PGNiG Sees $4.9 Billion of Cash on Increased Gas Output
Polskie Gornictwo Naftowe i Gazownictwo SA, Poland’s dominant gas company, plans to repay existing debt and generate 15 billion zloty ($4.9 billion) of excess cash by 2020 as it’s seeking to increase output, sell units and expand into power generation.
The state-controlled company known as PGNiG will boost gas production to 6.2 billion cubic meters in 2015 from 4.4 billion cubic meters this year to cut dependence on Russian supplies and prepare for the domestic market liberalization, according to its plans for 2012-2014 published today.
“In two years we want to be a modern, diversified energy company, which can operate successfully in new market conditions,” Chief Executive Officer Grazyna Piotrowska-Oliwa said in a statement today.
The Warsaw-based company plans to start gas production from its off-shore Norwegian license, start drilling for the fuel in Libya and Egypt and continue searching in Pakistan. Its gas output plan excludes the search for shale gas, the reserves of which may be eight times as high as documented deposits of the conventional fuel in the country.
PGNiG, which sells about 14.5 billion cubic meters a year, buys two-thirds of the amount from Russia. Russia imports will fall once Poland taps its shale gas reserves to meet rising demand from power plants. The country may have as much as 768 billion cubic meters of gas trapped in shale rock formations, the Geological Institute said in March after analyzing wells drilled from the 1950s to the 1980s.
The company plans to sell shares in its gas exploration unit PGNiG Poszukiwania as well as its PGNiG Technologie subsidiary in an initial public offering next year. It will sell non-core assets, including spa resorts operator Geovita Sp. z o.o., to cut the number of subsidiaries to 14 from 53.
About 900 people will leave the company as of the start of next year under a voluntary job reduction plan to help lower costs and PGNiG will set up separate units for power and gas trading.
The company will spend on investment about 5 billion zloty next year, Chief Financial Officer Slawomir Hinc said today. Its investments in coming years will include building gas-fired power-generation units in Warsaw, Stalowa Wola and Lagisza.
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