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

Directors’ Report on PGNiG S.A.’s Operations in 2008
Chapter VI: Investment Projects
In 2008, PGNiG S.A. carried out a number of projects in all of its business areas. According to the
financial statements, capital expenditure on property, plant and equipment and intangible assets
incurred by PGNiG S.A. in 2008 amounted to PLN 1,161.9m. The table below presents the
expenditure structure by business segments.
Capital expenditure of PGNiG S.A. in 2008
PLNm
Exploration and Production 935.0
Trade and Storage 226.7
Other 0.2
Total 1,161.9
1. Investment Projects in the Exploration and Production Segment
The expenditure on projects incurred in the Exploration and Production segment in 2008 amounted to
PLN 935.0m. Below are described the major projects in the segment.
Exploration
In the area of exploration, capital expenditure totalled PLN 362.1m, including PLN 211.7m incurred
mainly on positive boreholes and boreholes which were not completed. In 2008, eleven positive
boreholes were drilled. The balance of PLN 150.4m was incurred on negative boreholes and was
charged to costs of the financial year.
Lubiatów-Międzychód-Grotów Project
The objective of the project is to develop the Lubiatów-Międzychód-Grotów reserves of crude oil and
natural gas and to facilitate transport, storage and sale of crude oil, natural gas, liquid sulphur and
propane-butane mixture from the LMG Crude Oil and Natural Gas Mine. The LMG project involves:
• construction of the LMG Central Facility to serve as a hub for collection, distribution and
treatment of reservoir fluids,
• construction of the Dispatch Terminal in Wierzbno to support collection and shipment of crude
oil in rail tank cars and handle the pumping of crude oil collected from the LMG Crude Oil and
Natural Gas Mine to the PERN Druzhba Pipeline,
• construction of a gas pipeline to the Denitriding Plant in Grodzisk to support the transmission of
surplus gas from the LMG Mine to Grodzisk Denitriding Plant.
In 2008, the construction of the Dispatch Terminal was completed. The expenditure incurred in 2008
was PLN 26m. The total value of the project is estimated at approx. PLN 1.6bn.
The Grodzisk Project
The objective of this project is to support the sale of gas from nitrogen-rich reserves after the gas has
been treated (cryogenic denitriding of nitrogen-rich gas) to the parameters of high-methane gas. The
Grodzisk Denitriding Plant is constructed with a view to increasing nitrogen-high gas production
volume at the existing mines and from reserves earmarked for development.
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