Poland’s state-owned oil and gas firm PGNiG has received approval from Norwegian authorities for its purchase of all assets of INEOS E&P Norge. With its 21 new licences, the Polish company will become the owner of a total of 58 gas concessions on the Norwegian continental shelf from 1 October.
The takeover fits with Poland’s planned Baltic Pipe, which will bring gas from Norway to Poland via Denmark, as Warsaw seeks to diversify away from Russian supplies.
.@WiadomosciTVP | Polskie Górnictwo Naftowe i Gazownictwo @GK_PGNiG kupiło aktywa norweskiej spółki, której gaz wypełni powstający właśnie gazociąg Baltic Pipe.
[1/2]pic.twitter.com/cbtIKRyTCN— TOP TVP INFO (@TOPTVPINFO) September 25, 2021
The initial agreement with INEOS Group was drawn up in March but required the green light from Norway’s regulator. PGNiG will pay approximately $323 million (1.27 billion zloty), according to its statement.
That is a reduction from the amount of $615 million initially agreed, with the difference attributed by the Polish firm to “income generated by INEOS E&P Norge over the first nine months of the year”.
“The transaction terms are very favourable,” said PGNiG’s CEO, Paweł Majewski. “The purchase of INEOS E&P Norge’s licences 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.”
Poland’s minister for state assets, Jacek Sasin, hailed the acquisition as a “big success” which “shows that PGNiG can compete on the international market”.
The licences span a number of production fields, including Ormen Lange – the second largest gas field on the Norwegian shelf – as well as Marulk, and Alve. PGNiG has also acquired an 8.2% interest in the Nyhamna gas processing plant.
As a result of the transaction, the company’s hydrocarbon reserves will increase to 331 mboe and annual production is forecast to jump by 1.5 billion cubic metres. In 2022, PGNiG’s total natural gas output from the Norwegian shelf is forecast at 2.5 billion cubic metres.
Some of that gas will be pumped through the Baltic Pipe, which is nearing completion. The pipeline is initially expected to open next year with a capacity of around 2-3 billion cubic metres, increasing to 10 billion cubic metres at the start of 2023.
The latest takeover follows a number of other by PGNiG in recent months. In August, the company bought an 85% stake in Ukraine’s Karpatgazvydobuvannia, which holds a gas exploration licence in the Lviv region near Poland’s border.
In May, PGNiG Upstream Norway, a subsidiary, also finalised its purchase of shares in the Gina Krog and Alve Nord fields. The company forecast its natural gas extraction to have increased by 100 million cubic metres annually following the transaction.
Main image credit: PGNiG press release
Maria Wilczek is deputy editor of Notes from Poland. She is a regular writer for The Times, The Economist and Al Jazeera English, and has also featured in Foreign Policy, Politico Europe, The Spectator and Gazeta Wyborcza.
