PGNiG expands in Ukrainian upstream

Polish gas company PGNiG is looking to expand its activities in Ukraine's upstream sector, reporting on March 30 it had signed a memorandum of understanding with the country's state-owned Naftogaz on joint exploration work.

PGNiG said it had used exploration techniques such as 3D seismic surveying in the sub-Carpathian region of Poland to discover new reserves, and that their use could yield similar results in Ukraine.

"Ukraine, which has one of the largest gas reserves in Europe, offers a very attractive growth potential for upstream companies like PGNiG. We are particularly interested in gas production development in western Ukraine, the region bordering to the area where we have already been producing natural gas for several decades," PGNiG COO Robert Perkowski said. "The available data proves a high reservoir potential of this region. Our partner also has extensive experience and valuable geological data," he said.

PGNiG entered Ukraine's upstream sector in October last year, signing an investment agreement with Energy Resources of Ukraine (ERU) to undertake joint exploration and production near the country's border with Poland.

Naftogaz is eager to attract foreign upstream partners, but primarily for exploration activities offshore rather than onshore. It signed a memorandum with Austro-Romanian firm OMV Petrom on joint Black Sea operations in February, and agreed a similar deal with Israel's Naphtha Israel Petroleum the following month.

"In particular, PGNiG has proven achievements in the region bordering the Ukrainian part of the Carpathians," Naftogaz COO Otto Waterlander said. "I am confident that together we will be able to achieve mutually beneficial synergy that will contribute to Naftogaz' strategic goal – to help Ukraine achieve energy independence within the next 10 years by driving its natural gas production volumes."