PGNiG Acquires Shell's Interests in Two Producing North Sea Fields
PGNiG Upstream Norway AS, a wholly-owned subsidiary of Polskie Gornictwo Naftowe i Gazownictwo SA (PGNiG), has signed an agreement with a subsidiary of Royal Dutch Shell Plc to acquire its non-operated interests in the Kvitebjørn and Valemon fields in the North Sea. The financial terms of the transaction have not been disclosed.
PGNiG will acquire a 6.45% interest in the Kvitebjørn field and a 3.225% stake in the Valemon field, along with Shell’s 3.225% interest in the Valemon rich gas pipeline which transports hydrocarbons produced from these fields. Upon closing of the transaction, PGNiG’s gas production in Norway will be 0.9 billion cubic meters (Bcm) in 2021, nearly a 30% increase upon its previous (pre-deal) forecast. According to the company’s estimates, during 2023-2028, the fields will deliver approximately 0.9 Bcm of gas annually, net to the company.
The Kvitebjørn field covers an area of 127 sq. km within license PL 193 (Block 34/11) and is located in the Tampen area of the North Sea. The field had gross estimated reserves of approximately 1,005 billion cubic feet equivalent (Bcfe) as of December 31st, 2019, and produced an average of around 606 million cubic feet equivalent per day (MMcfe/d) during 2019.
The Valemon field lies within licenses PL 050ES (Block 34/10), PL 050HS (Block 34/10), PL 193D (Block 34/11), PL 193B (Block 34/11), and PL 050GS (Block 30/1) and is located immediately west of the Kvitebjørn field. Gross estimated reserves attributable to the field were approximately 162 Bcfe as of December 31st, 2019, and the average daily production was around 135 MMcfe/d during 2019.
“This latest transaction involving assets on the Norwegian Continental Shelf is closely in line with the PGNiG Group’s strategy. Its purpose is to diversify gas supplies and improve Poland’s energy security in reliance on our own reserves,” said Jerzy Kwieciński, President of the Management Board of PGNiG.
PGNiG currently produces oil and natural gas from seven Norwegian fields including the Skarv, Morvin, Vale, and Vilje fields, and is conducting development and assessment work on five other deposits.
The transaction is subject to customary closing conditions, including the receipt of approval by the Norwegian petroleum and tax authorities.