Increase in ORLEN’s gas reserves on the Norwegian Continental Shelf

PGNiG Upstream Norway AS (PUN), a company of the ORLEN Group, has signed an agreement with Wintershall Dea Norge AS for the swap of interests in upstream assets in Norway. PUN will acquire an interest in the Idun Nord field and expand its holdings in the Adriana and Sabina discoveries. In exchange, it will transfer a minor part of its interest in the Ærfugl Nord field to Wintershall Dea. The transaction will increase PUN's recoverable reserves of natural gas of by more than 0.4 billion cubic meters. The asset swap is anticipated to optimise the company’s portfolio of licence interests in the Skarv area, translating into improved efficiency and lower overall cost of managing these assets.

“The ORLEN Group stands prominently among the leading upstream companies operating on the Norwegian Continental Shelf. We have achieved this position through the strategic integration of our Norwegian companies, consistent organic growth, and successive acquisitions. We have a broad and attractive licence portfolio, which we can actively manage by swapping license interests with other players in this market. Our overarching objective in these endeavours is to improve the ORLEN Group's production capabilities, particularly for natural gas. The agreement signed today with Wintershall Dea Norge is an important step forward, adding over 0.4 billion cubic meters to our gas resources on the Norwegian Continental Shelf, while also increasing efficiency. This milestone will help us maintain a stable level of volumes supplied to Poland in the upcoming years, thereby strengthening Poland's energy security," said Daniel Obajtek, CEO and President of the Management Board of ORLEN.

Under the agreement between PGNiG Upstream Norway (PUN) and Wintershall Dea Norge, the ORLEN Group will exchange a 3.08% interest in the Ærfugl Nord field for interests of 11.92% in the Idun Nord field and 1.92% in the PL211 CS licence, which includes the Adriana and Sabina fields to harmonise ownership of licenses in the Skarv Area.

The transaction will have a positive effect on the ORLEN Group's total recoverable gas reserves on the Norwegian Continental Shelf, boosting net reserves by 0.42 billion cubic meters. In addition, it provides PUN with an opportunity to optimise its production profile. Given that the Idun Nord field and Adriana and Sabina discoveries, are yet to come on stream, the exchange will enable a part of production to be deferred to future years, in which the productivity of currently producing fields is expected to undergo a natural decrease. This will contribute to the stabilisation of gas volumes sourced from ORLEN Group's own operations on the Norwegian Continental Shelf, which are transported to Poland via the Baltic Pipe pipeline.

Upon completion of the deal, which is pending approval from the Norwegian Petroleum Directorate, PUN's share of all the fields involved in the exchange will stand at 11.9%, mirroring its interest in the Skarv field – the centrepiece of the ORLEN Group's operations on the Norwegian Continental Shelf. This consolidation of interests will yield synergies that foster more efficient management and operation of the entire area and increase in value.

The Idun Nord field holds recoverable reserves estimated at 3.3 million cubic meters of oil equivalent: 0.3 million cubic meters of oil and 3 billion cubic meters of gas, of which 0.35 bcm of gas will be attributable to PUN. In July 2023, Norwegian authorities approved the Plan for Development and Operations for Idun Nord. Production, scheduled to begin in 2027, will be carried out using the facilities of the Skarv field. Once the transaction is completed, PUN’s partners on the Idun Nord field will be Equinor (with a 36.17% interest), Wintershall Dea Norge (28.08%), and Aker BP (23.84%, operator).

PGNiG Upstream Norway already holds a 10% interest in the licence for the Adriana and Sabina discoveries, bought in June this year. The accumulations were discovered in the first quarter of 2021. According to preliminary estimates, their total recoverable resources may range from 38 to 88 million barrels of oil equivalent. These volumes can be confirmed after an appraisal well has been drilled, which is planned for early 2024. Should the discoveries be developed, Adriana and Sabina could be tied in to the facilities on the Ærfugl field and from there to the infrastructure of the Skarv field. After the transaction, PUN’s licence partners will be Wintershall Dea Norge (38.08%, operator), Petoro (35%), and Aker BP (15%).

The development of the Idun Nord field, and the Adriana and Sabina discoveries with the use of the Skarv field extraction facilities would improve the profitability of production in this area by reducing the cost of starting production from new deposits and making even more efficient use of the existing infrastructure. It would also cut down the carbon footprint of the production process, which for the Idun Nord field is estimated at as little as 4.5kg of CO2 per barrel of oil equivalent.

As a result of the asset swap, PUN’s interest in the Ærfugl Nord field will decrease by 3.08% to 11.92%. The other licence partners will be Aker BP (30%, operator), Equinor (30%), and Wintershall Dea Norge (28.08%).

The agreement with Wintershall Dea Norge marks another transaction completed by the ORLEN Group on the Norwegian Continental Shelf this year. Following the acquisition of a 10% interest in the Adriana and Sabina fields in June, in November PGNiG Upstream Norway purchased all shares in KUFPEC Norway, which holds interests in five producing fields. As a result, next year PUN’s annual production will grow by 1 billion cubic metres of natural gas, to 4 billion cubic metres.

The Norwegian Continental Shelf is among the key foreign markets in which the ORLEN Group operates. Via the Baltic Pipe, ORLEN can deliver to Poland more than 8 billion cubic metres of Norwegian gas, with an increasing share of volumes from its own production. By the end of 2030, the Group plans to ramp up its gas output from Norwegian assets to over 6 billion cubic metres per year.