The role of the Group in ensuring the reliability and quality of energy supplies

The im­por­tan­ce of ener­gy se­cu­ri­ty is fur­ther stres­sed in stra­te­gic do­cu­ments en­dor­sed at the hi­ghest cen­tral go­vern­ment le­vel, such as the ‘Ener­gy Se­cu­ri­ty and Envi­ron­ment – 2020 Ou­tlo­ok’ Stra­te­gy ad­op­ted by re­so­lu­tion of the Co­un­cil of Mi­ni­sters in April 2014, or the 2017 ‘Stra­te­gy for Re­spon­si­ble De­ve­lop­ment until 2020 (with 2030 Ou­tlo­ok)’, which sta­tes that “en­su­ring ener­gy se­cu­ri­ty calls for di­ver­si­fi­ca­tion of ener­gy so­ur­ces, raw ma­te­rials, as well as ener­gy ge­ne­ra­tion and di­stri­bu­tion me­thods. In the short term, this ap­plies to the di­rec­tions of sup­ply and the sup­pliers of na­tu­ral gas and to con­ti­nu­ing expan­sion of gas sto­ra­ge ca­pa­ci­tie­s”. This ap­pro­ach was con­fir­med by the Mi­ni­stry of Sta­te As­sets in the draft Po­lish Ener­gy Po­li­cy until 2040 and in the Na­tio­nal Ener­gy and Cli­ma­te Plan for 2021-2030.

From PGNi­G’s per­spec­ti­ve, the fac­tors of key im­por­tan­ce to en­su­ring ener­gy se­cu­ri­ty, out of tho­se hi­gh­li­gh­ted by the Co­un­cil of Mi­ni­sters, in­c­lu­de:

• The degree of diversification of natural gas sources and directions of supply to Poland;
• The volume of domestic natural gas production;
• The level and availability of natural gas storage capacities in Poland.

It is es­ti­ma­ted that by 2030 the de­mand for na­tu­ral gas in Po­land will grow by over 30% re­la­ti­ve to 2015. It will be dri­ven, in par­ti­cu­lar, by the expan­ding mar­ket for CNG and LNG fu­els used by ve­hic­les, and the as­so­cia­ted de­ve­lop­ment of di­stri­bu­tion and sup­ply in­fra­struc­tu­re, which will fol­low that growth trend. Ano­ther ma­jor in­di­ca­tor of the upco­ming in­cre­ase in de­mand for na­tu­ral gas is the con­struc­tion of new ga­s-fi­red po­wer ge­ne­ra­ting units and the ro­le of na­tu­ral gas as a trans­i­tion fu­el in the de­car­bo­ni­sa­tion of the Po­lish eco­no­my.

PGNiG is the principal importer of natural gas to Poland. A considerable portion of gas supplies still comes from countries east of Poland, but this share is gradually shrinking, mainly due to growing volumes of LNG imported from other countries, including the United States, Qatar and Norway. The LNG terminal in Świnoujście, being a key element of Poland’s gas infrastructure which will further support diversification of gas supply sources, is of crucial importance both for Poland and the entire CEE region. Its current regasification capacities are fully utilised by the PGNiG Group, which clearly demonstrates the Group’s leading role in diversifying the supply sources of energy commodities.

PGNiG holds several dozen licences for exploration for and appraisal of hydrocarbon deposits in Poland, as well as over 200 hydrocarbon production licences, which positions the PGNiG Group as the leader of the country’s crude oil and natural gas production. Not only is this area of the Group’s activity consistent with the objective set out in the ‘Strategy for Responsible Development until 2020 (with 2030 Outlook)’, namely restoration of the country’s gas production potential based on the resources available in Poland to the extent which will satisfy demand for gas, but it also constitutes an inherent part of the Group’s business operations in the domestic mining market.

As a global commodities market player, the PGNiG Group also engages in exploration and production activities outside of Poland. The Group’s long-standing efforts in this area contribute to diversification of supply sources of energy commodities to its home country. The access to resources located outside of Poland is considered an important driver of further diversification of supplies, especially in the context of the Baltic Pipe project which is aimed at building a new gas supply corridor on the European market from North Sea fields.

Through PGNiG Upstream Norway AS, the PGNiG Group has been engaged in upstream operations on the Norwegian Continental Shelf for more than ten years now.

Through Gas Storage Poland, the PGNiG Group acts as the storage system operator responsible for the operation of gas storage facilities, provision of storage services, as well as the use, maintenance and overhauls of storage facilities and equipment. Storage services are offered in three time horizons (long-term, short-term and intraday storage), which makes the Group’s offer fully flexible.

The PGNiG Group currently operates seven underground high-methane gas storage facilities (UGSF) linked to the gas transmission system, as well as two nitrogen-rich gas storage facilities. As part of the ‘UGSF working capacity development programme’, the Group also takes steps to increase its gas storage capacities. The UGSF's target capacity, as set out by the Ministry of Energy, is expected to reach approximately 4 bcm in 2030.

Pursuant to the Minister of Energy’s Regulation (Dz.U. of 2018, item 1814), in 2018 PGNiG Obrót Detaliczny was designated to act as the supplier of last resort for end users of gas, in particular those connected to Polska Spółka Gazownictwa’s or OGP Gaz-System’s network, in the event that their current supplier discontinues gas supplies through its own fault. In such a case, the DSO or TSO, acting for and on behalf of the customer, will enter into a relevant agreement with the supplier of last resort in order to guarantee uninterrupted gas supplies to end users. The customer is be notified of such agreement by PGNiG within 30 days.

The PGNiG Group’s business operations have a direct impact on Poland’s energy security, which – in the context of sustainable development – is reflected in our objective of providing customers with uninterrupted access to natural gas, electricity and heat, based on diversified sources and directions of natural gas supplies. This objective is understood as continuous pursuit by the Group of development in the area of natural gas and crude oil production and gas storage, as well as ensuring diversified sources of supply for customers. Against this backdrop, key business projects involving gas exploration and production or procurement, or the day-to-day business of electricity and heat generation pursued by the Group companies, become all the more important.

The PGNIG Group constantly strives to expand its reserves and production of natural gas and crude oil and to ensure their uninterrupted supply to customers. To this end, the Group pursues a policy to diversify natural gas imports to Poland and implements exploration and production projects.

In the context of the expanding portfolio of PGNiG’s services, including those related to the supply of electricity and heat, the Group plays an increasingly important role in ensuring Poland’s energy security.