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13.01.2012

Polish Shale Gas Corruption Arrests 'Unsurprising'

The recent arrest of people connected with the nascent shale gas sector in Poland is not a huge surprise to some connected with the industry, TheNews.pl has reported.

“It has been known for years that the process of granting shale gas licenses was pathological, making a laughing stock of the Polish state amongst the [sector] community,” Grzegorz Sobieski of the Sobieski Institute told thenews.pl.

“Now it looks that the state stepped in and is trying to restore its reputation and authority. This is a step in the direction of restoring control over the management of exploration licenses in Poland.”

Only two Polish companies own shale gas concessions, PGNiG and Orlen, both big state-owned companies with little or no technical knowledge about shale gas.

Both have or plan to enter into partnerships with (mainly) large north American majors.

A popular way of linking local and foreign firms is via ‘farm ins.’ Such practises are industry standard business solutions, but are not easy to implement in Poland.

Pytel says that, legally, “no license that has been awarded can be just shared with anyone, it cannot be split into what are essentially equity stakes in a new enterprise. Companies have been trying to solve this by keeping one licence, or very few licenses, per one registered subsidiary of the mother firm and then sharing the shareholding out at the subsidiary level. This may lead sometimes to ownership ambiguities.”

About 100 licenses have been granted.

Seven people, including government officials were arrested this week on charges of corruption in relation to the process of granting of licences for shale gas exploration.

Copyright 2011, TheNews.pl. All rights reserved.

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