Competitive environemnt

Domestic production of natural gas in Poland in 2020 was approximately 41.8 TWh, of which 0.7 TWh was produced by competitors of PGNiG. Their share in the production of natural gas in Poland is approximately 1.6%.

PST's main competitors are major players in the energy market such as Shell, Total, RWE, Equinor, etc., who are concurrently active in network gas, LNG and electricity trading in all markets where PST is present.

On the Polish natural gas retail market, the company competes with the largest electricity suppliers that expand their operations to include sale of natural gas. In 2020, PGNiG OD’s main and most active competitors on the gas market were: Fortum; Enea, Energa Obrót, Axpo, Elektrix.

In the LNG retail market, the main competitors are: DUON Dystrybucja Sp. z o.o.; NOVATEK Polska Sp. z o.o.; CRYOGAS M&T POLAND S.A., BARTER Sp. z o.o., Shell Polska Sp. z o.o. and Gaspol S.A. According to available information, competitors are pursuing robust investment plans to expand their tanker fleets and equipment used in the LNG sales.On the LNG bunkering market, the most active competitors are DUON Dystrybucja sp. z o.o., Barter S.A., Cryogas sp. z o.o., Gascom sp. z o.o. and foreign entities, e.g. Nauticor and Gasum.

There are 52 competing DSOs (Distribution System Operators) on the Polish gas distribution market, including:

• 19 entities for whom DSO activities are their core business, including 4 entities operating in closed distribution zones;
• 33 entities engaging in DSO activities outside their core business, including 29 entities operating in closed distribution zones.

In total, competing DSOs and entities engaged in LNG regasification (without a gas distribution licence) operate in 278 municipalities; competing DSOs and PSG operate in 133 municipalities.

Source: In-house analysis based on PSG data.

* UNIMOT System Sp. z o.o. and Blue LNG Sp. z o.o.
** Other DSOs operating in two or fewer municipalities.

Companies with the greatest impact on the distribution market in Poland include entities that have (mainly independent of PSG) entry points to their own distribution systems, including LNG regasification stations, and operate in approximately 40% of municipalities where PSG’s direct competitors are present. These include: DUON Dystrybucja Sp. z o.o.; GAZ ENERGIA Sp. z o.o., Novatek Polska. Other competitors are active on local markets or expand at smaller rates.

In the area of heat generation, PGNiG TERMIKA operates on markets limited by the boundaries of two separate municipal heating networks: in the capital city of Warsaw and in Pruszków, Piastów and Michałowice. The shares in the heat production markets in Warsaw and Pruszków make PGNiG TERMIKA a natural monopolist in these areas. An important area of competition is the sale of heat to end customers, where business is conducted on a TPA basis (third party access).

PGNiG TERMIKA sells electricity almost exclusively on the wholesale market (with an only marginal share of sales to end customers). In 2020, as in previous years, the main players on the wholesale market were three groups of companies: PGE Polska Grupa Energetyczna S.A., TAURON Polska Energia S.A, and ENEA S.A., which account for some 67% of total installed capacity and whose electricity outputs represent approximately 70% of the total production in Poland. The PGE Group holds the largest share in electricity generation. Given their shares in the wholesale market, the above entities certainly have a major impact on the development of energy prices in futures contracts.