2017 10 100 120 140 Exploration 0.0 1.0 2.0 3.0 4.0 Explorationand Average 20 40 60 80 0 USD/ PLNbn Q1 77 * restated bbl Q2 79 2010 2010 1.2 Q3 prices 76 Q4 87 105 Q1 of of Production’s 117 Q2 2011 2011 crude 1.9 113 Q3 109 Q4 oil 119 Q1 109 Q2 2012 2012 EBITDA 2.0 110 Q3 & 110 Q4 113 Q1 Production 103 Q2 2013 2013 3.4 110 Q3 109 Q4 108 Q1 110 Q2 2014 2014 3.1 102 Q3 Q4 76 Q1 54 Q2 62 2015 2015 Q3 2.4 50 Q4 43 Q1 35 financial Q2 46 2016 2016* Q3 46 2.2 Q4 50 Q1 54 Q2 50 2017 Q3 52 2017 3.9 Q4 61 2018 Q1 67 results Segment’s Segment’s PLNm PLNm from gas from sales recorded theby PLN tonnes increase condensate up PLN Revenue 2017 by Average Revenue Revenue +16% 1 851 + 7 5 289 % 15% 107 1 979 6 118 in Q12018 m in sales volumes, volumes, sales in from sales from of crude and oil results results (+10%) in Operating Operating expenses expenses of Brent oil oil Brent of +11% -

767 4 151 20% Q1 2018 2018 Q1 for for for for

851 3 314 . y/y Q1 Q1 2018 85 FY2017 vs FY2016* increase inincrease revenue m m y/y EBITDA EBITDA 1 376 2 206 +75% to with 429

1 380 3 865 vs prices segment a thousand Q1 +10 +146% EBIT EBIT 1 084 +4% 1 138 % y/y% .

1 128 2 805 up 11 International E&P activities – Norway

Licenses 21

USD 360m (Skarv) Licence cost NOK 1.95bn (Morvin, Vale, Vilje, Gina Krog)

Skarv CAPEX (PGNiG’s part) approx. USD 800m

55 mmboe (Skarv, Snadd) Reserves of the licence (2P) for PGNiG 28 mmboe (Morvin, Vale, Vilje, Gina Krog, Ærfugl, Skogul)

Production in Norway

mm boe Crude oil Natural gas 9.0 8.6 8.0 7.4 7.0 7.0 7.0 5.8 5.9 6.0 4.9 4.1 3.4 5.0 4.3 3.8

4.0 3.1 3.3

3.0 2.1

2.0 3.7 3.3 3.5 3.2 2.7 2.6 1.0 2.2

0.0 2013 2014 2015 2016 2017 2018F 2019F

12 International E&P activities – Pakistan and other

Assets: Pakistan Other foreign activity in 2017

Seismic works: Acquisitions of seismic data: Algeria, Austria, Croatia, Colombia, Myanmar, Tunisia, Egypt, Germany. Processing and interpretation of seismic data: Algeria, Austria, Spain, Iran, Yemen, Norway, Pakistan, Switzerland and Morocco.

Licence Kirthar Drilling works: Main drilling areas: Pakistan, Kazakhstan, Ukraine agreement May 18th 2005 Libya shares PGNiG 70%, Pakistan Petroleum 30% Since 2008, one license for mining (LC113). area 956 sq km In mid-2014, a force majeure notification. location Sindh province, folded belt Kirthar In 2017, activities limiting the impact of force majeure and verification of the prospects of obligations 2 wells, 100 km 2D (fulfilled) the license. 14.2 bcm of natural gas estimated reserves (10.5 bcm Rehman, 3.7 bcm Rizq)

In March 2017: the Rehman-3 borehole was completed, and in October the Rizq-1. In November 2017: Rehman-4 and preparatory works for Roshan-1 and Rehman-5.

13 Gas supply & sales

Trade and Storage segment comprises: Sources of gas supply of PGNiG SA in Poland

sales of natural gas (both imported and domestic) to retail and bcm wholesale markets, sales and trading of electricity 20 17.5 15.4 storage of gas 15.2 15.3 15.0 16 1.7 14.3 13.7 1.0 1.6 2.0 13.3 2.3 Polish market growth: CAGR +2.7% 2005-2017 1.0 2.1 0.3 1.6 1.2 12 Contract for natural gas deliveries with Gazprom 9.0 9.3 9.0 10.2 9.7 („Yamal contract”) until 2022: 8 8.7 8.1 8.2 10.2 bcm annually, 85% Take-or-Pay 4 Contract for LNG with Qatargas until 2034: 4.2 4.3 4.3 4.2 4.0 4.0 3.9 3.8 0 1.3 bcm annually, 100% Take-or-Pay. Deliveries since June 2016 2010 2011 2012 2013 2014 2015 2016 2017

side agreement (the total volume will increase to 2.7 bcm per annum, LNG Western/Southern direction Eastern direction Domestic production in 2018-2020 volume will be increased to 2.9 bcm) Storage capacity (incl. storage capacity used only by E&P segment)

bcm 2.2 bcm of gas sold by PGNiG Supply & Trading to 4.0

customers outside of Poland in 2017 3.5 3.2 3.2 3.2 3.0 Tariffs: 3.0 2.8 2.5 Gas sales: Cost of gas + operating costs + margin 2.1 1.8 1.8 2.0 Retail: PGNiG Retail’s cost base including cost of gas on the commodity exchange 1.5 Storage: Cost + return on capital (6.0% WACC x PLN 3.6bn RAB) 1.0 (until March 2018) 0.5

0.0 2010 2011 2012 2013 2014 2015 2016 2017

14 Trade & Storage’s financial results

Trade and Storage’s EBITDA Revenue growth driven by PLNbn 1.2 higher sales volumes

1.0 In Q1 2018 revenue from gas sales up 16%, 1.0 led mainly by an 13% y/y rise in volumes. 0.8 0.8 0.6 0.6 0.6 0.5

0.4 0.2 0.2 Segment’s results for FY 2017 vs FY 2016* PLNm 0.0 +8% +12% -171% -258% -0.1

-0.2 -0.4

31 135 31

30 495 30 28 28 180 -0.4 27 775

2010 2011 2012 2013 2014 2015 2016* 2017

640

435

-

-

614 405

* restated Revenue Operating EBITDA EBIT expenses

Segment’s results for Q1 2018 Sales of natural gas of PGNiG SA, PGNiG Retail and PST Data restated for comparability in connection with the bcm application of the new IFRS 9 and IFRS 15 Financial 30 26.8 Reporting Standard with effect from 1 January 2018 24.7 PLNm +17% +20% -50% -57% 25 23.0 2.2 2.5 18.7 2.3 20 8.5 16.2 1.8 9.1

8.3 10 209 10 1.4 076 10

15 3.7 8 697 0.1 8 389

7.5

358

308 179 8.6 133 10 6.9 7.7 7.3 Revenue Operating EBITDA EBIT expenses 5 8.6 6.2 5.5 5.1 6.1 0 2013 2014 2015 2016 2017 PGNiG Supply & Trading Polish Power Exchange Retail Wholesale

15 15 Distribution

Stable network’s growth and increase of distributed volumes (+3.4% CAGR 2005-2017) The owner of approximately

thou. km bcm 96% of Poland’s distribution 220.0 13 network and nearly 99% of the 11.6 210.0 12 10.9 gas service lines 200.0 11 9.9 10.1 190.0 9.6 9.8 9.5 10 Transports natural gas from gas 180.0 183 9 sellers to households, industrial 180 170.0 177 173 8 and wholesale customers 160.0 7 150.0 Responsible for operation, 6 140.0 148 150 maintenance and development 130.0 140 5 of gas pipelines 120.0 4 '11 '12 '13 '14 '15 '16 '17 Segment comprises of Polska Distribution network with service lines(lhs, thou. km) Volume of distributed gas (rhs, bcm) Spółka Gazownictwa (PSG)

Coverage of distribution network Tariff: The new Tariff No. 6 approved by the President of the Energy Regulatory Office in January 2018 and has applied from March 1st 2018, Cost + return on capital (6.2% WACC x PLN 12.1bn RAB)

16 1.00 1.05 1.10 1.15 1.20 1.25 1.30 1.35 1.40 Distribution’s 0.0 0.5 1.0 1.5 2.0 2.5 3.0 Segment’s Distribution’s PLNbn PLNbn 2010 2.3 2011 1.24 CAPEX EBITDA 2011 1.6 2012 1.14 2012 1.7 2013 1.34 financial 2013 1.6 2014 1.12 2014 2.0 2015 1.19 results 2015 2.3 2016 1.11 2016 2.6 2017 1.27 2017 2.5 Segment’s Segment’s Reporting with effect from Standard2018 1January newthe of application comparability for withDatarestatedthe connection in PLNm PLNm 16bn in 2016 generate PSG’s in Q1 2018 vsQ1 2017 V Revenue Revenue olumes 1 469 +6% 4 915 1 551 4 937 results results strategic Operating Operating expenses expenses up cum. cum. EBITDA of PLN

1 008 +1% 3 280 +3% IFRS IFRS for for Q1 2018 for for FY2017 vs FY2016 1 014 by7

3 369 - 2022 9 and IFRS 15 Financial IFRS 15and9 goal % EBITDA EBITDA +10% -

692 2 559 3%

763 2 493 is to to +16% EBIT EBIT -

461 1 635 4% 537 1 568 17 Heat and Power Generation

Share on the domestic market *: Generation segment operating data heat power 10% volume of heat sales 11% Installed heat power 5.5 GWt Share on the Warsaw market: largest producer of heat and electricity in cogeneration Installed electric power 1.2 GWe estimated coverage of total heat demand about 70% estimated total electricity demand around 65% heat supplied to the city network about 98%. Heat sales in Q1 2018 (regulated) 19.0 PJ Timeline: January 2012 – acquisition of 99.8% stake of Vattenfall Heat Poland Produced electricity sales in Q1 2018 1.5 TWh S.A. from Vattenfall AB for PLN 3bn in cash (PLN 3.5bn EV) Acquisition of 20.4% of the share capital of the Polish Mining Group as a result of the investment of PLN 800m Production of heat and own generation electricity

Expansion of heat and power generation and distribution: PJ TWh 44 43.0 4.0 April 2016: purchase from JSW SA of Przedsiębiorstwo Energetyki 3.9 Cieplnej („PEC”) for PLN 190m, including 14 local heat plants, 260 42 3.9 3.8 MW of total heat output 40.2 42.1 39.5 3.8 August 2016: purchase from JSW SA of Spółka Energetyczna 40 3.7 3.7 39.0 3.8 3.7 40.2 „Jastrzębie” („SEJ”) for PLN 327m, including 5 CHP, 130 MW of 3.7 38 3.7 3.6 electricity output, 540 MW of heat output 38.7 38.7 38.2 36.2 3.6 September 2017: The merger of PGNiG TERMIKA EP 36 3.6 3.6 (formerly SEJ) and PEC 36.6 3.5 3.5 Tariff: 34 3.4 Heat tariffs benchmarking scheme creates significant upside for 32 3.3 profitability as PGNiG Termika produces low-cost heat 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Heat production (left axis) Electricity production (right axis)

* Source: Thermal energy in numbers 2016 18 Generation’s 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 Investments Generation’s Combined 4 PLNbn * 2010 97 2010* 0.44 - 2011 according to Polish accounting standards; 2012 standards; accounting to Polish according 2011 expenditure Polska (PLN 900 specialised A commercial 2016 An contractor In Total Agreement 50 MWe / survey 50 January m agreement , EBITDA power 450 JV loan aligning Energia, gas Heat PGNiG m 2011* 0.49 related of for . agreement firm, operation 2016 output from - the fired Sale on ECSW’s and responsible totalling and : each to : project’s key cancellation 450 of the block Tauron and Electricity 2012 0.47 Power between preconditions lender MWe improper existing PLN current status for Polska in ) and financial for 600 . - supporting of 2013 data before data intercompany before 2013 Plant ECSW Warsaw PGNiG execution commercial market 240 2013 the 0.50 m, the ended Energia for and MWt refinancing contract with Stalowa to the conditions its in PLN supply of . at Bank project Total coordination 2016 the agreements 2014 0.46 Ż 300 and contract era of 0 CAPEX . Gospodarstwa eliminations . . 5 m Wola restructuring ECSW’s The impos bcm ń to results plant finance project . on 2015 of 0.70 PLN to ition (Q gas an debt the 4 1 EPCM ( of . for 6 20 will ECSW’s was Krajowego 2019 expected bn to penalties 14 20 PGNiG (project be 2016 0.76 signed basis years ) ) resumed further start . and and finance) for in October general date PGNiG Tauron 2017 capital 0.84 by of a sales sources electricity In segment Revenue Segment’s Segment’s PLNm PLNm Revenue Revenue Q +7% +

859 1 2 195 3 volumes % 918 2018 (

2 251 up up from generated results results , 4 to % growth Operating Operating expenses expenses rising +15% + y/y,

558 14 heat 1 796 2 % for for for 644 % 1 826 to by of Q1 Q1 2018 FY2017 vs FY2016 yoy 571 by sales 6 revenue % ), EBITDA EBITDA m +11% the - 409 yoy to 2% 759 PLN recorded PLN 401 . 843 segment’s from in Q 263 1 EBIT EBIT +7% 301 - 9% sales 2018

399 m, by 274

425 own with the . of 19 Strategy, CAPEX PGNiG Group Strategy for 2017-2022

The new PGNiG Group Strategy for 2017–2022 (extended until 2026)

#1Mission statement #2 Vision #3 Primary objective We are a responsible and effective We are a trustworthy supplier of energy Increasing the PGNiG Group's value and provider of innovative for households and businesses ensuring its financial stability energy solutions

Trustworthy Responsible Value growth

The customers can depend on premium We act transparently, in line with the Our primary ambition is to create added quality and reliability of our services principles of corporate social responsibility value for our shareholders and customers

Energy supplier Effective Financial stability Our customers are offered a full range of We have implemented process and cost We seek to secure long-term financial stability energy products (gas + electricity + heat + optimisation measures and creditworthiness other/services) Households and businesses Innovative solutions

We care for and value all our customers: We are an innovation leader in the energy households, businesses, and institutions sector

21 The Group’s key strategic objectives

Strategic objective competitive position while supporting the development and ensuring security of the gas market in Poland

PGNiG's strong Development of gas competitive position market in Poland

Securing new gas supply More rapid expansion of sources to strengthen the Group's distribution network in order to competitive position following expiry of Paramount enable more new customer the Yamal contract in 2022 objective connections and gas market growth

Production projects in Norway Expanding the upstream focused on increasing annual gas business in Poland to replenish output to ca. 2.5 bcm from 2022 Increase hydrocarbon reserves and to maintain onwards the PGNiG Group's high levels of production value and ensuring its financial Significant improvement of Participation in the Norwegian stability customer service quality through Corridor project to secure direct digitalisation of service channels and gas imports from Norway expansion of the product portfolio expansion

Developing gas and LNG trading functions to make PGNiG more competitive on gas markets in Europe and in Poland

22 Ambitions in the key business areas

1. Exploration and 2. Wholesale 3. Retail production Increase the base of documented Diversified gas supply portfolio after 2022 Maximising retail margins hydrocarbon reserves by 35% (to Increasing the overall volume of natural Maintaining the total volume of retail 1,208 mm boe in 2022) gas sales by 7% (to 178 TWh in 2022) gas sales at ca. 67-69 TWh/year Increase annual hydrocarbon Cumulative natural gas sales volume on production by 41% (to 55 mm boe in wholesale markets in Poland and abroad 2022) 1000 TWh

4. Storage 5. Distribution 6. Power and heat generation Securing access to storage More than 300 thousand new service Increase power and heat sales capacities adjusted to actual lines in 2017–2022 volumes by 20% (to 18 TWh in 2022) demand The annual growth rate in the number of Improve storage efficiency service lines by 17% Increase gas distribution volume by 16% (to 12.3 bcm in 2022)

7. Corporate Centre

Effective execution of R&D&I projects Operational efficiency improvement across the PGNiG Group Enhancing the PGNiG Group's image

23 CAPEX and EBITDA for 2017-2022

CAPEX breakdown for 2017-2022 EBITDA for 2017 – 2022

PLNbn PLNbn

Exploration 15 45% 9.2 & Production PLN 33.7bn cumulative EBITDA Distribution 10 29% Ambitious investment 5.6 Power programme: & Heat 5 13% long-term growth of the generation Group's EBITDA, particularly in 2023−2026 (at the annual Storage 0.3 1% & Trade average of ca. PLN 9.2bn)

Other growth Keeping debt at safe levels 4 12% projects 2017−2022 annual 2023−2026 annual (net debt/EBITDA below 2.0) average average Total more than 2017-2022 PLN 34bn

Annual average 5.7 2017–2022

Annual CAPEX 2012 – 2017 Almost half of CAPEX (45%) will be spent on

PLNbn Generation Distribution Trade & Storage Exploration & Production hydrocarbon exploration and production. 8.0 6.8 7.0 Average annual capital expenditure in 6.0 2017−2022 at ca. PLN 5.7bn. 5.0 3,2* 3.9 3.6 4.0 3.3 0.4 3.1 0.3 2.9 1.1 3.0 1.1 0.5 0.5 1.3 0.4 2.0 0.6 0.3 0.5 1.2 1.1 1.3 0.2 0.1 0.1 1.0 1.9 2.1 1.5 1.4 1.3 1.2 0.0 Dec 31 2012 Dec 31 2013 Dec 31 2014 Dec 31 2015 Dec 31 2016 Dec 31 2017

* Includes PLN 3bn for acquisition of PGNiG Termika 24 Appendix Financial highlights Q1 2018

Group's EBITDA by segment in Q1 2017 vs Q1 2018 [PLNm] Q1 2017 Q1 2018 D%

PLNm Revenue 11,615* 13,247 14% 1600 1376 1380 Operating expenses 1400 -8,846* -10,573 20% (excl. D&A) 1200 1000 EBITDA 2,769 2,674 -3% 763 800 692 600 Depreciation and amortisation -695 -669 -4% 409 401 400 358 EBIT 2,074 2,005 -3% 200 179 0 Net finance income/(costs) 19 40 106% -200 -66 -57 Q1'17 Q1'18 Q1'17 Q1'18 Q1'17 Q1'18 Q1'17 Q1'18 Q1'17 Q1'18 Net profit 1,599 1,566 -2% E&P T&S Distribution Generation Other *Data restated to ensure comparability following the adoption of amended IFRS 15. Exploration and Production Revenue from gas sales up by PLN 107m yoy (+10%). Cost of dry wells written off in Q1 2018 at PLN -244m, compared with PLN PGNiG Group’s EBITDA in Q1 2017 vs Q1 2018** -17m in Q1 2017. PLNm 3,000 Reversal of impairment losses on non-current assets in Q1 2018 at PLN +4 2,769 +241m, against PLN +5m in Q1 2017. 2,500 -179 +71 -8 +17 2,674 Trade and Storage 2,000 Revenue from gas sales up 16%, led mainly by a 13% rise in volumes yoy. PLN +25m in reversals of gas inventory write-downs recognised in Q1 2018 1,500 (mark-to-market valuation of gas at the LNG terminal). In Q1 2017 gas 1,000 inventory write-downs increased by PLN -35m.

Distribution 500 Gas distribution volume 7% higher yoy in Q1 2018, with revenue from 0 distribution services up 5% yoy. Q1 2017 E&P T&S Distribution Generation Other and Q1 2018 Eliminations Generation **Eliminations in Q1 2018: PLN +8m, Q1 2017: PLN 0m Sales volumes of electricity (from own sources) and heat up 6% and 5% yoy, respectively.

26 Operating expenses in Q1 2018 vs Q1 2017

[PLNm] Q1 2017 Q1 2018 D% Comments: PLN 1.5bn (or 22%) yoy increase in the cost of gas sold, Cost of gas sold -6,749 -8,215 22% due to higher prices of oil and gas.

Fuels for heat and power generation -293 -355 21% Higher yoy cost of dry wells (PLN -244m). Seven dry wells written off in Q1 2018 vs three in Q1 2017 Other raw materials and consumables used -350 -438 25% (PLN -17m). Reversal of impairment loss on non-current assets at Employee benefits expense -640 -669 5% PLN 240m. In Q1 2017, reversal was low at PLN 20m. Lower depreciation and amortisation yoy (PLN -669m in Transmission services -260* -269 3% Q1 2018 vs PLN -695m in Q1 2017), mainly on account of a PLN 40m (or 29%) decrease in depreciation and Other services -358* -392 9% amortisation charges on Norwegian assets in Q1 2018 vs LNG regasification services -87 -89 2% Q1 2017. Decline of other income/expenses in Q1 2018 caused, Taxes and charges -524 -557 6% among other factors, by a reversal of gas inventory write- downs of PLN 25m (vs an increase in write-downs of Other net income and expenses** 167 112 -33% PLN 35m in Q1 2017) and lower provisions for certificates of origin (Q1 2018: PLN -43m, Q1 2017: Change in inventory write-downs -19 63 -4x PLN -82m).

Change in provisions -63 -92 -46% Net exchange differences related to operating activities: PLN +52m in Q1 2018 vs PLN -74m in Q1 2017. Recognition and reversal of impairment losses on 2 -4 3x Net loss on derivative instruments charged to other property, plant and equipment and intangible assets expenses: PLN -43m in Q1 2018, vs net gain of PLN Cost of dry wells and seismic surveys written-off -17 -244 14x +53m in Q1 2017. Cost of transactions hedging gas prices at PLN +4m in Impairment losses on non-current assets 20 240 12x Q1 2018 vs PLN +45m in Q1 2017. Work performed by the entity and capitalised 159 214 35%

Depreciation and amortisation -695 -669 -4%

Total operating expenses -9,541* -11,242 18%

Operating expenses net of cost of gas sold -2,792* -3,027 8%

* Data restated to ensure comparability following the adoption of amended IFRS 15. ** Other expenses shown above do not include taxes and charges, or impairment losses on property, plant and equipment and intangible assets. 27 Performance drivers

PLN strengthening yoy against 9-month average crude oil price up Revenue up on high gas both EUR and USD 15% yoy in Q1 2018 PLN USD/bbl sales volumes, with unit cost 4.5 120 -3% of gas rising.

4.32 100 -16% 4.18 4.0 4.06 80 67.03

60 54.04 3.5 +24%

3.40 40 47.30 +15% 54.45

3.0 20 01'15 04'15 07'15 09'15 12'15 03'16 06'16 09'16 12'16 03'17 06'17 09'17 12'17 03'18 01'1504'1507'1509'1512'1503'1606'1609'1612'1603'1706'1709'1712'1703'18

Quarterly average USD/PLN exchange rate 3M moving average of Brent oil price in USD Quarterly average EUR/PLN exchange rate 9M moving average of oil price in USD

Gas prices quoted on the POLPX Day-Ahead Market and Comments: the average price of contracts weighted by volume Selling prices at POLPX: the largest volumes PLN/MWh of gas were traded on the POLPX and other POLPX (Day-Ahead Market) Volume-weighted average price of contracts traded on POLPX (by delivery date) gas exchanges under contracts with maturities of a quarter, season (summer/winter) and year. 160 These were complemented by monthly/weekly futures and spot contracts. The volume-weighted average price of 90.17 contracts traded on the POLPX for a given 89.58 quarter is calculated based on the prices of 81.25 78.72 +10% 76.70 80 76.39 81.16 81.48 83.79 contracts for delivery in that quarter.

average price quoted average price quoted on DAMg in Q1 +17% on DAMg in Q1 2017: 87.43 2018: 102.10 40 01'16 03'16 06'16 09'16 12'16 03'17 06'17 09'17 12'17 03'18 28 Gas sales and imports structure

Imports of natural gas to Poland Gas sales outside the PGNiG Group by company Lower share of sources east LNG Q1 2018 of Poland, with an increased 13% Western and [mcm] Q1 2017 Q1 2018 D% role of sources south and southern direction PGNiG Group: 8,781 9,905 +13% west of Poland as well as 9% 12% 4% LNG, in total gas imports PGNiG SA 5,387 5,944 +10% in Q1 2018. Q1 2017

PGNiG OD 2,744 2,963 +8% PGNiG Group gas sales 84% Eastern volumes up 1.1 bcm yoy in Q1 direction PST 649 998 +54% 2018. Higher sales to industrial 78% customers, mainly refineries and petrochemical plants, as well as PGNiG Group's gas sales volumes, gas inventory levels, and gas imports power and heat producers.

bcm 12.5

9.9 10.0 8.8 8.0 8.0 7.3 7.5

5.4 4.7 4.6 5.0 4.3 Comments: 3.7 3.2 3.3 3.5 3.8 2.7 2.8 3.0 3.0 LNG terminal stocks: 96 mcm after regasification (as at March 31st 2018). 2.5 2.8 2.9 2.2 2.3 0.9 1.6 0.9 1.7 1.1 0.0 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18

Gas inventory levels Volume of gas sold by PGNiG Group Volume of gas imported to Poland

29 Gas transport routes

Interconnections Northern Gate Project

POLAND – NORWAY (up to 10 bcm, 2022) POLAND – LITHUANIA (1.7/2.4 bcm, 2021)

LNG TERMINAL (I stage – 5 bcm, planned II stage TETEROVKA – 7.5 bcm) (0.2 bcm*)

YAMAL MALLNOW Włocławek YAMAL KONDRATKI PIPELINE Lwówek PIPELINE (reverse : technical (30.7 bcm*) capacity up to do 6.1 bcm*) VYSOKOYE (5.5 bcm*)

GCP (1.5 bcm*) POLAND – UKRAINE (5 bcm, 2020)

POLAND – CZECH REP, DROZDOVITSE/ (6.5/5 bcm, 2019) HERMANOWICE CIESZYN, (4.4 bcm*) (0.5 bcm) POLAND – SLOVAKIA (5.7/4.7 bcm, 2020)

Existing interconnectors LNG TERMINAL Interconnectors planned, under construction (transmission capacity into/from Polish grid)

* Technical capacity 30 Gas trading and retail sales

Gas sold to key customers: above 25 mcm annually 4.4 bcm of gas sold in 2016 7.0 bcm of gas sold in 2017 Production Export 0.4 bcm in 2016 PGNiG S.A. 0.7 bcm in 2017 Direct sales Sources of gas 0.7 bcm in 2016 0.8 bcm in 2017 Polish Power Exchange 9.0 bcm in 2016 8.5 bcm in 2017

7.0m customers Polish Power Exchange PGNiG Obrót 7.2 bcm of gas consumed in 2016 (POLPX) Detaliczny 7.6 bcm of gas consumed in 2017

Sales made on POLPX by PGNiG SA and purchases made on POLPX by PGNiG Obrót Detaliczny, which commenced operations on August 1st 2014, are not subject to elimination from the consolidated financial statements, and are disclosed under the Trade and Storage segment.

31 Changes on the Polish gas market

Gas sales volume (mcm) 2014 2015 2016 2017 Gas market deregulation is affecting PGNiG's share in Total PGNiG Group 18.6 23.0 24.3 26.8 imports and sales structure PGNiG SA (without Pakistan) 13.8 13.2 14.5 16.9 Since August 1st 2014, the PGNiG Group's including PGNiG SA through PPE 3.7 8.1 9.0 8.4 gas sales volumes have included both PGNiG SA's sales through the exchange and PGNiG Obrót Detaliczny (Retail) 3.0 7.5 7.3 7.6 PGNiG OD's sales to end customers and on the exchange. Nitrogen-rich gas presented in the table as Group E gas equivalent.

* Notes: The chart presents PGNiG SA's share in gas flowing into Poland through OGP Gaz- PGNiG's share in gas imports to Poland* System's entry points (excluding transit volumes via the Yamal pipeline and including 100% volumes for export), monthly data The increase of PGNiG's share in imports observed in Q1 2016 caused mainly by 80% reduced exports to Ukraine. Data in the chart do not show PGNiG SA's share in the Polish gas market,

60% %

They have been sourced from reports

88 92%

: : :

7 published by OGP Gaz-System on the

40% 1 volumes of gas flowing through Q1’18 Q1’ interconnectors.

20%

0% 01'13 04'13 06'13 09'13 12'13 03'14 06'14 09'14 12'14 03'15 06'15 09'15 12'15 03'16 06'16 09'16 12'16 03'17 06'17 09'17 12'17 03'18

32 Tariff Model in Poland

Type of activity Regulatory mechanism Monthly average gas prices in European import contracts and PGNiG tariff price Direct sales None PLN / ths. cm 2000 Gas sales Cost of gas + operating costs + margin 1600 PGNiG Retail’s cost base including cost of gas on Retail PPE Including cost of imports + cost of production (with 1200 Wholesale return on capital invested in E&P) Storage Cost + return on capital 800 (until March 2018) (6.0% WACC x PLN 3.6bn RAB) Distribution (set in 2018) Cost + return on capital 400 (6.2% WACC x PLN 12.1bn RAB) BAFA price Russian gas at German border PGNiG Selling Price (Industrial tariff) 0 Detariffication schedule for gas market in Poland Jan/11 Jun/11 Nov/11 Apr/12 Sep/12 Feb/13 Jul/13 Dec/13 May/14 Oct/14 Mar/15 Aug/15 Jan/16 Jun/16 Nov/16 Apr/17 Levels of obligatory trading on Polish Power Exchange

Until January 1 October 1 the end 2017 2017 of 2023 30% 40% 55% max Eliminating gas fuel Eliminating gas fuel Maintained the trading tariffs for trading tariffs for other obligation of providing wholesalers and end business customers tariffs for households. In 2013 From January 1, 2014 From January 1, 2015 customers purchasing (including both bigger gas fuel (i) at a virtual industrial companies gas trading point, (ii) in and small & medium Liberalization of gas market in Poland is being implemented, based on the form of LNG or CNG, enterprises). obligatory trading on gas exchange in Warsaw and gradual removal of and (iii) under tender, tariffs for certain segments of industrial customers. auction or public procurement procedures pursuant to the provisions of the Public Procurement Law.

33 Debt and sources of funding Comments: On December 21st 2017, due to a mismatch Sources of funding (as at March 31st 2018) between its investment programme and the PLNm PLN 1.5bn bond programme of July 4th 2012, PGNiG TERMIKA entered into agreements available used terminating the bond programme. As a result, the total value of guaranteed bonds reached PLN 7bn. On December 21st 2017, PGNiG S.A. signed a PLN 5bn bond programme agreement. The issue is organised by: ING Bank Śląski S.A., 6,600 Bank Polska Kasa Opieki S.A., Bank Handlowy 5,000 w Warszawie S.A., and Bank BGŻ BNP Paribas S.A. 760 1,000 ,400 610 Underwritten bonds (programmes Domestic bonds (2022) BGK programme (2024) Reserve Based Loan (2022) Dividend per share valid until 2019-2022) PLN Debt at quarter end 0.30 PLNbn 0.19 0.20 0.20 0.17 0.18 10 0.20 0.15 0.15 Debt Net debt 0.12 0.13 8 0.09 0.08 6.4 6.4 6.4 6.4 0.10

6 3.8 0.00 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 4 3.0 2.2 1.3 2 0.8 1.1 Strategic objective: up to 50% of consolidated 0.5 0.7 0.4 net profit to be distributed as dividend in 0 2015−2022 (provided that the financial Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 condition is stable and financing for investment -2 -1.5 -1.6 projects is secured). -1.9 -1.7 -2.0 -4

34 Statement of financial position, statement of cash flows, financial ratios and headcount

Group's statement of financial position (as at Headcount (as at March 31st 2018)* March 31st 2018) thousand 40 PLNm Non-current Current Equity Other segments Generation Distribution Trade & Storage Exploration & Production

31.0 29.0 30 2.0 11,857 1.1 1.6 25.5 25.3 24.7 24.7 1.1 35,048 1.3 1.9 1.8 1.8 1.1 1.9 13.1 1.8 1.8 36,783 20 12.2 6,725 10.7 11.2 6,867 10.8 11.1 4.1 3.9 Assets Equity and liabilities 10 3.5 2.9 3.0 3.0 Profitability and liquidity ratios 10.8 10.2 8.9 7.7 7.0 6.9 9.4% 10% 8.7% 0 7.3% Dec 31 2013 Dec 31 2014 Dec 31 2015 Dec 31 2016 Dec 31 2017 Mar 31 2018 8% 6.7 6.9%

6%

5.8% 6.1% Consolidated cash flows (Jan 1−Mar 31 2018) 4% 4.7% PLNm 4.1% 4.3% 2%

0% 6,000 2013 2014 2015 2016 2017 - 1 050 ROE ROA + 1 174 +93 +669 -488 - 1 695 3 2.4 2.2 4,000 1.8 +2 080 2 1.6 1.4 1.2 2.0 1.6 1 1.4 2,000 1.1 1.2 3,364 0.9 2,581 0 2012 2013 2014 2015 2016 2017 Current ratio Quick ratio 0 Cash (Jan 1, Profit before Depreciation Income tax Other Change at the Investing CF Financing CF Cash (Mar 31, 2018) tax and paid adjustments end of the 2018) amortization period expense * Changes in the presentation of corporate centre data, leading to changes in the Trade & Storage and Other segments in 2016.

35 Production and sales volumes

NATURAL GAS PRODUCTION BY THE PGNIG GROUP [mcm] Q1 2018 FY 2017 Q4 2017 Q3 2017 Q2 2017 Q1 2017 FY 2016 Q4 2016 Q3 2016 Q2 2016 Q1 2016 HIGH-METHANE GAS (E) 464 1,863 461 459 469 474 1,919 473 449 487 509 including in Poland 323 1,315 335 325 327 328 1,401 347 346 349 359 including in Norway 141 548 126 134 142 146 518 126 103 138 150 NITROGEN-RICH GAS (Ls/Lw as E equiv.) 719 2,674 731 664 567 712 2,540 692 582 596 670 including in Poland 674 2,524 684 627 533 680 2,481 670 570 584 657 including in Pakistan 45 150 47 37 34 32 59 22 12 12 13 TOTAL (measured as E equivalent) 1,183 4,537 1,192 1,123 1,036 1,186 4,458 1,165 1,031 1,083 1,179

NATURAL GAS SALES at PGNiG Group [mcm] HIGH-METHANE GAS (E) 9,414 25,291 7,603 4,298 5,079 8,311 22,895 6,921 4,004 4,410 7,560 including PST sales outside PGNiG Group 998 2,186 603 452 482 649 2,510 561 614 571 764 NITROGEN-RICH GAS (Ls/Lw as E equiv.) 491 1,496 419 296 312 469 1,371 417 244 298 412 TOTAL (measured as E equivalent) 9,905 26,787 8,022 4,594 5,391 8,780 24,266 7,338 4,248 4,708 7,972 including sales directly from the fields 237 796 226 182 161 227 718 209 129 172 208

NATURAL GAS IMPORTS by PGNiG SA [mcm] Total 3,837 13,714 3,673 3,488 3,334 3,219 11,527 2,968 3,020 2,837 2,702 including: sources east of Poland 2,982 9,656 2,540 1,889 2,518 2,709 10,248 2,539 2,429 2,623 2,657 including: LNG 505 1,715 383 470 475 387 974 380 384 210 -

CRUDE OIL, PGNiG Group (thousand tonnes) Production of crude oil and condensate 348 1,257 329 313 269 346 1,318 344 298 328 348 including in Poland 208 787 220 203 148 216 763 207 177 176 203 including in Norway 140 470 109 110 121 130 555 137 121 152 145

Sales of crude oil and condensate 429 1,270 313 251 316 390 1,346 325 287 336 398 including in Poland 210 791 222 190 161 218 753 198 179 171 205 including in Norway 219 479 91 61 155 172 593 127 108 165 193

GENERATION Production of heat, net (sales) (TJ) 19,037 42,487 14,195 3,472 6,732 18,088 39,527 15,079 2,945 5,351 16,152 Production of electricity, net, secondary generation (for sale) (GWh) 1,539 3,882 1,280 407 737 1,458 3,604 1,204 418 592 1,390

36 Changes in the presentation of services under IFRS 15

The Group has applied the requirements of new Effect of the implementation of IFRS 15 on the consolidated IFRS 9 and IFRS 15 with the use of a modified statement of profit or loss retrospective approach, effective as of January 1st 2018 and, as prescribed by IFRS, did not restate Q1 2017 Q1 2017 2017 consolidated statement of profit the comparative period data in the interim report. before effect after and loss (PLNm) restatement restatement To facilitate the interpretation of financial results, Revenue, including: 11,652 -37 11,615 this slide provides a simplified overview of the Revenue from sales of gas 9,468 -1,234 8,234 impact of IFRS 15 on the presentation of the Q1 Other revenue 2,184 1,197 3,381 2017 and Q1 2018 figures. Operating expenses (excl. D&A), -8,883 37 -8,846 The next slides compare Q1 2018 with Q1 2017 including: restated according to IFRS 15. Transmission services -294 34 -260 Other services -361 3 -358 IFRS 9 Financial Instruments changes to the rules for classification and measurement of financial Q1 2018 Q1 2018 2018 consolidated statement of profit assets, before effect after and loss (PLNm) introduction of a new model for determining expected credit losses and restatement restatement changes in hedge accounting requirements. Revenue, including: 13,297 -50 13,247 IFRS 15 Revenue from Contracts with Customers Revenue from sales of gas 10,853 -1,291 9,562 Group companies which identified their role with respect to specific Other revenue 2,444 1,241 3,685 goods or services as that of an agent changed the manner of presentation of relevant revenue and expenses. Revenue is recognised Operating expenses (excl. D&A), -10,623 50 -10,573 in the amount of net consideration. including: In respect of gas transmission and electricity distribution services, the Transmission services -311 42 -269 Group has no control over the main features or price of such services, Other services -400 8 -392 acting solely as an agent. Revenue from sales of gas distribution services is recognised in an amount equal to the full value of such services provided to customers from outside the PGNiG Group.

37 Effects of presentation changes under IFRS 15 – segments Without presentation changes under IFRS 15 Q1 2017 Q1 2018 The Trade and Storage Trade and Storage segment acts as a agent with Revenue 9,932 11,506 respect to gas distribution, gas Operating expenses (excl. D&A) -9,574 -11,327 transmission and electricity Distribution distribution services. Revenue 1,469 1,551 Therefore, revenue and Sales to external customers 260 294 expenses are recognised in Inter-segment sales 1,209 1,257 net amounts. Operating expenses (excl. D&A) -777 -788 Effect of IFRS 15 In the Distribution segment, Trade and Storage the presentation change Revenue -1,235 -1,297 consists in the recognition of Operating expenses (excl. D&A) 1,235 1,297 revenue from sales of Distribution distribution services provided Revenue 0 0 Sales to external customers 1,198 1,247 to customers from outside the Inter-segment sales -1,198 -1,247 PGNiG Group as sales to Operating expenses (excl. D&A) 0 0 external customers. New manner of presentation Q1 2017 Q1 2018 The next slides compare Q1 Trade and Storage Revenue 8,697 10,209 2018 according to the new Operating expenses (excl. D&A) -8,339 -10,030 standards with Q1 2017 Distribution restated according to IFRS 15. Revenue 1,469 1,551 Sales to external customers 1,458 1,541 Inter-segment sales 11 10 Operating expenses (excl. D&A) -777 -788

38 Glossary

2P Proven reserves of fossil fuels bbl Barrel

BGK Bank Gospodarstwa Krajowego boe / mmboe Barrel of oil equivalent / Million barrel of oil equivalent (one barrel is approx, 0,136 tonnes)

CAGR Compound annual growth rate

CAPEX Capital expenses

CNG Compressed Natural Gas cm / bcm cubic meters / billion cubic meters

D&A Depreciation and Amortization

DCF Discounted cash flow

EBIT Earnings before interest and taxes

EBITDA Earnings before interest, taxes, depreciation and amortization

JV Joint Venture

LNG Liquefied Natural Gas

PPE Polish Power Exchange

PSG Polska Spółka Gazownictwa

PST PGNiG Supply & Trading GmbH RAB Regulatory Asset Base

WIG 20 Capitalization-weighted stock market index of the twenty largest companies on the Warsaw Stock Exchange

WSE Warsaw Stock Exchange

39 Contact details

More information Marcin Piechota Head of the Investor Relations Division Phone:+48 22 589 43 22 Mobile:+48 885 889 890 Email: marcin.piechota@pgnig.pl

Piotr Gałek Investor Relations Specialist Phone:+48 22 589 48 46 Mobile:+48 723 235 652 Email: [email protected]

Aleksander Kutnik Investor Relations Specialist Phone:+48 22 589 47 97 Mobile:+48 723 239 162 Email: [email protected] Investor Relations website www.ri.pgnig.pl

Polskie Górnictwo Naftowe i Gazownictwo S.A. ul. M. Kasprzaka 25 01-224 Warsaw, Poland Fax:+48 22 691 81 23 www.en.pgnig.pl

Disclaimer All opinions, judgements and projections contained in this presentation (‘Presentation’) have been prepared by Polskie Górnictwo Naftowe i Gazownictwo (PGNiG) S.A. relying on publicly available information. The information contained herein is subject to change without notice and may be incomplete or condensed, and it may omit some important details. No information contained herein is intended as an investment offer or recommendation or as an offer to provide any services. This Presentation contains information and statements relating to future, but not to past, events. Any such forward-looking statements are based on our current assumptions, but as they relate to the future and are subject to risks and uncertainties, actual results or events could materially differ from those anticipated in those forward-looking statements. This Presentation should not be acted or relied on in making any investment decisions. More information on PGNiG can be found in its current and periodic reports. PGNiG undertakes no obligation to update, and assumes no responsibility for the accuracy, completeness or use of, information contained in this Presentation. No information contained herein is intended as legal or other professional advice.