The Polish government yesterday approved a plan for PGNiG to limit the gas supply of certain users from today until February 15, as gas usage has hit record highs day-by-day. On Monday, Poland consumed 61.5 million cubic metres of natural gas versus the normal consumption of 45–50 million cubic metres a day last year. According to the plan, the supply of chemical companies and gas-fuelled power stations could be limited if necessary.
We believe the current situation is more negative than positive for PGNiG. The company faces very strong demand due to the harsh winter, but due to the lower regular import from the Ukraine pipelines, it will need to buy natural gas on the spot market at a much higher price than normal if it is to fulfil demand. Moreover, the stability and reliability of the natural gas supply is now in the spotlight, which could drive households to look at alternative heating solutions. It should be noted that PGNiG’s growth prospects mostly rely on the increase of natural gas for heating purposes. At the moment, however, we do not feel it necessary to revise our gas sales volume forecasts for PGNiG. We maintain our hold recommendation on the stock and PLN 3.50 price target.