The experts from the Centre for Social and Economic Research (CASE) upon the request of Orlen prepared a report entitled “Economic Potential of the Shale Gas Production in Poland between 2012-25".
“The shale gas is mostly an economic project where, as a standard, it is important to specify what kind of capital is available. We have specified three paths. All of them are realistic, business-wise profitable and fulfil many technical conditions which we have assumed in the research work,” says Maciej Sobolewski, Vice President of the CASE. In the opinion of the report authors, commercial potential of the shale hit depends on the actors hired by the Polish government.
The first scenario developed by the CASE experts assumes that the government will limit itself to the stars of national format. Such cast entails “moderate growth ". Smaller budget will be a problem. “According to this scenario, Poland develops gas explorations and production on the scale of domestic investment and personnel possibilities, importing the available technologies. By investing approx. US$ 8 billion in explorations and production by 2025, we will get 520 wells and the production in 2025 will reach 3.5 billion m3," anticipate experts.
The second scenario of the “increased investment" assumes partial engagement of the foreign investors who, however, would not treat the extraction of gas from Polish shale as the business priority on a global scale. Polish companies will be dominant. “In this scenario, for US$ 11.1 billion the economy finances 770 wells and the production in 2025 will exceed 5.9 billion m3. Further investment would allow us to stabilise the production by 2034 at the level of 6.4 billion m3," believe the CASE analysts.
Entering the third path of the “accelerated growth” by the shale sector will depend on the creation by the government of the legal and tax system which is friendly to investors. Then, the energy stars of international format, mostly from the US and Canada, will enter the stage. Changes in the mining and geological law, adjustment of the tax regulations and the planning of the use of the extracted gas will be necessary for achieving success. “In case this path is chosen by 2025 in the sector of the shale gas explorations and extraction, the investment reaching US$ 17 billion may come up which will enable the increase of the total well number to 1270.
In this situation, the volume of gas extraction will be almost 12 billion m3 (over 19 billion m3 until 2034)," stipulates the report. In the opinion of Maks Kraczkowski, Member of Parliament, the “economic brain" of the PiS (Law and Justice) party, dividing gas investors into Polish and foreign is pointless. “If good rules for Polish companies are established, then the companies from abroad would also be more eager to invest. For the government, not so much the origin of the capital should be of key importance but its reliability, guaranteeing that the extraction will bring appropriate tax revenues and injection for Polish economy,” claims Maks Kraczkowski. Paweł Kowal, Chairman of the PJN (Poland Comes First) party, emphasises that the investment has to be made in the shale as soon as possible. “Situation on the world gas market changes under the influence of the development of the shale gas sector in the US, and our neighbours work on the commencement of the extraction. Investors have to be quickly encouraged by transparent and clear tax regulations so that Poland does not miss the shale opportunity,” says Paweł Kowal.
The authors of the report believe that only the implementation of the third scenario would “have material impact on the development of the Polish economy". However, Poland is not prepared in terms of infrastructure and regulations for creating strong shale gas sector. Effective market of customers, who will ensure demand for the product, as well as distribution network enabling the receipt of the new huge gas production has to be created. The experts engaged by Orlen, using the opportunity, threw a stone into the PGNiG’s (Polish Oil and Gas Company) yard, they believe that it is necessary to free Polish gas market which should take place under the supervision of a strong regulatory authority. Its tasks include the support of liberalisation and punishing businesses which have monopolistic tendencies. “It is difficult to expect on the market of a single supplier that there will be a natural willingness to introduce liberalising changes,” states the report.
Source: Puls Biznesu, 2012-09-06, autor: GRA, Marcel Zatoński