Closer cooperation of PGNiG and LOTOS in Norway - MarinePoland.com
Closer cooperation of PGNiG and LOTOS in Norway
Date of publication: 03.10.2019

PGNiG Supply & Trading (PST), a member of the Polish Oil and Gas Company  Group (PGNiG), becomes the exclusive recipient of natural gas produced in Norway by LOTOS Exploration & Production Norge (LOTOS Norge), a LOTOS Group company engaged in exploration and production activities on the Norwegian Continental Shelf.

Under contracts signed by the two companies, gas purchases will be carried out from October 1st 2019 to October 1st 2021, with an option to extend the contract term until October 1st 2025. The supply volumes will depend on LOTOS Norge’s output.

“With its immense gas and oil production potential, Norway is one of the key directions of expansion for PGNiG,” said Maciej Woźniak, Vice President for Trade at PGNiG. “The LOTOS Group is our strategic customer for gas in Poland. We are glad that we have been able to extend our cooperation to the Norwegian market. As PGNiG, we implement a strategy of diversifying natural gas supplies and we are getting ready to start importing Norwegian gas to Poland. In 2022, after the launch of the Baltic Pipe gas pipeline, we will start direct and uninterrupted gas supplies from Norway to Poland on competitive terms. The implementation of this project will also open the possibility of deepening cooperation between LOTOS and PGNiG,” added Maciej Woźniak.

“The production segment is crucial for LOTOS not only for economic reasons, but also because it ensures uninterrupted feedstock supplies from the company’s own fields. The agreement reached with PGNiG is attractive business-wise, all the more so because natural gas accounts for approximately three quarters of our output in Norway. The contract we have signed proves that Polish companies are able to build a strong position on the international commodity markets through synergies,’” said Tomasz Maj, President of the Management Board at LOTOS Upstream, entity responsible for the implementation of the LOTOS E&P segment’s strategy. “The current 2P hydrocarbon reserves in Norway amount to 35 mboe, of which as much as 40% is natural gas,” stressed Tomasz Maj.

The contract marks the next stage in the development of cooperation between the PGNiG and LOTOS Groups. Since 2010, PGNiG has been a strategic supplier of natural gas to the LOTOS Group, and since 2015 it has also supplied crude oil for processing at the Gdańsk refinery. In 2019, the two Groups have worked together to develop the LNG market on the Baltic Sea, offering commercial bunkering of LNG sourced from the President Lech Kaczyński LNG Terminal in Świnoujście.

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LOTOS is a Polish corporation whose business is of strategic importance to the national and European energy security, as well as to Poland’s economy. It produces natural gas and crude oil in Poland, Norway and Lithuania. The company owns a refinery in Gdańsk, one of Europe’s most advanced oil refining plants, where crude is processed mainly into high quality fuels, including the LOTOS Dynamic premium brand.

LOTOS also operates a chain of close to 500 service stations conveniently located at motorways and expressways, in all large cities and many other locations across the country. As a retailer and wholesaler of fuels, it has a close to one-third market share at home. It is also Poland’s second largest railway carrier. LOTOS is a leading manufacturer of road bitumens, engine oils and lubricants used in road vehicles, aeroplanes, trains, ships, and even military vehicles.

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Polish Oil and Gas Company (Polskie Górnictwo Naftowe i Gazownictwo S.A.) is the leader in the Polish natural gas market. PGNiG S.A. is a publicly traded company listed in the WIG 20 index of the Polish blue-chip stocks. Its business comprises exploration for and production of natural gas and crude oil, and − through its key branches and subsidiaries − the company is also active in the area of import, storage, sale and distribution of gas and liquid fuels, as well as heat and electricity generation. PGNiG S.A. holds equity interests in almost 30 subsidiaries, including providers of specialist geophysical, drilling and well services, highly valued on international markets. For more than 20 years, the company has been engaged in exploration and production operations in Pakistan. It also hold a licence in the United Arab Emirates. The PGNiG Group is the owner of PGNiG Upstream Norway, which for over 12 years has been engaged in hydrocarbon exploration and production on the Norwegian Continental Shelf. PGNiG Supply & Trading GmbH, a Munich-headquartered member of the Group, trades in natural gas on Western European markets, operating an LNG trading office in London.