PGNiG buys into US-owned energy company in Ukraine

Photo courtesy of PGNiG
Photo courtesy of PGNiG

Polskie Górnictwo Naftowe i Gazownictwo and ERU Management Services have signed an agreement providing for the purchase by the Polish company of a controlling interest in Ukraine’s Karpatgazvydobuvannya – according to a statement on PGNiG’s website – the sole holder of the Byblivska licence located in Western Ukraine, in an area adjacent to the Polish border.

Karpatgazvydobuvannya holds a licence to explore for and produce hydrocarbons in the western part of the Lviv Oblast, adjacent to the Polish border. In terms of geology the area is similar to Przemyśl, Poland’s largest natural gas field operated by PGNiG for more than 60 years. Its attractiveness and potential have been confirmed through PGNiG’s preliminary analyses of geological and geophysical data.

The agreement signed (on 30 August) marks a step in PGNiG’s strategy to expand its operations on foreign markets, being a part of the company’s efforts to diversify its sources and directions of natural gas supply. We believe all these efforts will help strengthen energy security not only for Poland and Ukraine, but also for all countries of the Three Seas Initiative,” said Paweł Majewski, President of the PGNiG Management Board. “For the past five years, we have been actively trading natural gas in Ukraine. Not only have we launched gas sales to the Ukrainian market, but we have also gained access to the Ukrainian gas transmission network and storage facilities, thereby increasing our ability to optimise trade in natural gas. Our successful activities so far and strong cooperation with ERU have whetted our appetite to further tap the potential of the Ukrainian market, and so our partnership is being extended to include upstream,” added Majewski.

As a result of the agreement, PGNiG will acquire 85% of shares in Karpatgazvydobuvannya. In accordance with the licence work schedule agreed between the partners, preparations for spudding (ed. the process of beginning to drill a well in the oil and gas industry) an exploration well are to be completed by the end of 2021. The well drilling is scheduled for the second half of 2022, followed by formation tests. If it delivers positive test results, the well will be connected to the Ukrainian gas network and brought onstream in 2023. The Karpatgazvydobuvannya shareholders also plan to have additional geophysical surveys of the licence area performed to help design further wells.

“I am proud of the cooperative efforts of ERU and PGNiG, bringing to reality the regional energy initiatives envisioned two years ago this month, in Warsaw between the US, Poland and Ukraine, when we had contracted the supply of American LNG with our Polish partner. As US and Polish companies working together in Ukraine with our Ukrainian E&P project company (Karpatgazvydobuvannya LLC), we believe this sets an important example for further regional cooperation in an important sector,” commented Dale Perry, Managing Partner at ERU Management Services, a co-owner of Karpatgazvydobuvannya.

The execution of the agreement was preceded by the receipt of relevant approvals from the Polish Competition and Consumer Protection Authority and its Ukrainian counterpart.

According to the Linkedin profile of Dale Perry, ERU Management Services is a “US-based management services company created from the US merger of SI Energy in the US with Energy Resources of Ukraine. Direct and sole owner of ERU Corporation (Delaware) which, in turn, is owner of ERU Trading (Ukraine). ERU Management Services also directly owns ERU Europe (Austria) and ERU Energy Efficiency (Hungary), as well as Karpaska Industrialna Grupa 2014 LLC (Ukraine) and Karpatgazvydobuvannya LLC (Ukraine).” 

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Written by: Richard Stephens