Polish oil and gas company PGNiG has entered into a non-disclosure agreement enabling the company to participate in the privatisation of the Ukrainian energy sector.
“PGNiG’s possible participation in the privatisation of the Ukrainian energy sector is an opportunity to strengthen cooperation between our countries and to build energy security in this part of Europe,” said Jerzy Kwieciński, President of the PGNiG Management Board. “I am confident that with our experience and capabilities we could be a valuable partner for the Ukrainian side.”
PGNiG has been selling natural gas to Ukrainian customers for several years. The company has exported over 3 billion cubic metres (bcm) of gas to Ukraine since mid-2016. In the first half of 2020 alone, the volume of gas exports reached 0.9 bcm, reflecting strong growth in sales.
Meanwhile, PGNiG also intends to increase its involvement in hydrocarbon production projects in Ukraine, after signing an investment agreement with Energy Resources of Ukraine (ERU). The agreement sets a general framework for cooperation and provides a schedule of further work on a project located near the Polish border in Ukraine. The strong production potential of the licence is supported by the findings of geological surveys conducted by PGNiG, which show a correlation of its geological structures with Przemyśl, Poland’s largest natural gas field.
An important element of any investment project undertaken in Ukraine is insurance against political risks. In order to provide financial protection for the joint project of PGNiG and ERU, talks have been initiated with the US International Development Finance Corporation and Poland’s Export Credit Insurance Corporation (KUKE).
“The licence is our first exploration prospect in Ukraine, located in a very promising geological zone, encompassing also the Przemyśl field,” explained Mr Kwieciński. “We have all required technology and equipment resources and our employees have knowledge and expertise gained over 60 years of exploration and production operations in the Rzeszów region. This provides a strong foundation for the project’s success. We are glad to have the opportunity to expand our exploration and production operations in new markets with a reliable business partner.”
These agreements are, according to PGNiG’s President, another proof of what energy market integration can achieve to strengthening energy security across the region.