ORLEN Group increases its oil reserves in Norway
The Øst Frigg Beta/Epsilon discovery, where the ORLEN Group's PGNiG Upstream Norway is a licence partner, may contain twice as much oil as previously assumed. The recent discovery increases total resources of Yggdrasil and is considered as a possible tie-in to the development – one of the largest projects currently developed on the Norwegian Continental Shelf. The ORLEN Group is a partner in the Yggdrasil development.
– The preliminary results of the exploration well drilled in Øst Frigg field has turned out to be much better than expected. The additional oil resources will strengthen the ORLEN Group's position as one of the leading players on the Norwegian Continental Shelf – says Daniel Obajtek, CEO of PKN ORLEN. The company is the sole owner of PGNiG Upstream Norway.
The Øst Frigg field is located in concessions PL873 and PL442, in which PGNiG Upstream Norway (PUN) has a 12.3 percent share. To date, Øst Frigg's reserves have been estimated at 18-45 million barrels of oil equivalent (boe). The results from the exploration well indicate that the actual recoverable reserves could be at least twice that amount, at 40-90 million boe. This would increase oil reserves in the Øst Frigg field attributable to the ORLEN Group's to 5-11 million boe. A precise estimate of the field's resources will require further analysis, the results of which have yet to be confirmed by the Norwegian Petroleum Directorate.
Øst Frigg is one of eight fields being developed as part of the Yggdrasil development project (formerly NOAKA). Currently, this is one of the largest investments on the Norwegian Continental Shelf, with CAPEX of 115 billion NOK (about 45 billion PLN). Yggdrasil is benefiting from tax incentives under temporary tax regime in Norway. The ORLEN Group holds an interest of nearly 13% in the eight licences within the Yggdrasil area.
The additional resources from Øst Frigg Beta/Epsilon significantly increases the projected oil volume attributable to the ORLEN Group in the Yggdrasil project from 26.7 million to about 31 million boe of crude oil and condensate (assuming an averaged volume of the Øst Frigg field resources). The additional resources will utilize the planned infrastructure of the Yggdrasil project. This enables high profitability of the discovery.
PUN's partners in license PL873 are Aker BP (47.7 percent, operator) and Equinor (40 percent) and in license PL442 – Aker BP (87.7 percent, operator). In December 2022, the license partners submitted a plan for the development and operation of the Yggdrasil area to the Norwegian administration. Launch of the production is planned for early 2027.
The Yggdrasil project was prepared by LOTOS Exploration & Production Norge. In May of this year, all of its assets were acquired by PUN as part of the consolidation of ORLEN Group's upstream operations on the Norwegian Continental Shelf. The integration will enable increased efficiency of ORLEN Group operations.