Orlen Group acquires KUFPEC Norway for $445mn
The Orlen Group, through its subsidiary PGNiG Upstream Norway (PUN), has agreed to acquire 100% of shares in KUFPEC Norway, a subsidiary of Kuwait Foreign Petroleum Exploration Company, for $445mn, it said on November 20. The acquisition is expected to be finalised by the end of the year, subject to approval by the Norwegian authorities.
The acquisition of KUFPEC Norway will increase the Orlen Group's natural gas output in Norway by one-third, reaching over 4bn m3/year. PUN's daily hydrocarbon production is also expected to surpass 100,000 barrels of oil equivalent (boe) by the end of 2024.
"This significantly enhances our capacity to meet the demand of the Polish market and the entire region utilising our own gas resources. Beyond advancing the ORLEN Group's strategic goals, this transaction brings synergies that boost our development potential in Norway," said Daniel Obajtek, CEO of the Orlen management board.
The acquisition of KUFPEC Norway will also increase recoverable reserves within PUN's portfolio to nearly 400mn boe. Over 80% of these new resources will consist of natural gas, which is in line with Orlen's strategy to maximise gas production for supplying the Polish market and other countries in the region.
All existing producing fields, including approved development projects, are connected to existing infrastructure enabling gas transport to Poland through the Baltic Pipe pipeline.
This is the second transaction completed by the Orlen Group in Norway in 2023. Earlier, PUN purchased interests in the Sabina and Adriana fields in the Skarv production area, estimated to hold reserves in the range of 38 to 88mn boe. Between 2017 and 2022, the company completed 10 acquisitions, including the acquisition of production assets from INEOS E&P Norge, increasing its natural gas production from 0.5bn m3 in 2017 to 3.1bn m3 in 2022. The 2023 gas output is projected to surpass 3bn m3, and the acquisition of KUFPEC will boost production next year to more than 4bn m3.
PUN is actively pursuing a programme to further increase its hydrocarbon output. In June this year, the company and its licence partners received Norwegian authority approvals for the development of eight fields. PUN's share of the total reserves in those fields exceeds 100mn boe. In October this year, production began from the first production wells in the Tommeliten Alpha field, in which PGNiG Upstream Norway holds more than a 42% interest. At peak production, the field is expected to provide the company with at least 0.5bn m3 of gas annually.
In May this year, Orlen completed the process it initiated in late 2022 to integrate its Norwegian operations by consolidating the production assets of PUN and LOTOS Exploration & Production Norge. The two companies became part of the Orlen Group as a result of the acquisition of Grupa LOTOS and PGNiG in 2022.
Upon completion of the acquisition of KUFPEC, the ORLEN Group will hold 94 licenses on the Norwegian Continental Shelf and will become the 5th largest license holder among companies operating in the area. PUN will rank 9th in terms of recoverable reserves, totaling about 400mn boe.