INTEGRATED ESG
REPORT 2020

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PL

Prospects for 2022, 2030, 2050

2022 OUTLOOK – with an exten­sion until 2026 (the ti­me ho­ri­zon of the PGNiG Gro­up’s bu­si­ness stra­te­gy).

2022

  • The Yamal contract between PGNiG and Gazprom expires on December 31st 2022
  • Key infrastructure to diversify directions and sources of natural gas supplies to Poland is to be built by that date:
    • construction of the Norwegian Corridor to link Poland’s transmission network with fields in Norway through the Danish transmission system and a subsea connection from Denmark to Poland, enabling transport of gas from the Norwegian Continental Shelf. The project will involve the construction of connections between Norway and Denmark (Nordic Pipe – Tie-in) and between Denmark and Poland (Baltic Pipe), and the extension of the Danish transmission system. The project will be completed by 2022, enabling import of approximately 10 bcm of natural gas.
    • expansion of the President Lech Kaczyński LNG terminal in Świnoujście – its annual regasification capacity is to increase from 5 bcm to 7.5 bcm (receiving and regasification capacity).
  • Completion of cross-border gas projects in Poland, which will increase the country’s import and export capabilities and will involve either the construction or extension of links with:
    • Slovakia – raising annual import and export capacities to 5.7 bcm and 4.7 bcm respectively,
    • Lithuania (GIPL) – raising annual import and export capacities to 1.7 bcm and 2.4 bcm respectively.
  • Digital Field has substantially improved the efficiency of oil and gas production from PGNiG’s fields. The deployment of this analytical platform, integrating the work of specialists in various disciplines into a single field model, has allowed the Group to increase recovery rates and economic efficiency. A case in point is the work currently under way on the Paproć field, which shows a five-fold increase in efficiency compared with work done using traditional methods.
  • 90% of Poland’s population have access to the gas network thanks to distribution network extensions and off-grid LNG regasification stations.
  • Decarbonisation of Poland’s energy sector is under way:
    • Gas projects implemented by power plants, construction of gas-fired furnaces and phase-out of coal-fired ones
    • Development of renewable energy sources and steady growth in RES generation capacities
    • Development of alternative sources, including hydrogen
  • COVID-19 – the economy is recovering from the pandemic lockdown:
    • Higher day-to-day operating costs incurred by companies to comply with stricter workplace health and safety requirements
    • Increased financial support for healthcare providers and local communities, including members of the social groups most heavily affected by the pandemic
    • Complex customer service options using online tools, expansion of electronic customer service centres
    • Remote work options and tools introduced as a permanent solution.

By 2022, the PGNiG Group, the ORLEN Group and Lotos will form a multi-utility group, which is set to become the leader in Poland and a major player on the gas market in Central and Eastern Europe. The PGNiG Group has created a gas hub serving customers across the region, based on the LNG terminal in Świnoujście and the extensive cross-border infrastructure. Gas in­fra­struc­tu­re expan­sion pro­jects ha­ve al­lo­wed PGNiG to ef­fec­ti­ve­ly di­ver­si­fy its so­ur­ces and di­rec­tions of na­tu­ral gas sup­plies, with the di­ver­si­fi­ca­tion be­ing a cor­ner­sto­ne of Po­land’s ener­gy se­cu­ri­ty.

The PGNiG Gro­up is con­stan­tly ad­van­cing gas mo­bi­li­ty ba­sed on CNG and LNG tech­no­lo­gies, implemented by the combined PGNiG Group and PKN Orlen. A gro­wing num­ber of pu­blic trans­port ve­hic­les in Po­land are po­we­red by CNG, an envi­ron­men­tal­ly­-frien­dly fu­el. Ac­cor­ding to PGNiG Obrót De­ta­licz­ny, Po­land will so­on ha­ve a to­tal of 500 CNG-po­we­red bu­ses on the ro­ads, with the fi­gu­re expec­ted to mo­re than do­uble by 2023.

The PGNiG Gro­up com­ple­ments its tra­di­tio­nal gas explo­ra­tion and pro­duc­tion bu­si­ness with the new fa­st-gro­wing RES seg­ment. It con­stan­tly expands its pre­sen­ce in and in­te­gra­tes the he­at ge­ne­ra­tion sec­tor, gro­wing its as­sets and ef­fec­ti­ve­ly de­car­bo­ni­sing the ener­gy sec­tor by gra­du­al­ly swit­ching to ga­s-po­we­red or RES po­wer plants, thus re­pla­cing old co­al-fi­red fur­na­ces. The Gro­up ma­in­ta­ins its com­mit­ment to the de­ve­lop­ment of hy­dro­gen and other new tech­no­lo­gies and the­ir im­ple­men­ta­tion in bu­si­ness. PGNiG is po­ised to cre­ate a co­he­rent cha­in of hy­dro­gen ca­pa­bi­li­ties by 2022, ena­bling fur­ther growth of this bu­si­ness li­ne.

2030 is the ti­me ho­ri­zon of the Eu­ro­pe­an Unio­n’s cli­ma­te and ener­gy po­li­cy.

2030

The National Energy and Climate Plan 2021–2030 envisages:

  • Further decarbonisation of Poland’s energy sector, with the target share of coal in the energy mix at 56%–60% (compared with 77% now)
  • 21%–23% share of RES in gross final energy consumption (compared with 15% in the base year 2015), with the target share of RES in power generation at ca. 32%
  • Development of environmentally-friendly and efficient heating systems. By 2030, at least 85% of the heating or cooling systems with contracted capacity exceeding 5 MW are to meet the criteria of an energy-efficient heating system. This goal is to be achieved through:
    • expansion of cogeneration
    • adaptation of power plants for heat production
    • increased use of RES and natural gas in the heat generation sector
    • increased use of waste in energy generation
    • creating conditions conducive to increased use of district heating.
  • Maintaining Poland’s annual natural gas production at ca. 4 bcm and seeking to increase the output with innovative technologies helping to improve production efficiency.
  • Expanding underground gas storage capacity to at least 4 bcm by the 2030/2031 winter season and expanding the maximum daily withdrawal capacity from 48.7 mcm to at least 60 mcm.
  • Advancement of electric mobility and alternative fuels in transport, including natural gas (CNG and LNG) and hydrogen, driven by efforts promoting alternative fuels in transport and simultaneous expansion of the distribution infrastructure.

The Fo­urth In­du­strial Re­vo­lu­tion, al­so known as In­du­stry 4.0, is in­flu­en­cing al­most all bran­ches of ma­nu­fac­tu­ring. The con­cept uses and in­te­gra­tes va­rio­us di­gi­tal tech­ni­qu­es, in­c­lu­ding the In­ter­net of Things (IoT), Big Da­ta, smart sen­sors and Aug­men­ted Re­ali­ty (AR), in or­der to ful­ly au­to­ma­te the pro­duc­tion pro­cess and pass so­me de­ci­sion ma­king on to the ar­ti­fi­cial in­tel­li­gen­ce (AI) le­vel.

This ma­jor in­du­strial trend has had an im­pact on the gas, fu­els and ener­gy sec­tors and has al­lo­wed com­pa­nies to di­gi­tal­ly opti­mi­se most of the­ir bu­si­ness are­as. Ac­cor­ding to the Di­gi­tal Oil­field Mar­ket re­port pu­bli­shed by Mar­ketsandMar­kets, the glo­bal Di­gi­tal Oil­field Mar­ket is expec­ted to grow by 26% on 2019, to USD 30.4bn by 2024.

An exam­ple of an in­du­strial pro­cess di­gi­ta­li­sa­tion pro­ject im­ple­men­ted in Po­land is the In­te­gra­ted De­po­sit Ma­na­ge­ment Sy­stem sup­por­ting the ef­forts to opti­mi­se PGNi­G’s pro­duc­tion ope­ra­tions. Ge­olo­gi­sts, field and pro­duc­tion en­gi­ne­ers and eco­no­mi­sts are in­vo­lved in explo­ra­tion for and extrac­tion of mi­ne­ral re­so­ur­ces. Mas­si­ve amo­unts of da­ta are ge­ne­ra­ted, sto­red and used in each of the­se fields. The Di­gi­tal Field plat­form in­te­gra­tes the re­sults of work of spe­cia­li­sts across va­rio­us di­sci­pli­nes in­to a sin­gle field mo­del, fa­ci­li­ta­ting opti­mum use of the da­ta. The di­gi­tal mo­del is used to si­mu­la­te va­rio­us sce­na­rios for pro­duc­tion from se­ve­ral fields at a ti­me, in­cre­ase fo­re­cast ac­cu­ra­cy, opti­mi­se the dril­ling pro­gram­me, ana­ly­se the ef­fects of plan­ned ca­pi­tal pro­jects (CAPEX) and opti­mi­se ener­gy con­sump­tion (OPEX) and sup­ply cha­ins.

As an una­vo­ida­ble ef­fect of on­go­ing di­gi­ta­li­sa­tion and ad­van­ce­ment of In­du­stry 4.0, com­pa­nies ha­ve star­ted to ge­ne­ra­te and ac­cu­mu­la­te a new ty­pe of re­so­ur­ce: da­ta. In con­trast to pri­ma­ry ap­pli­ca­tions which used the most re­cent da­ta de­scri­bing pro­cess sta­tus, ad­van­ced ap­pli­ca­tions in­cre­asin­gly va­lue hi­sto­ri­cal da­ta. The lat­ter can be used to de­ve­lop a plant and ma­chi­ne­ry fa­ilu­re pre­dic­tion mo­del, opti­mi­se pro­duc­tion pro­cesses, ena­ble vir­tu­al explo­ra­tion for na­tu­ral re­so­ur­ces, etc. Com­pa­nies in tra­di­tio­nal in­du­stries still ha­ve a ra­ther li­mi­ted know­led­ge of what da­ta they ha­ve, how they can use it and what its po­ten­tial va­lue is. This will chan­ge over ti­me, and for the most ac­ti­ve and agi­le sec­tor com­pa­nies da­ta and da­ta-based se­rvi­ces may even be­co­me a new bu­si­ness li­ne. Be­fo­re they explo­re and ac­tu­al­ly use the new­ly­-bu­ilt as­set, com­pa­nies must fa­ce a num­ber of new chal­len­ges and ta­sks in­vo­lving an in­for­med ap­pro­ach to da­ta, in­for­ma­tion and know­led­ge ma­na­ge­ment by im­ple­men­ting, for in­stan­ce, Da­ta Go­ver­nan­ce pro­cesses and so­lu­tions (for mo­re in­for­ma­tion, see W kie­run­ku ener­gii przy­szło­ści [To­wards the ener­gy of the fu­tu­re], a re­port pu­bli­shed by PGNiG in 2019 – link).

Ob­ta­ining ener­gy from re­ne­wa­ble ener­gy so­ur­ces is cur­ren­tly one of the key tech­no­lo­gi­cal chal­len­ges for the gas, fu­els and ener­gy sec­tors. It is sup­por­ted by the EU’s cli­ma­te neu­tra­li­ty po­li­cy (Eu­ro­pe­an Gre­en De­al), which trans­la­tes in­to pre­fe­ren­tial fun­ding for RES pro­jects. At the sa­me ti­me, the ne­ed for de­car­bo­ni­sing the ener­gy sec­tor is con­du­ci­ve to the de­ve­lop­ment of RES. Na­tu­ral gas for RES may se­rve as a sys­tem sta­bi­li­ser.

Ana­ly­sis of trends pre­va­iling on the re­ne­wa­ble ener­gy mar­ket shows that the fa­ste­st-gro­wing tech­no­lo­gy is pho­to­vol­ta­ic so­lar pa­nels, which in 2018 ac­co­un­ted for mo­re than half of the to­tal new­ly in­stal­led RES ca­pa­ci­ty worl­dwi­de. Wind tech­no­lo­gies are equ­al­ly im­por­tant and ra­pi­dly gro­wing RES tech­no­lo­gies. Ac­cor­ding to the IEA’s Re­ne­wa­bles 2018 re­port, by 2023 the to­tal wind po­wer ca­pa­ci­ty will in­cre­ase by mo­re than 60% worl­dwi­de re­la­ti­ve to 2018. Of­f-sho­re wind pro­jects se­em par­ti­cu­lar­ly in­te­re­sting, as they are lar­ger, mo­re ef­fi­cient and cau­se less nu­isan­ce to pe­ople.

Wind po­wer is al­so a pro­no­un­ced trend among bu­si­nes­ses in Po­land. Exam­ples in­c­lu­de the PGE Gro­up, which, ac­cor­ding to the sta­te­ment by the com­pa­ny­’s re­pre­sen­ta­ti­ves du­ring the Eco­no­mic Fo­rum in Kry­ni­ca in 2019, is to ge­ne­ra­te 1.6 GW and 2.5 GW of wind po­wer by 2025 and 2030, re­spec­ti­ve­ly

Ano­ther dri­ving fac­tor be­hind RES growth is sti­mu­la­ting the mar­ket for small ener­gy pro­du­cers, pro­su­mers and com­pa­nies cre­ating in­no­va­ti­ve so­lu­tions in RES ge­ne­ra­tion, di­stri­bu­tion and sto­ra­ge (for mo­re in­for­ma­tion, see W kie­run­ku ener­gii przy­szło­ści [To­wards the ener­gy of the fu­tu­re], a re­port pu­bli­shed by PGNiG in 2019 – link).

Bio­me­tha­ne ob­ta­ined from bio­mass fer­men­ta­tion (bio­gas pro­du­ced in the pro­cess is pu­ri­fied and tur­ned in­to bio­me­tha­ne) may be an im­por­tant re­ne­wa­ble so­ur­ce for the gas in­du­stry. The PGNiG Gro­up’s tar­get vo­lu­me of bio­me­tha­ne in Po­lan­d’s di­stri­bu­tion ne­twork is ca. 4 bcm by the end of 2030.

By 2030, the PGNiG Group is set to become part of a modern multi-utility group with an extensive RES arm complementing its core business based on natural gas. PGNiG will play a major role on the RES market, relying particularly on biomethane.

By 2030, the multi-utility group that may include PGNiG will become the leader of Poland’s heat generation industry, continuing the decarbonisation process based on natural gas and RES as the industry integrator. Hydrogen solutions will form a separate business segment, and the hydrogen technology development programme will be continued.

2050 is the tar­get da­te for the Eu­ro­pe­an Union to be­co­me cli­ma­te­-neu­tral.

2050

  • Cli­ma­te neu­tra­li­ty – Climate neutrality – the EU becomes climate-neutral. In 2019, the European Council announced its goal to make Europe climate-neutral by 2050. As requested by the European Parliament and the European Council, the Commission’s vision of the climate-neutral future covers nearly all EU policies and is in line with the Paris Agreement objective to keep the global temperature increase to well below 2°C and pursue efforts to limit the increase to 1.5°C (for more information, visit https://ec.europa.eu/clima/policies/strategies/2050_pl).

Li­qu­efied na­tu­ral gas (LNG) is a fu­el which be­gins to play an in­cre­asin­gly im­por­tant ro­le in both glo­bal and do­me­stic ener­gy mix, and which is gi­ven par­ti­cu­lar at­ten­tion in terms of in­no­va­tion ad­van­ce­ment. This is due to LNG's si­gni­fi­cant ad­van­ta­ge over other fos­sil ener­gy car­riers, in par­ti­cu­lar:

  • low environmental impact: LNG combustion does not produce any harmful dust or smoke, and CO₂ emissions are 30% lower compared with burning fuel oil or coal
  • multiple applications – LNG can be used as a traditional fuel for generating energy in large-scale power plants, as a fuel for local businesses’ small-scale energy generating units, and can also be successfully used as a fuel for internal combustion engines used in road, rail and water transport.

All that ma­kes LNG in­cre­asin­gly po­pu­lar, as con­fir­med by fo­re­ca­sts that put an­nu­al LNG out­put at 630 mil­lion ton­nes in 2050, al­most three ti­mes the 2016 fi­gu­re. The LNG tech­no­lo­gy are­as on which de­ve­lop­ment work will fo­cus in the co­ming years in­c­lu­de in par­ti­cu­lar:

  • Floating Liquefied Natural Gas (FLNG) technologies that enable the production of LNG at sea, directly at offshore gas fields, which reduces the cost of LNG production by as much as 50% (IGU’s Global Natural Gas Insights – 2019 Edition)
  • transport-related technologies, including refuelling infrastructure and the development of more efficient LNG-powered vehicles.

The de­ve­lop­ment of LNG tech­no­lo­gies is a ca­ta­lyst of growth in gas mo­bi­li­ty, which can be an al­ter­na­ti­ve to elec­tric ve­hic­les, par­ti­cu­lar­ly in he­avy trans­port. The trend al­lows sec­tor com­pa­nies to de­ve­lop new bu­si­ness mo­dels tar­ge­ted at both re­ta­il and in­sti­tu­tio­nal cu­sto­mers. Sin­ce li­qu­efied na­tu­ral gas me­ets strin­gent re­qu­ire­ments of the In­ter­na­tio­nal Ma­ri­ti­me Or­ga­ni­sa­tion (IMO), both ports and ship ma­nu­fac­tu­rers ke­ep tabs on tech­no­lo­gies that ena­ble the use of LNG to po­wer ships. It sho­uld be no­ted that in the spring of 2019 one of the first com­mer­cial bun­ke­ring ope­ra­tions was car­ried out in Po­land. It to­ok pla­ce in the Port of Gdy­nia and used LNG sup­plied by PGNiG (for mo­re in­for­ma­tion, see W kie­run­ku ener­gii przy­szło­ści [To­wards the ener­gy of the fu­tu­re], a re­port pu­bli­shed by PGNiG in 2019 – link).

By 2050, the PGNiG Group will expand its use of alternative gases: hydrogen and biomethane, turning them into separate business segments. As part of a multi-utility group, the Group will be a trailblazer in the zero-carbon transition and a lynchpin of real change in the energy mix based on natural gas and RES (mainly photovoltaics, wind and biogas). In heat generation, the Group will seek to fully switch to the energy sources listed above.Continuous development of modern technologies will permit the PGNiG Group to strongly enter the market with a product range of the future.

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