PGNiG and ERU to Launch Natural Gas Exploration and Production Operations in Ukraine
Poland's PGNiG SA and Ukraine's ERU Group have signed an agreement on exploration and production of natural gas in Lviv region
In a statement released by Polish gas company PGNiG, an agreement was announced between it and Ukraine’s ERU Group on a joint venture for natural gas exploration in the Lviv region.
“We are consistently pursuing our strategy to expand PGNiG’s foreign operations. The agreement we have signed today will allow us to explore for natural gas in a very promising region. I am confident that our partnership with ERU will contribute to building the value of both companies,” said Piotr Woźniak, President of the Management Board of PGNiG SA, according to a release issued by the company.
“We are proud to announce with PGNiG this important step in the development of the Ukrainian hydrocarbon exploration and production sector. Since we established a business relationship with our Polish partner four years ago, we have noticed a positive shift in the investment climate in Ukraine and we are ready to take advantage of it to jointly invest in and expand upstream operations. We consider it the first of the many opportunities the Ukrainian energy sector has to offer in the coming years,” said Dale W. Perry, Managing Partner at ERU Management Services LLC.
The agreement between ERU and PGNiG provides for joint operations on a license located in the Lviv region, which is close to the Polish border. An exploration well will first be drilled to a depth of up to 2,500 metres, and geophysical surveys will be performed to select further well locations. Work will commence once all relevant approvals and permits have been secured.
“We have good reasons to believe the region has strong production potential, similar to Przemyśl deposit which is the biggest natural gas deposit in Poland,” Mr Woźniak explained. “Our experience and know-how gained from operating the field for over 60 years will certainly be of use in Ukraine.”
Przemyśl is producing gas at an annual rate of some 0.5 bcm, but in 1971 production totalled 3.7 bcm. Proven recoverable reserves of natural gas in the field were estimated at approximately 74 bcm, of which 65 bcm have already been extracted. However, based on the recently performed geophysical surveys and re-evaluation of the previously collected data, PGNiG estimates that Przemyśl may hold an additional 20 bcm of gas. These estimates have been confirmed by new exploration wells and workovers performed by PGNiG in recent three years.
PGNiG and ERU have been involved in exporting natural gas to Ukraine since 2016. The two companies have also supplied gas to the Ukrainian transmission and storage system operator Ukrtransgaz. In August 2019, PGNiG purchased a cargo of US LNG for ERU, which was regasified at the President Lech Kaczyński terminal and sold to Ukraine.