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PGNiG Jumps to 5-Year Peak as Poland to Delay Gas Tax

May 23 (Bloomberg) -- Polskie Gornictwo Naftowe i Gazownictwo SA, Poland’s dominant gas company, jumped to a five-year high on government plans to delay taxes on shale gas extraction.

PGNiG, as the company is known, closed 2.5 percent higher at 6.10 zloty, extending this year’s gain to 17 percent. Turnover stood at 227 percent of the three-month daily average, data compiled by Bloomberg show. The WIG20 Index fell 0.6 percent today.

In February, Poland published a draft law to impose a hydrocarbon tax, which capped the fiscal burden at 40 percent. Finance Minister Jacek Rostowski said yesterday that while the law will come into force in 2015 as planned, the tax won’t be collected until 2020 to encourage shale-gas investment.

“The tax delay has an impact on PGNiG’s price,” Maciej Hebda, an analyst at Espirito Santo Investment Bank in Warsaw, said by phone today. “The positive effect of the lack of tax from 2015 to 2020 is about 0.3 zloty a share according to my estimates.”

Poland granted more than 100 permits to investors, including U.S. and Canadian companies, to drill what was billed as Europe’s richest shale-gas deposits, seeking to cut dependency on imports from Russia’s OAO Gazprom. Of 39 wells planned for 2013, just two were drilled by May, Environment Ministry data show. At the same time Talisman Energy Inc. pulled out of the country and Marathon Oil Corp. decided to look for options to dispose of its 11 licenses.

PGNiG has 15 licenses to explore for shale gas and it has yet to start producing gas trapped in shale rock formations, just like all its competitors. The state-controlled company is producing the majority of conventional Polish gas, which also won’t be taxed until 2020.

To contact the reporter on this story: Maciej Martewicz in Warsaw at mmartewicz@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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