PGNiG buying Norwegian assets from Ineos at a reduced price
PGNiG Upstream Norway, a Norwegian subsidiary of Polish state-owned oil and gas company PGNiG, has received approval from Norwegian authorities to acquire all assets of Ineos E&P Norge at a price which is reduced from the one initially agreed upon.
The deal includes all of Ineos’ oil & gas interests in production, licenses, fields, facilities and pipelines on the Norwegian continental shelf and it was subject to approval by the Norwegian Ministry of Petroleum and Energy and the Norwegian Ministry of Finance.
PGNiG said last Friday that the Norwegian authorities had given a green light to the acquisition by PGNiG Upstream Norway of all Ineos E&P Norge assets, including interests in 21 licences.
As a result, the Polish company may now consummate the agreement concluded with the Ineos Group in March 2021.
Following the completion of the transaction, PGNiG expects to acquire a portfolio of upstream assets, which are set to meaningfully contribute to the delivery of its strategic objectives in natural gas production.
The estimated payment upon completion of the transaction will be approx. $323 million versus initially agreed $615 million for the contractual transaction date of 1 January 2021. The difference is attributable to the reduction of the initially agreed price by income generated by Ineos E&P Norge over the first nine months of the year.
“The purchase of Ineos E&P Norge’s licences will allow us to achieve one of our strategic objectives related to security and diversification of gas supplies, while being an investment in promising and highly profitable assets”, said Paweł Majewski, President of the PGNiG SA Management Board.
The company is the sole owner of PGNiG Upstream Norway.
The purchased licences include producing fields: Ormen Lange (14 per cent), Marulk (30 per cent), and Alve (15 per cent). The key asset is Ormen Lange, the second-largest gas field on the Norwegian Continental Shelf. The project was sanctioned by the operator Shell last week. Shell also submitted its development plan for the project to the Norwegian authorities.
As part of the transaction with Ineos, PGNiG Upstream Norway will also acquire an 8.2 per cent interest in the Nyhamna gas processing plant (8.2 per cent), which receives the output of Ormen Lange and Aasta Hansteen, among other fields.
The transaction will significantly increase hydrocarbon reserves allocated to PGNiG Upstream Norway to 331 mboe. The company will also increase its annual gas production by approximately 1.5 bcm. Taking into account the projected production volumes from the previously acquired licences, next year the PGNiG’s output of natural gas from the Norwegian Continental Shelf will reach approximately 2.5 bcm, meeting the target set in the group’s strategy for 2017–2022.
Furthermore, once the Baltic Pipe becomes operational, gas produced by PGNiG Upstream Norway will be transported to Poland, enhancing gas supply diversification and strengthening the country’s energy security.