PGNiG may invest more than PLN 1bn (US$ 346m) this year to build a liquefied natural gas terminal, expand storage and extract fuel at home, Vice President Stanislaw Niedbalec said in an interview in Warsaw yesterday. The company also expects to learn by the end of January whether it won a license to explore for gas and oil in Egypt, Niedbalec said.
Our view: The CAPEX planned for 2007 is significantly lower than our own expectation of PLN 1.9bn. We think that the company is keeping back the money ahead of the construction of the new LNG terminal, the bulk of expenditures are expected for 2008-2009. We have already expressed our doubts on the return of this investment and also flagged our concerns that this might lead to restrained CAPEX in other, more profitable businesses. We expect a slight negative market reaction to the news.