Polish Government Behind Orlen/Encana Shale Deal Delay
The Polish government stands behind a delay of a possible deal between Orlen and Encana Corp., Canada's largest natural gas producer, Natural Gas Europe has learned from two unofficial sources, one close to the Treasury Ministry and the other from the management board of Poland’s largest company.
Late last week Polish media reported that a decision on the partnership of PKN Orlen and Canadian based Encana over shale gas exploration was postponed, until at least the summer 2012, according to the Puls Biznesu daily.
The Polish fuel company has been looking for a partner for about a year. Last summer, it was reported that Orlen and Encana had reached a deal, reportedly involving access to Encana’s activities in the U.S. along with a contribution of $200 million USD from Encana to co-finance prospecting works in Poland, in exchange for a stake in Orlen’s concessions in the Lubelskie (Lublin) Basin. Orlen hold six shale gas concessions in the Lublin region (Bełżyce, Garwolin, Lubartów, Lublin, Wierzbica, Hrubieszów).
Both companies denied they had reached any agreement.
Since taking the post as Treasury Minister two months ago, Mikolaj Budzanowski has repeatedly insisted that state-run resource and utility companies should cooperate to jointly develop shale gas projects in Poland.
According to the Puls Biznesu, this cooperation was given priority over seeking foreign partners by Orlen and PGNIG, although both companies need hundreds of millions of dollars to finance ambitious shale gas exploration plans set by the government.
The latest reports say that the negotiations are already under way to create a joint shale gas company by state-controlled gas monopoly PGNiG, copper giant KGHM and utilities PGE and Tauron. This new company could seek external financing from the equity markets and banks. PGNiG recently announced an agreement for shale gas cooperation with other state entities.
In the mid-90s PKN Orlen, KGHM and PGE (then named PSE), encouraged by the state, formed a similar company Polkomtel, to create the first mobile network in the country. Almost 40% of the stakes were held by two foreign companies.