COMMENT OF THE PRESIDENT OF THE MANAGEMENT BOARD

We specialise in gas fuels, but we do not want to confine our activities to natural gas only. We intend to develop our capabilities in alternative fuels, such as biomethane and hydrogen, especially that the EU Green Deal policy indicates that over the next 30 years, by 2050, the whole Europe should achieve climate neutrality. This means that natural gas will need to be replaced with ‘green’ gas such as biomethane or renewables-based hydrogen. For PGNiG, the climate policy offers an opportunity to grow and act as a lead player in the process of decarbonising Poland’s economy. This is why we are working intensively to update our strategy for the entire Group with a view to developing a detailed action plan.

A key goal is to expand our product portfolio. For example, we estimate the biomethane potential in Poland at 7-8 bcm. We plan capture a 50% share in those volumes within ten years. This would mean that an additional 20% of our needs could be covered with own biogas instead of imported natural gas. We expect that a total of 1,500–2,000 biomethane plants will be needed across Poland, so a biomethane plant may operate in almost each municipality. In the future, this may be an important element of Poland’s energy security. 

Our strategic objective will be to build and develop a strong RES segment at the PGNiG Group, based on solar photovoltaics and wind farms, and to exploit the potential of biomethane, as well as production and sale of hydrogen.

Over the next few years, beyond 2022, PGNiG intends to spend even as much as PLN 4bn on building the RES segment. Ultimately, this will help us achieve generation capacity of up to 900 MW, making PGNiG one of the leading producers of renewable energy in Poland. We believe that renewables will help stabilise our financial performance. Renewable energy sources are not sensitive to movements in hydrocarbon prices, which have a strong effect on the PGNiG Group’s Exploration and Production, and Trade and Storage operating segments.

We also want to have a key role in integrating and consolidating the heat generation industry. We are already the second-largest player on the heat market in Poland through PGNiG TERMIKA, actively looking for opportunities to further grow our position. At the same time, we are committed to investing in projects that will allow us to increase the use of natural gas in the acquired heat plants. This will not only produce larger synergies between those assets and the Group as a whole, but will bring the solutions applied in the plants into compliance the EU requirements. Currently, the heating market is largely based on coal. Given the EU climate policy referred to above, it is set to undergo a strong transformation in the coming years. Our profile as a company active on the gas market may prove very helpful in this process. We believe gas to be the fuel that will facilitate transformation of the entire economy. This means that most of the heat plants and combined heat and power plants will transition to gas over the next years, which is what drives our interest in acquisitions on this market.