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    Poland beats Ineos down in Norwegian asset sale

Summary

Despite high spot prices this year, PGNiG knocked almost a half off the agreed sales price.

by: William Powell

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Poland beats Ineos down in Norwegian asset sale

Norway has approved Polish state PGNiG's acquisition of all UK-registered Ineos' licences, PGNiG said late September 24, and for a lower price than agreed in March. The deal brings a "portfolio of promising upstream assets, set to meaningfully contribute to the delivery of its strategic objectives in natural gas production," it said.

Tbe estimated payment on completion will be about $323mn compared with the agreed $615mn for the contractual transaction date of January 1, 2021. The reduction is due to lower income generated by Ineos over the first nine months of the year, PGNiG said.

PGNiG said the transaction terms were very favourable, "demonstrating PGNiG's competence in E&P sector deals. The purchase of Ineos’s licences will allow us to achieve one of our strategic objectives related to security and diversification of gas supplies, while being an investment in promising and highly profitable assets."

Once the Baltic Pipe becomes operational, the gas will be transported directly to Poland, enhancing gas supply diversification and strengthening the country’s energy security, it said. The Baltic Pipe had a setback in Denmark's approvals process earlier this year.

The purchased licences include producing fields: Ormen Lange (14%) Marulk (30%) and Alve (15%). The key asset is Ormen Lange, the second largest gas field on the Norwegian Continental Shelf. PGNiG will also acquire an 8.2% interest in the Nyhamna gas processing plant (8.2%), which receives the output of Ormen Lange and Aasta Hansteen, among other fields.

The transaction will boost PGNiG's reserves to 331mn barrels of oil equivalent and annual gas production by 1.5bn m³. All in all, PGNiG’s output from Norway will reach about 2.5bn m³ next year, meeting the target set in the  group's strategy for 2017–2022.