PGNiG, Grupa LOTOS To Jointly Explore For Oil And Gas

August 15, 2013

On August 14th 2013, an agreement on joint operations within the Kamień Pomorski licence block was signed between Polskie Górnictwo Naftowe i Gazownictwo SA and LOTOS Petrobaltic SA, PGNiG reported in a news release. According to the company, in practical terms, the agreement will strengthen the cooperation between the companies in exploration for and production of conventional oil and gas resources.

The objective of the cooperation is to intensify the exploration efforts in Poland, with a view to increasing the production of both natural gas and crude oil. The Kamień Pomorski licence block, located in the Province of Szczecin, is among the most prospective ones in the region. It covers an area of 217 square kilometres, and the exploration work carried out to date has identified several oil and gas leads within its boundaries. Further exploration, to be undertaken jointly by the partners, will allow them to evaluate the size of the resources and launch their production, if viable.
 
"The strategic objective pursued by PGNiG SA is to increase production from its own fields. We perform the majority of work on our own, but we know from experience, gained both in Poland and abroad, that it does make sense to conduct such projects in partnership with other operators, as this helps diversify risks and optimise the deployment of human and technical resources, to the benefit of both parties. The agreement with Lotos Petrobaltic S.A. is an excellent case in point. I hope that together we will achieve success," said Jerzy Kurella, acting President of the PGNiG SA Management Board.
 
The agreement on joint exploration for hydrocarbons within the Kamień Pomorski licence block will only take effect after the Minister of Environment gives his approval for the parties to enjoy joint mining usufruct of the area.
 
"The primary business goal of the project is to increase crude oil production, while expanding LOTOS Petrobaltic's upstream operations onto onshore areas. This is in line with the long-term development strategy of the entire LOTOS Group," said Zbigniew Paszkowicz, Vice-President of the Grupa LOTOS Management Board, Exploration & Production, and President of the LOTOS Petrobaltic Management Board. "We think this licence has an attractive production potential and by combining the resources and capabilities of PGNiG and LOTOS we will be able to fully exploit it. For us the planned cooperation is also a way to deepen our expertise and enhance our skills in the onshore exploration for hydrocarbons."
 
The agreement was concluded under an earlier memorandum of understanding between PGNiG SA and Grupa Lotos, executed in September 2012. In accordance with its provisions, PGNiG SA, which holds a 51-percent interest in the block, will act as its operator. As for LOTOS Petrobaltic S.A., it will acquire a 49-percent interest in the licence held by PGNiG SA, in exchange for funding a specific part of the exploration work. Other costs related to the exploration, appraisal and production of hydrocarbons within the licence area, as well as all profits derived from these operations,