Authorities in Norway have given the green light to a plan by Poland’s state oil and gas producer PGNiG to buy assets from Ineos E&P Norge, a subsidiary of the Switzerland-headquartered petrochemicals group.
The move builds on Poland's efforts to diversify away from dependence on its predominant supplier of natural gas, Russian monopoly Gazprom.
PGNiG said that Ineos’ minority interests in 21 offshore licences in the Norwegian North Sea are set to meaningfully contribute to the achievement of the Polish company’s strategic objectives in natural gas production.
Moreover, PGNiG will be required to pay just $323 million for these assets, not the $615 million announced in March.
The difference is attributed to the reduction of the agreed price by the income that was generated by Ineos over the first nine months of the year, the company said.
PGNiG's new interests in producing licences include a 14% stake in Ormen Lange, a 30% holding in Marulk and 15% in Alve.
PGNIG said that the key asset in the portfolio is Ormen Lange, the second-largest gas field on the Norwegian continental shelf.
As part of the transaction, PGNiG Upstream Norway — another regional subsidiary — has also acquired an 8.2% interest in the Nyhamna gas processing plant which handles the output of the Ormen Lange and Aasta Hansteen fields.
The transaction will raise hydrocarbon reserves incorporated by PGNiG Upstream Norway to 331 million barrels of oil equivalent.
Coupled with production volumes from the previously acquired licences in Norway, PGNiG expects its annual production of gas from the Norwegian continental shelf to reach about 2.5 billion cubic metres next year.
Baltic Pipe play
Once the new Baltic Pipe Project pipeline becomes operational gas produced by PGNiG Upstream Norway will be transported to Poland, enhancing gas supply diversification and strengthening the country’s energy security.
This strategic gas infrastructure project will allow transport of gas from Norway to the Danish and Polish markets, with the goal of creating a new gas supply corridor in the European market.
The project is being developed in collaboration with the Danish gas and electricity transmission system operator Energinet and the Polish gas transmission system operator Gaz-System.
The Baltic Pipe is due to connect with the Europipe 2 network in the North Sea that already carries gas from Norway to Germany.
The project is expected to be commissioned by October next year, however, the full transmission capacity of the equivalent of 10 Bcm per year is expected to become available only in 2023.
The Baltic Pipe can also operate in reverse, thus allowing Poland to export excess gas, if it becomes available, to Denmark.
Coupled with the planned expansion of a liquefied natural gas import terminal in the Baltic port of Swinoujscie and the construction of a gas interconnector between Poland and Slovakia, Poland intends to cover its domestic demand for gas without imports of Russian gas from Gazprom.
Polish lawmakers have led calls for an enquiry into Gazprom's alleged role in stoking a sustained increase in European gas prices.
"We call on the European Commission to urgently open an investigation into possible deliberate market manipulation by Gazprom and potential violation of EU competition rules," the lawmakers said in a letter drafted by more than 40 MEPs.
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