LOTOS to supply natural gas produced in Norway to Polish firm

PGNiG Supply & Trading (PST), a member of the Polish Oil and Gas Company Group (PGNiG), has become the exclusive recipient of natural gas produced in Norway by LOTOS Norge, a LOTOS Group company.

LOTOS Norge is engaged in exploration and production activities on the Norwegian Continental Shelf.

Under contracts signed by the two companies, gas purchases will be carried out from October 1, 2019, to October 1, 2021, with an option to extend the contract term until October 1, 2025. The supply volumes will depend on LOTOS Norge’s output, PGNiG said on Wednesday.

“With its immense gas and oil production potential, Norway is one of the key directions of expansion for PGNiG,” said Maciej Woźniak, Vice President for Trade at PGNiG.

“The LOTOS Group is our strategic customer for gas in Poland. We are glad that we have been able to extend our cooperation to the Norwegian market. As PGNiG, we implement a strategy of diversifying natural gas supplies and we are getting ready to start importing Norwegian gas to Poland. In 2022, after the launch of the Baltic Pipe gas pipeline, we will start direct and uninterrupted gas supplies from Norway to Poland on competitive terms. The implementation of this project will also open the possibility of deepening cooperation between LOTOS and PGNiG,” added Woźniak.

Tomasz Maj, President of the Management Board at LOTOS Upstream, entity responsible for the implementation of the LOTOS E&P segment’s strategy, said: “The production segment is crucial for LOTOS not only for economic reasons, but also because it ensures uninterrupted feedstock supplies from the company’s own fields. The agreement reached with PGNiG is attractive business-wise, all the more so because natural gas accounts for approximately three quarters of our output in Norway. The contract we have signed proves that Polish companies are able to build a strong position on the international commodity markets through synergies,’” said

“The current 2P hydrocarbon reserves in Norway amount to 35 mboe, of which as much as 40% is natural gas,” stressed Maj.

At the end of 2017, LOTOS held interests in 26 licenses for exploration, appraisal and production of hydrocarbon reserves in the Norwegian Continental Shelf.

Since 2010, PGNiG has been a strategic supplier of natural gas to the LOTOS Group, and since 2015 it has also supplied crude oil for processing at the Gdańsk refinery. In 2019, the two companies have worked together to develop the LNG market on the Baltic Sea, offering commercial bunkering of LNG sourced from the President Lech Kaczyński LNG Terminal in Świnoujście.

Meanwhile, PGNiG has been granted a license to drill an appraisal well in the Norwegian Sea. The drilling will begin following the completion of the Shrek exploration well in the same license, which PGNiG spudded in August.

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