Embargo on Russian oil and gas triggers Poland’s companies to increase output

An embargo on Russian oil and gas prompts PGNiG (Polish Oil and Gas Company), Lotos and Orlen to develop their output. PGNiG, for example, will increase its gas output this year to 7 billion cubic metres. In addition, the companies are facing a merger that will create a strong national entity, translating into higher hydrocarbon output.

The embargo on Russian hydrocarbons imposes new challenges on Polish companies such as PKN Orlen, Grupa Lotos and PGNiG. These companies are the largest entities in the country which extract oil and gas. Apart from diversifying supply directions, increasing production may make up for the lack of supplies from the East.

We stand in solidarity with our southern neighbours, hence the need for Orlen’s rapid diversification in the Czech Republic, for which this Polish company is ready. Let me remind you that currently, there is no more Russian oil in Lithuania, so all optimization measures are on the table for today – Anna Moskwa, the Minister of Climate and Environment, said at a press conference on 6 May.

PGNiG said that in 2021, natural gas production (in terms of high-methane gas) in the PGNiG Group totalled 5.4 bcm, of which 3.7 bcm of gas represented domestic production, 1.4 bcm of gas on the Norwegian Shelf and 0.3 bcm of production in Pakistan. Accordingly, the PGNiG Group produced a total of 1.37 million tonnes of crude oil (including condensate), of which 643 thousand tonnes of crude oil were produced domestically, and 732 thousand tonnes were produced in Norway.

PGNiG revealed that in 2021 it completed the development of the Aerfugl field, began production from the Grasel and Duva fields and finalized the acquisition of the Kvitebjorn and Valemona fields. The company has also purchased all production assets of INEOS E&P Norge.

PGNiG Upstream Norway, on 31 December 2021, held interests in 58 exploration and production licences on the Norwegian Continental Shelf, including eight operator licences. Four additional licences were granted at the beginning of 2022 under the APA2021 round.

“This year, we assume an increase in hydrocarbon production: natural gas from Norwegian concessions – from 1.4 bcm in 2021 by 1.6 bcm – to 3.0 bcm, i.e. including domestic production remaining at a similar level to last year – to 7.0 bcm. As a result, the company forecasts production in Norway of 863 thousand tonnes of oil in 2022 and respectively: 798 thousand tonnes and 928 thousand tonnes in 2023-2024” – PGNiG announced.

The company pointed out that as far as domestic gas fields are concerned, it has investments underway that will allow it to increase production to 3.9 bcm over the next two years.

“The PGNiG Group’s strategic priority in upstream investments is to increase the possibilities of obtaining natural gas. Part of the implementation of this assumption was, among other things, last year’s acquisition of all the of INEOS E&P Norge, which includes hydrocarbon resources comprising 94 per cent natural gas,” – the company emphasized.

It was also stressed that this does not mean a lack of investment in oil production.

“An example is the investments carried out at Poland’s two largest oil mines, i.e. KRNiGZ Dębno and KRNiGZ Lubiatów, which we plan to complete by the end of 2024, allowing us to increase production from these mines. On the other hand, in 2025, we are planning to put into operation also new, smaller crude oil deposits, such as the Sieraków deposit (Wielkopolskie voivodship) or Gryżyna (Lubuskie voivodship)” – PGNiG informed.

According to PGNiG, one of the effects of the merger of PKN Orlen, PGNiG and Lotos Group into a multi-energy national group is the emergence of a strong entity capable of dynamic development area of own hydrocarbon production.

The Lotos Group noted that it produces hydrocarbons in Poland, Norway and Lithuania. The average daily production volume from domestic fields currently stands at some 5.4 thousand barrels of oil equivalent (boe) a day (32 per cent of Lotos Group’s total production volume), while some 11.4 thousand boe a day come from foreign fields (68 per cent cent cent of the total volume).

The increase in production will mainly come from new development projects. An example is a B8 deposit, where we have completed the development phase, which is currently in the production growth phase. The company is taking steps to develop new deposits, both in Poland and abroad. Considering the time required to implement the phase associated with the development of deposits, the increase in production from new projects will occur in the coming years – said the Vice-President of the Management Board of Lotos Group, Jarosław Wróbel.

Lotos’ Vice-President indicated the company’s key current development projects in the upstream segment. The Yme oil field development project in Norway is in the final stages of commissioning offshore, with an average daily production of about 1.8 thousand boe and a target production of about 5 thousand boe per day (within Lotos’ share).

In turn, the Trell/Trine area deposit is at the stage of preparation of a development plan, with a possible date of operation launch in 2025. Lotos is also preparing a development plan for Norway’s NOA and Fulla area deposits. Extraction is expected to start in 2027.

In addition, the company is developing the B4/B6 natural gas fields in the Baltic Sea. An investment decision is underway with a possible production start date of 2026.

– Lotos Petrobaltic is planning exploration work to document new hydrocarbon deposits in its concessions – Jarosław Wróbel added.

At the same time, the company optimizes production from the currently exploited fields on an ongoing basis, taking into account, among others, the ongoing programme of reconstruction of production wells on the Baltic B3 deposit and the programme of drilling infill wells on the B3 deposit in Poland and Sleipner in Norway.

– These activities mainly contribute to stabilizing extraction and stopping the downward trend characteristic of deposits at a mature stage of exploitation – said Jarosław Wróbel.

Orlen has said that extraction is one of the pillars of its development and transformation into a multi-energy conglomerate. Orlen’s strategy until 2030 envisages almost tripling its daily hydrocarbon production. The company intends to allocate an average of PLN 900 million annually.

“In both Poland and Canada, the efficiency of depletion of currently operated deposits is being increased, work is being done to prepare further discoveries and deposits for production, and more exploration wells are being drilled. In Canada, the areas are: Ferrier, Kakwa and Lochend, and in Poland the Edge, Miocene, Płotki and Sieraków projects” – Orlen informed.

The company added that nine new wells had been put into production in Canada since the beginning of the year. In Poland, investments are being made to enable the fastest possible start of production on the currently owned assets.

In the first quarter of 2022, Orlen’s average production in Poland was 0.8 thousand boe (barrels of oil equivalent) per day and was at a similar level as in the corresponding period of 2021, while in Canada, it increased slightly and reached 15.4 thousand boe/d. Orlen’s average production in 2021 was 16.7 thousand boe/day, of which 1.1 thousand boe/day in Poland and 15.6 thousand boe/day in Canada.

 

source: PortalMorski.pl

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