Fueling a partnership
Following much speculation and early reports of a possible partnership, Polish Oil and Gas (PGNiG) and PKN Orlen, two of Poland's largest fuel companies, finally agreed on a deal that will see the them cooperate in oil drilling operations in Poland.
The joint extraction project will take place in Sieraków near Gorzów Wielkopolski in northwestern Poland. It is also close to PGNiG's prospective Lubiatów-Międzychód-Grotów coal mine.
"We decided to stop talking about big things and start with a project which may be small, but is workable. The collaboration on the project in Sieraków will allow us to separate the facts from the myths that have hindered cooperation between both companies," Michał Szubski, president of PGNiG, told Puls Biznesu.
The extractable oil reserves in Sieraków are estimated at 26 million barrels, 15 million barrels (2.5 million tonnes) of which the two firms want to extract during the first stage of operations. In comparison, last year PGNiG extracted 496,000 tonnes of oil across Poland, six percent less than in 2007.
The companies plan to split the expenses to reflect the share of participation: Orlen with 49 percent and PGNiG with 51 percent.
"Production will commence in 2018. Capital expenditure in the first two years will reach zł.50 million. The total project will absorb up to zł. 400 million," Jacek Krawiec, president of Orlen, told the paper.
The cooperation with Orlen marks a big change for PGNiG, which so far has been extracting oil and gas on its own.
"Around the world, usually several mining companies work on one project to spread the financial risk associated with high costs of investment," Szubski added. "We want it to look the same way in Poland."
Robert Szmigielski
