DIRECTORS' REPORT ON PGNiG SA'S OPERATIONS ... - Notowania

Directors’ Report on PGNiG S.A.’s Operations in 2008
professionals specialised in the exploration of natural gas and crude oil deposits. In countries where
PGNiG S.A. operates highly qualified staff is difficult to recruit.
Unpredictable Events
Hydrocarbon reserves developed by PGNiG S.A. are usually located at great depth, which is
accompanied by extremely high pressures, and many of them include hydrogen sulphide in its
chemical composition. Consequently, there exists a high degree of risk of an explosion, eruption or
hydrocarbon leakage, which in turn may pose a threat to people (workers and local inhabitants),
natural environment and also production equipment.
Changes in Legal Regulations
The legal regulations in some countries change frequently and unexpectedly, causing problems to
entities conducting exploratory activity. This may be a particular threat in countries where law changes
depend on the decisions of authoritarian governments.
Political and Economic Situation
Some countries where PGNiG S.A. carries out exploratory activity face the risk of armed conflicts or
terrorist attacks, which may result in limitation, suspension or discontinuation of the exploration and
production business there.
In some areas of PGNiG S.A.’s operations there is a risk of social and political destabilisation.
Changes of governments may bring to a halt the processes of state administration issuing permits to
conduct business activity related to oil. Additionally, these countries are at risk of internal conflicts
and social unrest caused by poor social and demographic conditions in which the inhabitants of these
countries live. The risks specified above may lead to limitation, suspension or discontinuation of the
Company’s operations.
In certain countries, the operations of exploration companies may be hindered by lack of adequate
infrastructure, which may be an obstacle in transporting equipment, staff and materials to the sites.
There may also arise problems in providing supplies and ensuring appropriate health care. These risks
may lead to limitation or suspension of the Company’s exploratory activity.
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