Wintershall Dea and ORLEN swap interests offshore Norway

Wintershall Dea and ORLEN swap interests offshore Norway

PGNiG Upstream Norway (PUN), part of the ORLEN Group, has signed an agreement with Wintershall Dea Norge for the swap of interests in upstream assets in Norway, a transaction that will increase PUN’s recoverable reserves of natural gas by more than 0.4 billion cubic meters.

Skarv FPSO; Source: Aker BP

As part of the agreement, PUN will acquire an interest in the Idun Nord field and expand its holdings in the Adriana and Sabina discoveries, and in exchange will transfer a minor part of its interest in the Ærfugl Nord field to Wintershall Dea.

The ORLEN Group will exchange a 3.08% interest in the Ærfugl Nord field for interests of 11.92% in the Idun Nord field and 1.92% in the PL211 CS license, which includes the Adriana and Sabina fields to harmonize ownership of licenses in the Skarv Area.

According to ORLEN, the transaction will have a positive effect on the group’s total recoverable gas reserves on the Norwegian Continental Shelf (NCS), boosting net reserves by 0.42 billion cubic meters, and this optimization of the company’s portfolio of license interests in the Skarv area is expected to translate into improved efficiency and lower overall cost of managing these assets.

Given that the Idun Nord field and Adriana and Sabina discoveries are yet to come onstream, the exchange will enable a part of production to be deferred to future years, in which the productivity of currently producing fields is expected to undergo a natural decrease. This will contribute to the stabilization of gas volumes sourced from ORLEN Group’s operations on the NCS, which are transported to Poland via the Baltic Pipe pipeline.

Upon completion of the deal, pending approval from the Norwegian Petroleum Directorate (NPD), PUN’s share of all the fields involved in the exchange will stand at 11.9%, mirroring its interest in the Skarv field.

The Idun Nord field holds recoverable reserves estimated at 3.3 million cubic meters of oil equivalent: 0.3 million cubic meters of oil and 3 billion cubic meters of gas, of which 0.35 bcm of gas will be attributable to PUN. In July, Norwegian authorities approved the plan for development and operations for Idun Nord. Production, scheduled to begin in 2027, will be carried out using the facilities of the Skarv field. Once the transaction is completed, PUN’s partners on the Idun Nord field will be Equinor with a 36.17% interest, Wintershall Dea Norge holding 28.08%, and Aker BP, the operator, holding 23.84%.

PUN already holds a 10% interest in the license for the Adriana and Sabina discoveries, bought in June. The accumulations were discovered in the first quarter of 2021. According to preliminary estimates, their total recoverable resources may range from 38 to 88 million barrels of oil equivalent. An appraisal well is planned to be drilled in early 2024. Should the discoveries be developed, Adriana and Sabina could be tied in to the facilities on the Ærfugl field and from there to the infrastructure of the Skarv field. After the transaction, PUN’s license partners will be Wintershall Dea Norge, as the operator with 38.08%, Petoro holding 35%, and Aker BP holding 15%.

As a result of the asset swap, PUN’s interest in the Ærfugl Nord field will decrease by 3.08% to 11.92%. The other license partners will be Aker BP (30%, operator), Equinor (30%), and Wintershall Dea Norge (28.08%).

This agreement marks another transaction completed by the ORLEN Group on the NCS this year. Following the acquisition of a 10% interest in the Adriana and Sabina fields in June, in November PUN purchased all shares in KUFPEC Norway, which holds interests in five producing fields. As a result, next year PUN’s annual production will grow by 1 billion cubic meters of natural gas, to 4 billion cubic meters.

Via the Baltic Pipe, ORLEN can deliver to Poland more than 8 billion cubic meters of Norwegian gas, with an increasing share of volumes from its production. By the end of 2030, the group plans to ramp up its gas output from Norwegian assets to over 6 billion cubic meters per year.

“Our overarching objective in these endeavours is to improve the ORLEN Group’s production capabilities, particularly for natural gas,” said Daniel Obajtek, CEO and President of the Management Board of ORLEN.

“The agreement signed today with Wintershall Dea Norge is an important step forward, adding over 0.4 billion cubic meters to our gas resources on the Norwegian Continental Shelf, while also increasing efficiency. This milestone will help us maintain a stable level of volumes supplied to Poland in the upcoming years, thereby strengthening Poland’s energy security.”