PGNiG Continues Expansion off Norway
Poland’s PGNiG has continued its acquisition drive off Norway, signing a deal to buy field interests from local player Aker BP.
The transaction, announced by the two companies on February 11, will see PGNiG acquire a 3.3% share in the Gina Krog oil and gas field, taking its overall interest to 11.3%.
Gina Krog has been in production since mid-2017, and flowed 54,500 barrels of oil equivalent/day last year. Its remaining reserves are assessed at 172.5mn boe, according to PGNiG.
In return, PGNiG will transfer to Aker BP $51mn in cash and a 5% stake of licence 838, containing the Shrek oil and gas discovery it made in October last year, lowering its share to 35%. Aker BP’s interest in the find will meanwhile rise to 35%.
Shrek, estimated to be between 19 and 38mn barrels of oil equivalent in size, is expected to be tied back to the nearby Aker BP-operated Skarv field.
PGNiG will also pay a further $11mn for a 11.9% interest in licence 127C comprising the Alve Nord find, contingent on the project’s further development. Aker BP, which will be left with a 88.1% position, plans to drill an exploration well at 127C this year.
PGNiG’s president Jerzy Kwiecinski described the deal as a “perfect fit” for its strategy. The state company is looking to acquire extra gas resources on the Norwegian shelf that can be delivered to Poland via the 10bn m3/yr Baltic Pipe due on stream in late 2022.
The deal will result in an immediate growth in PGNiG’s production and core earnings, Kwiecinski said, and the company expects the transaction to increase its future output by up to 100mn m3/yr.
Norwegian authorities need to approve the the deal, which will be backdated to January 1 2020.