March 13, 2017 / 8:30 PM / 4 months ago

Poland's PGNiG says capex to exceed $8.4 bln for 2017–2022

3 Min Read

* Strategy focused on boosting value, financial stability

* Cumulative 2017-2022 core earnings seen at 33.7 bln zlotys

* Warns planned dividend payments may be postponed

WARSAW, March 13 (Reuters) - Poland's biggest gas firm PGNiG said on Monday its capital spending would exceed 34 billion zlotys ($8.4 billion) over 2017 to 2022, with almost half to be spent on exploration and production.

The state-run firm wants to increase its current documented hydrocarbon reserves by about 35 percent and boost hydrocarbon production by about 41 percent, it said in a statement.

Poland consumes some 16 billion cubic metres of gas a year but most of it comes from Russia as PGNiG has a long-term gas supply contract with Gazprom - the so-called Yamal contract - that runs until 2022.

PGNiG is now struggling to secure alternative supplies after that date. Poland's first liquefied gas (LNG) terminal, on its Baltic coast, received its first commercial shipments in July and the country is also planning a pipeline to Norway.

It said the strategy has been prompted by rapidly growing competition in the Polish gas market as well as the need to diversify gas imports from 2022 onwards, among other factors.

Average annual capital expenditure for 2017−2022 will come to about 5.7 billion zlotys and the programme should deliver cumulative earnings before income tax depreciation and amortisation (EBITDA) of 33.7 billion zlotys over the period.

PGNiG said it expected the investment to help boost EBITDA to an annual average of some 9.2 billion zlotys for 2023-2026.

The company reiterated that it wanted to keep its net debt to EBITDA ratio below two.

It also said it would stick to its policy of paying out up to 50 percent of profits in dividends but warned there could be a delay.

"PGNiG will recognise net profits of its subsidiaries in the consolidated accounts net of any dividends paid by the subsidiaries, so achieving the planned level of dividend payments may be postponed by one year," it said. ($1 = 4.0609 zlotys) (Reporting by Lidia Kelly and Agnieszka Barteczko; writing by Lidia Kelly; editing by David Clarke)

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