PGNiG Profit Jumps on Gas Price Reduction Agreement With Gazprom

Polskie Gornictwo Naftowe i Gazownictwo SA said its fourth-quarter profit jumped five-fold after Poland’s dominant gas company agreed to a price cut in its import contract with Russia’s OAO Gazprom.

Net income rose to 2.19 billion zloty ($684 million) from 431 million zloty a year earlier, PGNiG, as the company is known, said in an e-mailed statement today. That missed the 2.38 billion-zloty mean estimate of eight analysts surveyed by Bloomberg.

PGNiG, which sold almost 15 billion cubic meters of gas last year, bought about 60 percent of the volume from Gazprom. In November last year it agreed to lower the price of the long-term contract with the Russian company by more than 10 percent, saying it will boost earnings before interest, taxes, depreciation and amortization, or Ebitda, by as much as 3 billion zloty.

The fourth-quarter profit helped the state-controlled company raise its annual net income to 2.24 billion zloty, according to a regulatory statement today.

PGNiG kept its plan to increase gas output to 4.8 billion cubic meters this year from 4.4 billion cubic meters in 2012 as it starts production at its Norwegian offshore well.

The company plans to raise gas production to 6.2 billion cubic meters in 2015, start output of shale gas and further increase imports from western Europe to cut its dependence on Russian supplies.

Imports through gas links with the Czech Republic and German rose 18 percent last year.