PGNiG Buys All Of Ineos Norwegian Assets At Almost Half-Price
PGNiG Upstream Norway, a Norwegian subsidiary of Polish state-owned oil and gas company PGNiG, has just received approval from Norwegian authorities to acquire all assets of INEOS E&P Norge at almost half the price than previously agreed.
Once the transaction is completed, PGNiG will acquire a portfolio of upstream assets set to meaningfully contribute to the delivery of its strategic objectives in natural gas production.
The Norwegian authorities have given a green light to the acquisition by PGNiG Upstream Norway of all INEOS E&P Norge assets, including interests in 21 licenses.
The estimated payment upon completion of the transaction will be around $323 million versus the initially agreed $615 million for the contractual transaction date of January 1, 2021. The difference is attributable to the reduction of the initially agreed price by income generated by INEOS E&P Norge over the first nine months of the year.
“The transaction terms are very favorable, demonstrating PGNiG's competence in E&P sector deals. The purchase of INEOS E&P Norge’s licenses will allow us to achieve one of our strategic objectives related to security and diversification of gas supplies while being an investment in promising and highly profitable assets,” said Paweł Majewski, president of the PGNiG management board.
The purchased licenses include several producing fields – Ormen Lange (14%) Marulk (30%) and Alve (15%). According to PGNiG, the key asset is Ormen Lange, the second-largest gas field on the Norwegian Continental Shelf, which was sanctioned by Shell just last week.
As part of the transaction, PGNiG Upstream Norway will also acquire an 8.2 percent interest in the Nyhamna gas processing plant, which receives the output of Ormen Lange and Aasta Hansteen, among other fields.
The transaction will significantly increase hydrocarbon reserves allocated to PGNiG Upstream Norway to 331 mboe. The company will also increase its annual gas production by approximately 53 bcf.
Taking into account the projected production volumes from the previously acquired licenses, PGNiG’s output of natural gas from the Norwegian Continental Shelf next year will reach around 88 bcf. This means that the target set in the company’s strategy for 2017–2022 will be met.
Also, once the Baltic Pipe becomes operational, gas produced by PGNiG Upstream Norway will be transported to Poland, enhancing gas supply diversification and strengthening the country’s energy security.
It is worth noting that the $323 million which Ineos will receive from the transaction will come in handy as it pledged last week to invest over $1.3 billion towards reducing greenhouse gas emissions at its Grangemouth site to net-zero by 2045.
The investment builds on the 37 percent reduction in net CO2 emissions already delivered since acquiring the site in 2005, Ineos outlined, adding that it has already committed over $682 million on projects which have been approved and are currently being implemented at Grangemouth.
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