PGNiG Acquires INEOS' Norwegian Upstream Business
Poland’s Polskie Gornictwo Naftowe i Gazownictwo SA (PGNiG) has entered into an agreement with the INEOS Group to acquire all of the assets of its Norwegian subsidiary, INEOS E&P Norge AS, for a total consideration of US$615 million.
Under the terms of the deal, PGNiG will acquire INEOS’ interests in twenty-two licenses located in the Norwegian Continental Shelf (NCS), including non-operated interests in the producing Ormen Lange (14%), Alve (15%) and Marulk (30%).
The transaction also includes an 8.2% equity interest in the Nyhamna gas terminal, which serves, among others, the Ormen Lange and Aasta Hansteen fields. Royal Dutch Shell Plc-operated Ormen Lange, the key asset in the portfolio, is the second-largest gas field on the NCS, with an expected production life beyond 2045. As part of the transaction, all 52 employees of INEOS E&P Norge will transfer to PGNiG upon completion.
The acquired assets are estimated to contain net proven (1P) and proven plus probable (2P) reserves of 37 and 80 million barrels of oil equivalent (MMboe), respectively (as of December 31st, 2020). Net production in 2020 averaged 33 thousand barrels of oil equivalent per day (Mboe/d), 93% of which was gas. Following the transaction, PGNiG’s annual gas production in Norway is expected to reach 4 billion cubic metres (Bcm) in 2027.
In December last year, INEOS announced the formation of INEOS Energy to combine its existing oil & gas businesses with the company’s activities in developing low carbon technologies geared towards energy transition. The transaction follows the announcement of INEOS Energy’s acquisition of Hess Corp.’s Danish upstream business announced earlier in March this year.
“Acquisition of the INEOS E&P Norge AS assets means a sharp increase in our gas output in Norway, and will ensure considerable gas volumes for the Baltic Pipe. Therefore, it will contribute significantly to the implementation of the PGNiG Group’s strategic objectives,” said Paweł Majewski, President of the PGNiG Management Board.
The completion of the transaction remains subject to customary closing conditions, including various administrative and regulatory approvals.