The decision to drill in Lubycza Królewska was made following positive results of geological surveys. During the next 100 days, PNiG Kraków will drill to the depth of 4,300m. By drilling a vertical hole and analysing results of tests that are to be carried out during the process, PGNiG will collect more information on the volume of shale gas reserves in the Lublin Province.

"Increasing the number of boreholes drilled is the only way to verify the shale gas potential and consequently to start producing the gas instead of talking about it," said Mikołaj Budzanowski, Minister of the State Treasury. "We need to do it as quickly as possible, because shale gas is a chance for less expensive fuel for everyone, a chance for new investments, reduction of the CO₂ emissions and development of the gas market both in Poland and in Central and Eastern Europe."

As announced earlier and in line with the adopted strategy, PGNiG SA has focused on exploring in Poland for conventional and unconventional reserves so as to be able to substantially increase its oil and gas production in the coming years.  Exploration for shale gas has been the Company's highest priority. According to the available data, south-eastern Poland is one of the areas where considerable unconventional gas reserves can be expected.

"This is an important moment for PGNiG SA. However, what we need to do first is to revise our data to confirm the actual unconventional gas volumes and to identify those areas where it is worthwhile to concentrate our resources in the following years. The work conducted in Lubycza Królewska and the borehole in the Tomaszów Lubelski licence area will help us improve our knowledge regarding the potential shale gas reserves in the Lublin Province," said Grażyna Piotrowska-Oliwa, CEO and President of the PGNiG Management Board.

The Lubycza Królewska borehole will be drilled by PNiG Kraków, a PGNiG subsidiary. The drilling contractor was selected in a tender process. According to preliminary data, gas may be expected to be encountered at a depth of about 2300 m to 4300 m. The hole will be drilled using Drillmec 2000- HP Walking Rig, currently the most advanced drilling rig in Poland.

About 640 running meters of the core will be collected for further analysis. Actual reserves volume can be estimated only once a comprehensive analysis of the results has been performed.

Next to Pomerania, the Lublin province is the second area in Poland where PGNiG SA holds licences to explore for shale gas. In Pomerania, work is currently at a most advanced stage in the Wejherowo licence area (the Lubocino-1 well). PGNiG SA started technical shale gas production from the well in September 2011. If all the work planned for the Wejherowo licence area proceeds as scheduled, commercial gas production in this area should be launched in late 2014.

Among all the companies hoping to discover shale gas in Poland, PGNiG SA holds the largest number of licences (15) and is applying for new concessions. The business concept adopted by the Group with respect to shale gas exploration assumes that work will be carried out both by the PGNiG Group alone, and in cooperation with third parties. Detailed rules for the PGNiG Group's cooperation with the partners with which letters of intent were signed in February 2012 (including Tauron Polska Energia, PGE and KGHM) are to be elaborated by the end of April.

Joanna Zakrzewska

Press Officer