PGNiG and ERU Management Services begin hydrocarbons E&P activities in Ukraine

PGNiG has signed an agreement with ERU Management Services on cooperation in exploration and production of hydrocarbons in the western part of Ukraine, near the border with Poland.

‘We are consistently implementing the strategy for developing PGNiG's operations on foreign markets. The agreement signed today will allow us to conduct exploration and production of natural gas in a very promising area. I am convinced that cooperation with ERU will increase the value of both companies’, said Piotr Woźniak, President of the Management Board of PGNiG SA.

‘We are proud to announce today, with PGNiG, this important step into Ukraine's E&P sector. Working together with our Polish partner over the past four years, we have seen the positive improvement in Ukraine's investment climate and look forward to jointly developing and investing in this new area. We see this as the first of several opportunities in Ukraine's energy sector over the coming years’, said Dale Perry, Managing partner ERU Management Services LLC.

The agreement between ERU and PGNiG provides for joint work on a licence located in the Lviv Oblast (region) near the Polish border. In the first place, an exploratory well up to 2500 meters long will be drilled and geophysical surveys will be carried out to design the location of subsequent wells. The exploration activities will be commenced immediately after obtaining all necessary approvals and permits.

‘We have strong grounds to assume high hydrocarbon potential in this region, just like on the largest natural gas field in Poland - the Przemyśl deposit’, explained Piotr Woźniak. ‘We will certainly be able to put to use in Ukraine our extensive experience and know-how that we have gained over 60 years of E&P activities in the Przemyśl deposit’.

Currently, 0.48 billion cubic meters of gas per year are produced from the Przemyśl deposit, but in 1971 it was 3.7 billion cubic meters. Documented recoverable reserves of the deposit amounted to approx. 74 billion cubic meters of natural gas, of which 65 billion cubic meters have already been extracted. However, thanks to recent geophysical surveys and a re-analysis of previously collected data, PGNiG expects that the Przemyśl deposit may contain an additional 20 billion cubic meters of gas. These assumptions were confirmed by new exploration wells and reconstructions of old wells made by PGNiG in last three years.

PGNiG and ERU have been exporting natural gas to Ukraine since 2016. The companies also jointly supplied gas for the needs of the Ukrainian gas transmission network and storage operator Ukrtransgaz. In August 2019, PGNiG purchased an American LNG cargo for ERU, which after regasification in the President Lech Kaczyński terminal in Świnoujście was sold to Ukraine. Upstream activity is a new but very perspective area of cooperation between two companies.

ExPro Reference

Polish Oil and Gas Company (PGNiG) deals with exploration and production of natural gas and crude oil and – through its branches and key companies from the Capital Group – with import, storage, sales, distribution of gaseous and liquid fuels, production of heat and electricity as well as geophysical and drilling services. Its subsidiaries and branches carry out exploration and production activities in Norway and Pakistan, gas sales in Germany and LNG trading through an office in London. www.en.pgnig.pl

ERU Energy Resources of Ukraine (ERU) is a group of companies with the foreign investments, specializes in development of energy projects in Ukraine. The company combines over 35 years of international energy development and management expertise with in-depth understanding of local market. In 2016-2019 Ukrainian trader ERU TRADING holds the leading positions among private importers of natural gas. In July 2019 ERU TRADING became the first company that imported electricity from Europe to Ukraine. In August 2019 first American LNG for Ukraine was contracted by ERU TRADING. www.eru.com.ua

15:32 / 9 December, 2019

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