GRI 103-3
 
The total CAPEX has been assumed to exceed PLN 34bn in 2017−2022. Average annual capital expenditure will amount to ca. PLN 5.7bn.

The investment programme should deliver cumulative 2017−2022 EBITDAear­nings be­fo­re in­te­rest, ta­xes, de­pre­cia­tion and amor­ti­za­tion of ca. PLN 33.7bn, driving long-term growth of the Group’s EBITDAear­nings be­fo­re in­te­rest, ta­xes, de­pre­cia­tion and amor­ti­za­tion in 2023−2026 to the annual average of ca. PLN 9.2bn. At the same time, the net debt to EBITDAear­nings be­fo­re in­te­rest, ta­xes, de­pre­cia­tion and amor­ti­za­tion ratio should stay below 2.0 over the Strategy term, with the current dividend policy providing for distribution of up to 50% of the Group’s consolidated net profit upheld.

Planned CAPEX in 2017−2022* [PLNb]

* CAPEX including expenditure on acquisition of hydrocarbon deposits.

 

Capital expenditure in 2020

The Group intends to maintain a high level of capital expenditure in 2020. Spending will focus primarily on projects involving maintenance of hydrocarbon production rates, as well as projects in the exploration for and appraisal of crude oil and natural gas deposits, and development of the power generation segment.
Exploration and Production

Working towards its strategic objective of increasing total hydrocarbon production, PGNiG will continue to tie in wells in Poland at the Zielona Góra and Sanok Branches. In 2020, 25 wells are planned to be tied in.

In the area of appraisal and production work in Pakistan, plans for 2020 include completion of drilling, tests and tying in of the Rizq-3 production well and drilling of the Rehman-7 production well. In parallel with the drilling campaign, work will be carried out to expand the capacity of the production infrastructure and tie in new wells: Rehman-6, Rehman-7 and Rizq-3 for commercial production.

PGNiG UN will continue to produce, as a partner, hydrocarbons from the Skarv, Morvin, Vilje, Vale, and Gina Krog fields and will proceed with the development of the Skogul, Ærfugl and Duva fields. Development of the Tommeliten Alpha and King Lear fields is at the concept preparation phase. PGNiG UN is preparing to acquire further deposits on the Norwegian Continental Shelf by monitoring and analysing potential projects on an ongoing basis, and in the upcoming licensing rounds the company plans to apply for additional licence areas.

Trade and Storage

In 2020, projects will be undertaken in the retail area to develop customer service tools, which will include modernisation of customer service offices as part of the BOK 2.0 programme (with 15 offices planned to be modernised in 2020), further development of the eBOK platform, and development and optimisation of the Contact Centre.

New products will be added to the offering:

  • Construction and operation of gas-fired cogeneration units combined with sale of their electricity and heat output. The service will include performing energy analyses/ audits, a proposal of the PGNiG Group’s financial support in the project implementation, supervision of the investment process, installation of equipment, obtaining additional income from energy efficiency enhancement measures (white certificates), and subsequent operation of the units and sale of their energy output;
  • With respect to CNG and LNG:
    • Operation of refuelling stations where no other seller will be selected,
    • LNG bunkering – the ship bunkering segment is an attractive sale market for LNG,
    • Increasing the share of LNG sales in the B2B segment by developing solutions to sell LNG to customers and construct regasification stations in the B2B formula;
  •  New business involving photovoltaic products – launch of products for retail customers in 2020.

In the long term, PGNiG will focus on the performance of obligations under its long-term contracts with respect to minimum offtake volumes (Yamal contract) and contracted LNG volumes.

PST will continue to develop wholesale trading in energy commodities. Commercial activities are planned to be undertaken in the Slovak and Hungarian markets in 2020. PST Polish Branch began to supply gas to industrial customers in Poland (formerly Wholesale Trading Branch customers) in January 2020.

In 2020, GSP will work on the construction of the Kosakowo CUGSF, comprising five chambers in Cluster B, which are to be filled with gas and put into operation by 2021.

Distribution

The Group plans to maintain the current level of expenditure on expanding the distribution grid, connecting new customers, and on altering and modernising the gas network to a high standard, with 70,000 new gas service lines expected to be built in 2020.

Capital expenditure on gas grid upgrades is made in order to meet growing requirements related to the need to ensure security of gas supplies and operation of the gas grid, including gas pipelines, gas service lines and gas service points, complexes and stations.

Compared with 2019, when a total of approximately 600 km of the grid was upgraded, the scale of upgrades will range from 770 km in 2020 to 1,000 km in 2022.

Generation

The PGNiG TERMIKA Group faces a number of challenges in its market and regulatory environments, as well as the need to continue its modernisation programme to replace or adapt its existing generation assets to more and more stringent environmental requirements and expand its generation capabilities.

The PGNiG TERMIKA Group will proceed with its strategic initiatives and acquisitions commenced in 2019, and intends to markedly scale up the volume of electricity sales by implementing projects aimed at building new, cost-effective generation capacities and upgrading existing sources using low-carbon technologies.

Additionally, in 2020 the Generation segment will work on securing heat supplies to the city of Rybnik, connecting the Zofiówka and Pniówek CHP plants’ heat systems, launching a programme to develop the hot domestic water market (initially in Jastrzębie Zdrój) and drilling additional gas wells at the Krupiński coal mine. Work is in progress on the projects to build an off-grid heating system in Warsaw, construct a complex of eight local gas-fired boiler units in Toruń.

Other growth projects

In 2020, PGNiG Ventures will commence operations with a strategy to invest in growth-potential companies. In 2020, the company is expected to launch a programme to search for entities meeting the investment criteria, which will enable it to estimate the scope and level of investments.

In 2020, the research and development area will be geared towards commercialisation projects and achievement of direct business benefits. At the same time, new business areas with a potential for enhancing the Group’s competitiveness and market position in the medium and long term will be constantly explored. These include: strengthening of the position in hydrogen technologies, transferring the MiniDrill and EkoHead R&D projects for commercialisation, wide application of photovoltaics, including in the production of ‘green’ hydrogen, biomethane, and development of modern environmental management systems through the implementation of the Eco Management Audit Scheme at the PGNIG Group.