The management of PKN ORLEN has agreed on the details of the agreement regarding swap of the shares in the concessions in Poland and in the US
As "Parkiet" found out, PKN ORLEN, which is the largest manufacturer of fuel in Poland, has agreed on the details of the agreement regarding swap of the shares in the concessions. Officially, the company will announce information only after the transaction is closed. In consequence, it will not reveal who will be its partner. As we have found out, it is a US-based company which operates one of the largest shale gas fields in the US.
At Orlen itself the comments about this agreement are exceptionally skimpy. President of ORLEN Upstream, Mr Wiesław Prugar, admits that such an agreement is possible. “We have talked for a long time that we would be looking for partners in exploration and extraction of shale gas deposits in Poland and we mean a company which is experienced in that particular area. The majority of such companies operates in the United States which is the leader in shale gas extraction”, said Mr. Wiesław Prugar. Getting access to the US gas deposits by PKN ORLEN in return for the shares in domestic concessions will be the first such transaction in Poland.
It is difficult to estimate its value but it is at least within the range of several dozen US$ million. In 2010 in the United States approximately 137 billion cubic meters of shale gas was produced, i.e. almost 50% more than a year before, and it was approx. 23 % of the extraction of that resource in the country. ORLEN offered its partner about 20-30 % of the shares and it would remain the operator with respect to the sites covered by its concessions. In return, it will get shares in deposits which are already exploited in the US, access to the partner’s “know-how” and it may count on technological support. Additionally, the partners will share the risk related with the exploration work in Poland. Especially, as the experts estimate the costs of making a full exploratory well in Poland at US$ 15 million, and the company with a concession should make at least three such wells.
ORLEN has the concessions in the Lublin region, and the last one it received from the Minister of Environment for the site near Hrubieszów two weeks ago. Before, the company suggested that it would be the easiest for it to establish partnership based co-operation with the companies which have neighbouring concessions – for example ExxonMobil or Marathon Oil. But, as we have established, it did not happen. However, both companies sell shares in Polish concessions for exploration. Since February ExxonMobil has waited for the prospective buyers to whom it wants to sell up to 49 % of the shares, and Marathon Oil made an announcement two days ago about the agreement with a Canadian company and the sale of 40 % of shares to it. PKN ORLEN plans to make the first wells in the second half of the year on sites covered by its concessions. “And then we should know better what resources we have available and when the gas could be exploited,” President of PKN ORLEN, Jacek Krawiec, said to journalists a few weeks ago. In his opinion at the end of the year it will be possible to assess not only the contents of the deposits but, initially, the profitability level of their exploitation. In addition to ORLEN, also Polish Oil and Gas Company (PGNiG) hopes to swap the shares.
PGNiG has 15 concessions in Poland for the exploration of gas from unconventional sources. A few months ago, the Management Board announced that it waited for the offers from interested companies, counting that in return it would be able to take shares in the North Sea deposits. Even though many offers came in, none has been satisfactory so far. To Poland, shale gas exploration has special importance as its production will help us to become independent from imports. According to the US experts, the resources amount to 5.29 trillion cubic meters while we consume approx. 14-144 billion cubic meters of gas a year.
Source: Parkiet, on page: 1, 2011-04-29, By: Agnieszka Łakoma
On this topic also in:
Rzeczpospolita, page 1, Economy
Rzeczpospolita B, page 1, ORLEN Plays Shales