PGNiG Upstream International AS (formerly PGNiG Norway AS) was established for the purposes of a project on the Norwegian Continental Shelf, the aim of which is to provide access to new recoverable reserves of oil and gas outside Poland. The principal business objective of PGNiG Upstream International AS is the exploration for and production of crude oil and natural gas on the Norwegian Continental Shelf. PGNiG UI has been pre-qualified as an operator by Norwegian authorities.
PGNiG Upstream International AS holds interests in exploratory and production licences on the Norwegian Continental Shelf, in the Norwegian Sea and in the Barents Sea. Jointly with its partners, the company is developing the Skarv, Snadd, and Idun fields. PGNiG Upstream International AS holds a 12% interest in the licence. The other interest holders are British Petroleum (operator, 24%), Statoil (36%) and E.ON (28%). In the other licence areas, the company is engaged in exploration projects.
On December 31st 2012, the company and its partners launched production of crude oil and natural gas from the Skarv and Idun fields (Skarv project). Between January and October 2013, start-up works were conducted on the field, including well cleanout and testing, and individual wells were brought on-stream. The field is now operated through a total of 16 wells. Hydrocarbons are produced using a new floating production, storage and offloading vessel (FPSO), which is moored close to the field.
The company has been selling the extracted hydrocarbons since January 2013. The oil is sold directly from the FPSO vessel to Shell International Trading and Shipping Company Ltd. and transported by the partner’s fleet of shuttle tankers. The produced gas is transmitted over the Gassled Area B System gas pipeline to the onshore terminal in Kårsto, and then redirected to Germany over the Gassled Area D System gas pipeline, where it is received by PGNiG Sales & Trading GmbH. In 2013, the company produced a total of 284 thousand tonnes of crude oil and other fractions (measured as tonnes of crude oil equivalent) and 340 mcm of natural gas.
In 2014, PGNiG Upstream International AS acquired interests in four fields on the Norwegian Continental Shelf from Total E&P Norge AS. The interests cover six licences on the Morvin, Vilje, Vale and Gina Krog fields. As a result of the transaction, PGNiG Upstream International AS acquired:
- a 24.243% interest in the PL36D licence (Vilje field); the remaining interests are held by Det norske oljeselskap ASA as the operator (46.904%) and Statoil Petroleum AS (28.853%),
- a 24.243% interest in the PL36 and PL249 licences (Vale field); the remaining interests are held by Centrica plc as the operator (50%) and Lotos E&P Norge AS (25.757%),
- a 6% interest in the PL136B and PL136C licences (Morvin field); the remaining interests are held by Statoil Petroleum AS as the operator (64%) and Eni Norge AS (30%),
- a 29.63% interest in the PL029C licence (representing an 8% interest in the Gina Krog field); the remaining interests are held by Statoil Petroleum AS as the operator (58.7%), Total E&P Norge AS (30%) and Det norske oljeselskap ASA (3.3%).
An independent auditor’s report sets the 2P recoverable reserves of crude oil (72%) and natural gas (28%) attributable to the acquired interests at 33 mboe. Consequently, PGNiG Upstream International AS’ recoverable reserves in Norway grew by ca. 60%. According to operator data, production from the fields will continue for an average period of 14 years. The interests were acquired for NOK 1,950m, with January 1st 2014 as the agreed transaction date. A significant portion of the transaction price was paid with cash flows acquired by PGNiG Upstream International AS and generated in the period between the agreed acquisition date and the date of actual settlement of the transaction. Given the achieved sales targets of hydrocarbons produced from the acquired fields in 2014, reduced costs and capital expenditure, as well as favourable foreign exchange rates, the ultimate cash payment was approximately NOK 843m (approximately PLN 400m at the exchange rate as at December 30th 2014), which accounted for only 43% of the purchase price. The amount was financed with an intra-Group bridge loan provided by PGNiG S.A.
As part of another licensing round, concluded in 2014, PGNiG Upstream International AS was granted the PL756 operator licence in the Norwegian Sea. As the operator, the company acquired a 50% interest in the licence. The licence partners are Idemitsu Petroleum Norge AS and Rocksource Exploration Norway AS, each with a 25% interest. The PL756 licence – located in a well appraised area, close to a number of producing fields, including the large Aasgard field – is the second operator licence granted to PGNiG Upstream International AS on the Norwegian Continental Shelf.
As geological and geophysical analyses performed in the PL599, PL600 and PL648S licence areas revealed significant exploration risks the company and its partners renounced the PL599 and PL600 licence areas and relinquished the PL648S licence. As at December 31st 2014, PGNiG Upstream International AS held interests in 18 exploration and production licences on the Norwegian Continental Shelf, including two operator licences.
In 2014, the company continued work on the development of the Snadd field and preparation of the Skarv field for the second drilling stage (scheduled to commence in 2017), as well as its operations on other exploration licence areas. Among other things, it worked on evaluation of prospectivity of the PL646, PL707, PL711 and PL756 licences and was involved as a partner in drilling of an exploration borehole (ultimately classified as a dry hole and abandoned) in the PL558 licence area.
In January 2015, upon conclusion of another licensing round, PGNiG Upstream International AS was granted the PL799 operator licence in the Norwegian Sea. As the operator, the company acquired a 40% interest in the licence, while its partners – Statoil Petroleum AS, VNG Norge AS and Explora Petroleum AS – received a 20% interest each. The PL799 licence area is located in the vicinity of the Skarv and Snadd fields.
| || ||2014 ||2013 ||2012 ||2011 ||2010 ||2009 |
|Sales revenue ||PLN m ||1266,3 ||1124,2 ||0 ||0 ||0 ||0 |
|Net (loss) profit ||PLN m ||-38,4 ||-25 ||74 ||-131,6 ||-76,8 ||-32,4 |
|Equity ||PLN m ||255,7 ||306,1 ||370 ||291 ||314,2 ||382,4 |
|Total assets ||PLN m ||4169,8 ||4251,5 ||5019 ||4 661,40 ||3424,1 ||221,1 |
|Headcounts ||persons ||27 ||28 ||22 ||23 ||22 ||20 |
|as at the end of each year |