NATURAL CAPITAL

Green technologies and products are one of the key drivers of innovation across the Group. It is PGNiG’s intention to become Poland’s leader in hydrogen technologies. In 2019, the ELIZA research and development project was successfully completed, laying the foundations for the creation of a hydrogen competence program at the PGNiG Group. The ELIZA R&D project, which focuses on generation of hydrogen from renewable sources through electrolysis and on using in practice the Group’s know-how in gas fuels storage. 

A number of innovative solutions developed under INGA, one of the most ambitious projects on record in the gas industry, as well as the GeoMetan II project, will open access in the near future to new hydrocarbon reserves, which until recently have not been even considered as potentially productive.

Human capital and natural capital interact on several levels:

• Through education and training, the Group minimises the risk of events which could have an adverse effect on the natural environment due to human error. 
• Through development and innovation projects, the Group develops and rolls out solutions designed to reduce the environmental footprint of its operations. A large number of such solutions are developed internally by Group companies.
• From the perspective of extraction of natural resources, competent staff are key to efficient exploration for and production from new deposits, also outside of Poland.

As part of its production operations in Poland and abroad, the Company engages in social dialogue with local communities, experts and environmental organisations, as access to hydrocarbon deposits often depends on their acceptance. The PGNiG Group is firmly committed to building strong partnership-based relations with local communities, public authorities, suppliers and contractors in the pursuit of common goals. 

PGNiG Group is an industrial and commodity holding company. PGNiG’s business comprises exploration for and production of natural gas and crude oil. Through its key companies, PGNiG is also active in the area of import, storage, sale and distribution of gas and liquid fuels, as well as heat and electricity generation and distribution. As a result, all areas of our business rely heavily on access to natural capital which determines the Group’s financial performance. 

Exploration and Production is the Group’s first and principal operating segment from the perspective of the PGNiG Group strategy. To ensure uninterrupted supply of hydrocarbons to its retail and business clients, the Group invests in:

• Exploration for new deposits and acquisition of production licences, 
• Field development.

The Group acquires and sells commodities from its own sources, but also purchases commodities on the market:

• Natural gas (including LNG) purchased from third parties,
• Coal purchased as fuel for the Generation segment.

Natural gas and crude oil prices determine the performance of individual segments to a large extent. To secure favourable gas prices in international transactions, the Group enters into short-, mid- and long-term contracts as a guarantee of uninterrupted supply of natural gas at market prices.

Environmental costs are an inherent part of the Group’s operations. In an effort to minimise its environmental footprint, in 2019 the Group earmarked capital investments for emission allowances of 4,563.4 thousand Mg (the amount to be additionally purchased by the PGNiG Group as the allocated emission allowance is 1,713.3 thousand Mg).

The Group also pays costs of certification, environmental software and mandatory environmental measurements

Interactions between natural capital and manufacturing capital may be analysed on several levels. 

• In the Exploration and Production segment, the Group must have access to the necessary facilities and technologies to extract hydrocarbons from various deposits, including small-scale and unconventional deposits. In 2019, PGNiG launched the "Digital field" program - a tool that enables PGNiG to use oil and gas resources even more effectively. Last year, we also continued work on the GeoMetan II project, the aim of which is to make the methane trapped in coal beds seams available. In 2019, the ELIZA research and development project was successfully completed, laying the foundations for the creation of a hydrogen competence program at the PGNiG Group.
• The Generation segment relies largely on coal assets. The Group is currently upgrading its existing generation capacities to bring them in line with the requirements of BAT. New investments will rely primarily on gas – a fuel which has significantly smaller environmental impacts.