Poland's PGNiG locks in Norwegian gas volumes with Aker BP deal closure

London — Poland's PGNiG has locked in more future Norwegian gas volumes to fill the planned Baltic Pipe with the closure of a deal with Aker BP to take a stake in the Alve Nord discovery and to increase its share in the producing Gina Krog field.

PGNiG has moved to increase its share of gas projects offshore Norway in recent years, expanding its upstream portfolio ahead of the construction of the Baltic Pipe to bring Norwegian gas directly to Poland.

PGNiG's aim is to maximize the contribution f its own equity production to gas volumes that go from Norway to Poland through the Baltic Pipe, for which preparatory works are starting.

In a statement late Tuesday, PGNiG said that with the Aker BP transaction closed, the number of licences on the Norwegian Continental Shelf in which PGNiG holds an interest has increased to 31.

CEO Jerzy Kwiecinski said it was timely that the latest NCS acquisitions coincided with the commencement of construction work on the Baltic Pipe.

"The pipeline will carry gas produced by PGNiG from Norwegian fields to Poland starting from 2022, with the gas volumes rising as we complete further acquisitions and more fields enter the production phase," Kwiecinski said.

Under the deal with Aker BP, PGNiG took an 11.92% working interest in license PL127C -- which includes the Alve Nord discovery, located north from the Aker BP-operated Skarv field where PGNiG is also a partner.

PGNiG increased its stake in Gina Krog from 8% to 11.3%.

In return, PGNiG agreed to transfer a 5% working interest in its recent Shrek discovery on the license PL838 as well as paying a firm cash consideration to Aker BP.

PGNiG estimates that the overall transaction will increase the company's future gas production by 0.1 Bcm/year on average.

Oil and gas production from Gina Krog started in 2017, and last year it amounted to 19.9 million barrels of oil equivalent, of which PGNiG's share was 1.6 million boe.

Recoverable reserves at Gina Krog are estimated at 172.5 million boe.

Shrek discovery

Under the agreement with Aker BP, PGNiG said it was also agreed that the operatorship of PL838 -- containing the Shrek find -- would be transferred from PGNiG to Aker BP.

It is assumed the Shrek discovery can be developed through a tie-back to the Skarv field.

In the last three years, PGNiG has increased its oil and gas reserves in Norway from 80 million boe to approximately 200 million boe as it looks to secure more equity volumes for Baltic Pipe.

The 10 Bcm/year Baltic Pipe is a joint venture between the Polish and Danish transmission system operators Gaz-System and Energinet.

It will connect the Norwegian, Danish and Polish gas grids and is scheduled to be completed in October 2022. PGNiG has reserved 8.2 Bcm/year of capacity in the pipeline.