PGNiG and LOTOS to Cooperate on Oil, Gas Exploration (Poland)

Grupa LOTOS SA and Polskie Górnictwo Naftowe i Gazownictwo SA entered into an agreement for joint exploration for conventional and unconventional oil and gas and commercial cooperation. The two companies will assess the potential of PGNiG’s seven exploration licences.

The cooperation is to speed up exploration for hydrocarbons in Poland to raise output of oil and gas produced domestically. Pursuant to the agreement, the two companies will develop a joint exploration programme in order to diversify risks and combine human, technical and financial resources in an effort to expand their upstream operations.

PGNiG and LOTOS will cooperate on licence areas in the Provinces of Gdańsk, Szczecin, Olsztyn and Lublin. The agreement offers LOTOS an option to acquire a share in each licence, with PGNiG having reserved the right to act as the operator on the licences.

The two companies are setting up a working team to plan the technical, economic and legal details of the cooperation. PGNiG and LOTOS will also share knowledge on their ongoing projects and development plans in order to identify areas of common interest, which are not limited to the seven licences covered by the agreement but extend to field development projects and efforts to secure further licences.

“The theoretical and practical knowledge of geologists, adequate risk management and a robust financial base are key to success in gas exploration projects. I want to leverage these assets the best I can and I am glad that for our prospective licences in the north of Poland we have acquired a partner whose business profile aligns well with our own capabilities. The promise of increased supply of price competitive natural gas is an important incentive for Lotos, one of our key customers, to engage in exploration projects. It is the business ventures where the synergies and sources of motivation of both partners are clear that have the best chance for success and raise hopes for increased exploration for hydrocarbons at home. They should result in increased production from domestic deposits,” said Grażyna Piotrowska-Oliwa, President of the PGNiG Management Board.

Poland’s average gas consumption is over 14.5 billion cubic metres a year. One third of the demand is covered from domestic sources.

“The agreement we signed today is of material importance to the national energy security,” stressed Paweł Olechnowicz, LOTOS CEO. “We expect that the joint effort with help increase the volumes of both oil and gas produced in Poland and, consequently, further diversify the sources of supply for domestic customers. Importantly, our cooperation is not limited to the licences identified earlier. Options are open for joint offshore projects and projects outside Poland as well as for commercial cooperation.”

PGNiG and LOTOS are interested in striking commercial cooperation involving the purchase of crude oil produced by PGNiG. The first samples of crude have already arrived at the refinery in Gdańsk and are being thoroughly tested for their technical and processing requirements. If the tests are passed successfully, LOTOS may resolve to purchase crude oil from PGNiG.

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LNG World News Staff, September 17, 2012