ORLEN Group integrates its production assets in Norway
In early May, PGNiG Upstream Norway acquired the production assets of LOTOS Exploration and Production Norge, the ORLEN Group’s other Norwegian-based company. The consolidated entity is a top ten company operating on the Norwegian Continental Shelf in terms of hydrocarbon reserves and production, accounting for half of the Group’s output. The integration of upstream operations will facilitate investments that will help increase hydrocarbon production and further strengthen the ORLEN Group’s position in Norway, a market of key importance to Poland’s energy security.
‘The consolidation of the ORLEN Group’s Norwegian assets will allow us to better leverage the exploration potential of our licences and more efficiently engage the capital and financial resources that were previously generated by separate entities. These synergies, supported by the knowledge and experience of our team, will contribute to scaling up ORLEN’s operations on the Norwegian Continental Shelf. Following the consolidation, we already rank among top producers on that market. In a couple of years, further investments will enable us to significantly increase natural gas production volumes in Norway, which will contribute to strengthening Poland’s feedstock security,’ said Daniel Obajtek, President of the PKN ORLEN Management Board.
The integration of the Norwegian assets of PUN and LEPN follows the merger of PKN ORLEN with Grupa LOTOS and PGNiG completed last year. As a result of the merger, two companies with identical business profiles operating on the same market were included in the ORLEN Group. The decision to integrate the businesses was aimed at achieving operational and financial synergies, and bringing the operations into compliance with Norwegian regulatory requirements.
The consolidated entity has a strong position in a market occupied by leading oil and gas players. At present, PUN has total oil and gas reserves of 346.6 million barrels of oil equivalent and is producing 88.1 thousand barrels a day, giving it a place in the top ten of all companies operating on the NCS. PUN’s position is even better if only natural gas is considered. Natural gas reserves and output give the company eighth place in Norway. Last year, the ORLEN Group’s natural gas production on the Norwegian Continental Shelf totalled roughly 3.5 billion cubic metres.
Following the merger, PUN holds interests in 98 licences, with only four other entities operating on the Norwegian Continental Shelf owning larger holdings. An extensive licence portfolio fits into the ORLEN Group’s strategic plans to raise annual gas production volumes to 12 billion cubic metres by the end of 2030, an increase of about 50% on the current levels. Investment in assets on the NCS will be key to delivering on that target as the ORLEN Group’s production volumes in Norway are expected to reach around 6 billion cubic metres in 2030. This means an increase in own gas production on the NCS by about three-quarters over last year’s combined PUN and LEPN output. All gas produced by the ORLEN Group on the Norwegian Continental Shelf will be able to flow to Poland through the Baltic Pipe pipeline.
In order to ramp up production, PUN plans to invest some USD 3bn over the next five years. The ORLEN Group company is at the forefront on the Norwegian Continental Shelf operations in terms of planned capital spending. Its key running projects include the development of the Tommeliten Alpha, Fenris, Yggdrasil, Ørn and Alve Nord fields.
PUN was designated as the integrator of the ORLEN Group’s Norwegian assets owing to its strong track-record of successfully implementing a strategy to raise production volumes, as demonstrated by the rapid growth of its gas production volumes from 0.5 billion cubic metres in 2020, to 1.4 billion cubic metres in 2021, to 3.1 billion cubic metres last year. Also, PUN completed the acquisition and consolidation of the assets of INEOS Exploration and Production Norge in 2021.
The ORLEN Group is currently producing from 17 fields on the Norwegian Continental Shelf.