As announced late March, PGNiG is acquiring all of INEOS Group’s oil and gas assets in Norway for a total sum of 615 million USD. Ineos’ portfolio formed a good match as natural gas accounts for about 94% of the acquired resources, and it is gas that PGNiG is after. Most of the fields and licences are located in the Norwegian Sea.
The key asset PGNiG will acquire through the transaction is a 14% stake in the Ormen Lange field, which is expected to be in production for at least another 20 years, as well as a 15%-30% interest in the Alve and Maruk fields respectively.
PGNiG’s main assets at the moment are a 12% stake in Aker BP operated Skarv field in the Norwegian Sea, which has remaining reserves of almost 375 MMboe in total. The Warka discovery announced last year, in which PGNiG has a 35% interest, may also secure future production. In the near future, if the PDO is approved later this year, output from the North Sea Tommeliten Alpha discovery will form another backbone to PGNiG’s production profile in the years to come.
Diversification of supply
PGNiG is actively trying to diversify gas supply to Poland in order to be less dependent on import from Russia. From next year, the newly constructed Baltic Pipeline will transport gas directly from Norway to Poland, which explains why the company is looking for acquisitions such as the deal now announced with Ineos.
However, gas import from Russia is still at about 60% of total gas import, and this percentage has only been decreasing very slightly over the past few years. With total gas imports by PGNiG amounting to 14.79 BCM (93 MMboe) in 2020, the PGNiG target of 2.5 BCM/y (15.7 MMboe/y) imported from Norway means that the country will still rely on other sources, such as LNG imports, to meet demand.
Ineos’ North Sea refocus
Whilst Ineos is now exiting Norway through the sale of its gas assets, it does look as if Denmark has become a focus area where oil is a much more important part of the portfolio. Ineos recently announced the acquisition of Hess’ operating stakes in the South Arne field, which also opens up opportunities to develop the nearby Solsort and Herje discoveries. The company is also progressing a Siri Canyon field (Nini West) towards becoming a CO2 injection site, the only one that is currently being worked on in the Danish offshore.
Ineos had two firm exploration wells lined up for 2021: Black Vulture and Fat Canyon, both in the Norwegian Sea.
The Fat Canyon well to be drilled in licence PL937 is located just south of the Neptune-operated Fenya discovery. Ineos hoped to prove prospectivity in updip sands that were deposited as part of the feeder system that supplied the sands found in Fenja. This well will be one to watch, as PGNiG also acquires licence P1111 from Ineos, which was probably awarded as being a potential analogue to PL937.
The Black Vulture well, which should be considered an appraisal rather than an exploration well, is targeting the Cretaceous Lange Fm discovery in PL159B. Depending on the outcome, there may be a follow up well Black Vulture Extension in PL122. The Black Vulture discovery was announced by Equinor following drilling of well 6507/3-13 in 2019.