PGNiG to Buy Lotos' Norwegian Gas

PGNiG is set to become the exclusive recipient of gas produced by fellow Polish operator Lotos in Norway starting this month, the former said in a statement on October 2.

Under contracts signed between PGNiG Supply & Trading and Lotos Exploration and Production Norge, the gas supplies will take place between October 1 2019 and October 1 2021, with an option to extend the period until October 1 2025. Volumes will depend on how much Lotos produces.

“With its immense gas and oil production potential, Norway is one of the key directions of expansion for PGNiG,” the company’s vice president for trade, Maciej Wozniak said. He drew attention to PGNiG’s efforts to diversify Poland’s natural gas imports, the bulk of which currently come from Russia.

The company plans in 2022 to launch Baltic Pipe, a pipeline connecting Norwegian gas fields with the Polish market via Denmark. It is also developing its own gas deposits on the Norwegian shelf. For the time being, PGNiG is only able to import gas from Norway in the form of LNG.

“The agreement reached with PGNiG is attractive business-wise, all the more so because natural gas accounts for approximately three quarters of our output in Norway,” Tomasz Maj, president at Lotos Upstream, explained. “The contract we have signed proves that Polish companies are able to build a strong position on the international commodities markets through synergies.”

Lotos’ current proven and probable reserves off Norway are estimated at 30mn barrels of oil equivalent, of which 40% is gas.