Monday, October 26, 2020
Home Oil & Gas PGNiG Upstream Norway acquires two new fields in the North Sea

PGNiG Upstream Norway acquires two new fields in the North Sea

PGNiG Upstream Norway (PUN), subsidiary of the Polish oil and gas company, has signed an agreement with Norske Shell to acquire interests in Kvitebjørn and Valemon, two producing fields in the North Sea. Following the transaction, the PGNiG Group’s own gas production in Norway will increase to 0.9 billion cubic metres (bcm) in 2021, up 45 per cent compared to 2019.

The gas produced from the new fields, along with volumes resulting from the previous acquisitions made by PGNiG’s Norwegian subsidiary between 2017 and 2020, will be sent to Poland after the Baltic Pipe link is launched.

“This latest transaction involving assets on the Norwegian Continental Shelf is closely in line with the PGNiG Group’s strategy,” commented Jerzy Kwieciński, President of the Management Board of PGNiG. “Its purpose is to diversify gas supplies and improve Poland’s energy security in reliance on our own reserves. As with the transaction completed earlier this year whereby we increased our interest in the Gina Krog field, also this acquisition will translate into an immediate and substantial increase in gas volumes produced by our subsidiary on the Norwegian Continental Shelf, with a positive effect on the PGNiG Group’s overall operating performance.”

Both newly acquired fields contain predominantly natural gas. Their target gas output in 2020 attributable to the interests acquired from Shell represents approximately 70 per cent of PUN’s current production volume in Norway. Therefore, the transaction will result in an immediate increase of the company’s own gas production – in 2021 it will be nearly 30 per cent above the previous forecast, having grown by almost a half compared with PUN’s gas output in 2019. According to the company’s estimates, in 2023–2028 (after the launch of the Baltic Pipe), the two fields will deliver approximately 0.2 bcm of gas annually to the company.

The agreement with Shell is yet to be approved by the Norwegian petroleum and tax authorities, but once the transaction is completed PGNiG Upstream Norway’s asset portfolio will be expanded to include another four licences on the Norwegian Continental Shelf, adding up to a total of 32 licences. 

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