PGNiG, Lotos Expand Gas Cooperation, Poland

The cooperation between PGNiG and the LOTOS Group in oil and gas exploration is gaining speed. First exploration work will be carried out in four of PGNiG’s licence areas situated in the region of Pomerania.

At a meeting in Gdańsk, Grażyna Piotrowska-Oliwa, President of the Management Board of Polskie Górnictwo Naftowe i Gazownictwo SA, and Paweł Olechnowicz, President of the Management Board of Grupa LOTOS S.A., discussed the results of the work performed under the agreement on cooperation in exploration for and production of conventional and unconventional oil and gas, as well as commercial cooperation. The meeting was also attended by Mikołaj Budzanowski, Minister of the Polish State Treasury.

The goal behind the agreement, made on September 17th 2012, is to intensify exploration efforts throughout Poland. Pursuant to the agreement, both parties analysed the production potential of seven exploration licences held by PGNiG.

A working team appointed by the companies’ governing bodies has completed the first phase of the work, involving a geological survey of the areas covered by the cooperation. Based on joint analyses, out of the seven licence areas, four were selected for further exploration. The selected areas are situated in the Provinces of Gdańsk and Szczecin.

During the next stage, specialists from LOTOS Petrobaltic and PGNiG will prepare an action programme for the selected licence areas and perform an economic assessment with respect to each area. The programme will define the scope of necessary seismic surveys and exploration and production drilling.

“Our overriding goal is to substantially increase natural gas and crude oil production from domestic resources. The results achieved to date thanks to the joint efforts of PGNiG and the LOTOS Group may create grounds for intensifying further actions. First of all, we plan to focus on the most prospective licences,” said Grażyna Piotrowska-Oliwa, President of the Management Board of PGNiG SA.

“The results of our joint work to date confirm the rationale behind the agreement we signed two months ago”, stressed Paweł Olechnowicz, President of the Management Board of Grupa LOTOS S.A. “The results will also indicate further steps to be taken under the agreement”.

The coming days will see the start of talks on the terms of future cooperation in carrying out geological work aimed at discovering and proving reserves, as well as joint development of both conventional and unconventional hydrocarbon reserves.

The LOTOS Group includes – in addition to Grupa LOTOS S.A. (parent), LOTOS Czechowic, LOTOS Jasło and LOTOS Petrobaltic (gas and oil exploration and production in the Baltic Sea) – more than a dozen subsidiaries trading under the LOTOS brand name. After the first three quarters of 2012, LOTOS recorded revenue of almost PLN 25bn (+19% y-o-y.). The net profit for the period was PLN 700m (+21% y-o-y)

As at the end of August 2012, LOTOS’ share in the domestic fuel market was 34%, which is more than the 30% level set in the 2011-2015 strategic plan.

Through LOTOS Petrobaltic and LOTOS Norge, the Group is also present on the Polish and Norwegian Continental Shelf, where it is engaged in crude oil exploration and production. Following the acquisition of a 100% equity interest in LOTOS Geonafta, the Group has also gained exposure to onshore crude oil reserves in Lithuania. In 2011, LOTOS produced 230 thousand tonnes of crude oil. In accordance with the strategy for 2011-2015, LOTOS plans to achieve annual production of 1.2m tonnes of crude oil by 2015.

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LNG World News Staff, November 28, 2012