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Oil & Gas

Polish group sees drop in oil and gas profits

Poland’s Orlen Group has reported declining profitability in its upstream division which took over oil and gas producer PGNiG in November, according to its financial report for the first quarter of 2023.

The multi-energy and petrochemical giant said that operating profit for the upstream segment before impairment allowances fell to 2.3 billion zloty ($541 million) for the first three months, when PGNiG’s performance was included in the report for the first time. Its figure for the fourth quarter of 2022 was 6.3 billion zloty.

Orlen noted a more than fourfold increase in upstream operating expenses to over 5 billion zloty in the first quarter of this year against the fourth quarter, but has not revealed the reasons.

The company’s oil and gas production business fell to third place in terms of operating profit in the first quarter after Orlen’s refining business arm operating profit of 5.5 billion zloty and its energy generation segment earned income of 3.3 billion zloty.

Orlen’s acquisition of PGNiG increased total group’s oil and gas production by 12 times to more than 173,000 barrels of oil equivalent per day, the company said. Its proved and probable hydrocarbon reserves now stand at almost 1.3 billion boe, about 73% of it being natural gas.

Orlen said that gas imports to Poland totalled about 3.2 billion cubic metres, of which 51% was liquefied natural gas and the remainder pipeline gas.

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In Swinoujscie, 15 LNG carriers were unloaded at the terminal: four from Qatargas, four from US player Cheniere Energy and seven bought on the spot market, it added.

However, the company exited the first quarter with about 1.1 billion cubic metres of gas in storage against 1.4 Bcm a year earlier.

With the upstream segment still contributing a healthy share to total revenues, Orlen posted a 143% jump in the top line to more than 110 billion zloty in the first quarter of 2023 against the same period of 2022. Against the fourth quarter of 2022, gross revenues rose by almost 9%.

Net income, attributable to shareholders, more than quadrupled to 9 billion zloty in the first quarter of 2023 compared with the first quarter of 2022, although the bottom line was still sizeably lower than the net income line of 14.4 billion zloty in the fourth quarter of 2022.

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