PGNiG, Orlen to Jointly Complete Extraction Project in Poland
On June 22, 2009, PGNiG and Orlen concluded an agreement on the joint completion of an exploratory and extraction project, located in northwest Poland.
The project is the continuation of initial exploration work completed by PGNiG on the Niż Polski. The proposed area for cooperation is located in the most promising region for hydrocarbon exploration in Poland. The initially recognised, collection of crude oil in the area of the Sieraków deposit is located near the largest discoveries of crude oil deposits made in recent years by PGNiG in Poland. The estimated reserves are approximately 130 million barrels, of which the estimated extractable reserves are 26 million barrels, while the production planned at this stage of exploration is approximately 15 million barrels.
In the name of Orlen, the project will be completed by its subsidiary Orlen Upstream Sp. z o.o. created in order to carry out Orlen's strategy in the area of exploration and extraction.
The planned involvement of PGNiG SA in the enterprise is 51%, and PKN Orlen SA - 49 %.
For covering 51 % of the expenses needed for the completion of the project PGNiG SA is obtaining a proportional right to future revenues. The remaining 49 % remains in the possession of PKN Orlen.
The total estimated costs for the completion of the enterprise will not exceed PLN 400 million. In the first years of the project execution they will not exceed PLN 50m. The major part of the amount will be spent in the following years.
PGNiG SA is the operator, whose role is the ongoing management of the project, completed based on jointly agreed upon and approved schedules and budgets.
PGNiG SA is a leader on the exploration and extraction market in Poland. It currently has more than 70 exploration concessions. Only in this year, it will spend approx PLN 650 million on the exploration of new deposits.
The completion of the joint project with PGNiG is another stage in the building of a diversified portfolio of exploration and extraction projects of Orlen, and also comprises another step in the building of competence in this segment in the Concern.
This project is the beginning of the real cooperation of both companies in the area of exploration and extraction of crude oil and natural gas. Both Companies analyze further projects, which will be carried out as permitted by the finances of both companies.
In April of 2008 another company of the Concern - Orlen International Exploration & Production purchased a 45% share in the concessions for the exploration and extraction of crude oil and natural gas in the Latvian economic zone of the Baltic Sea. The partner of Orlen in this project is Kuwait Energy Company.
The hydrocarbon resources estimated for the Baltic deposits in which the Concern is interested amount to approximately 250 million barrels.
At the same time, the Company is carrying out an exploration project in the territory of 5 concessions with a total area of 5000 km2 located in the area of the Mazovia-Lublin Graben (near Garwolin). The main purpose of the work is the discovery of hydrocarbon deposits eligible for industrial exploitation.
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Company: PKN Orlen more info
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