Poland’s gas monopoly PGNiG and refiner Lotos join forces
September 18, 2012
PGNiG CEO Grażyna Piotrowska-Oliwa and Lotos CEO Pawel Olechnowicz
Polish natural gas utility PGNiG and refiner Grupa Lotos SA, both state-controlled, signed Monday a deal on cooperation in gas and oil exploration and extraction from both conventional and non-conventional sources and will analyze exploration potential of seven licenses owned by PGNiG, the companies said in a press statement.
Out of the seven licenses, five are non-conventional and two are conventional hydrocarbon deposits, PGNiG CEO Grazyna Piotrowska-Oliwa told reporters at the signing ceremony.
Lotos could become a shareholder in each of the licenses but PGNiG has reserved the right to act as license operator on all licenses, the press statement read.
Lotos eyes broad-based cooperation with PGNiG, including projects outside Poland, such as in Norway, Lotos CEO Pawel Olechnowicz told reporters after the signing ceremony.
"What is included in the letter of intent goes beyond the [cooperation on E&E] licenses," Olechnowicz said. "It is about broad-based cooperation on the domestic market and outside Poland."
The companies apply for new upstream licenses in Norway and could cooperate in this country, Olechnowicz and PGNiG CEO Grazyna Piotrowska-Oliwa said.
According to the press statement, PGNiG and Lotos could additionally launch cooperation regarding sales and purchases of oil extracted by PGNiG.
Meanwhile, earlier on Monday PGNiG launched a natural gas link to Lotos’ Gdansk-based refinery, with the initial volume set at around 340 million cubic meters and the target volume at over 500 mcm, making Lotos one of PGNiG’s top five customers by volume.
"Thanks to this agreement Lotos will become one of the five largest gas recipients," Piotrowska-Oliwa said in a statement. "We are convinced that our cooperation will last in the coming years, creating chances for further supply increases."
The agreement will also result in Lotos' having at its disposal much larger amounts of LPG, so it will increase deliveries of this resource to the domestic market, the statement showed.
"We are talking about around 120 thousand tons of liquid gas a year," Lotos deputy CEO Marek Sokolowski said. "We have already started distribution, both in wholesale terms and on our petrol stations."
Treasury Minister Mikolaj Budzanowski present at the cooperation signing ceremony said that Lotos may seek a strategic partnership with firms from the fuel and chemicals sector.
"Strategic partnership for Lotos - yes, but in a different formula - not via privatization and sale of shares, this is not included in the privatization program and we have no plans to change it in coming years," Budzanowski said.
"I see it as a kind of a strategic accord with several companies that Lotos may sign in the near future," Budzanowski added. "I don't want to speculate, but that concerns both fuel and chemicals firms. It's a project we are working on."