As expected, Gazprom cut off natural gas supplies through Ukraine on January 1, 2006. As a result pressure was lowered in the gas pipelines for each countries in CEE, however, at a different measure. Hungary reports 25% decrease in pressure, Austria 18%, while Polish PGNiG says that the amount has been reduced by only 14%.
Due to the relatively mild weather the current natural gas consumption in Poland is some 47m cubic meters a day, versus peak consumption of 56-58m, Gazeta Wyborcza quotes Andrzej Osiadacz, CEO of Gaz System as saying. This means that gas storages are almost full, and there is no direct threat of a supply disrruption in any consumer segments. In our view, in case of a significant decline in temperature and a continuously lower import, government and PGNiG might decide to lower supply in certain consumer segments, (primarily for industrial consumers, such as gas fuelled power stations, chemical plants -Pulawy, Police; ceramic tiles producers) asking them to switch for alternative fuels (like heating oil). This would definitely worsen the business of PGNiG through lower sales volume. Therefore we consider the news as negative for the stock.