Poland’s state-owned oil and gas company PGNiG has bought a Ukrainian company that holds a license to drill natural gas wells in an area near the Polish border.
Under the deal signed on Aug. 30, PGNiG will acquire 85% of the shares in Karpatgazvydobuvannia from Energy Resources of Ukraine (ERU) Management Services.
ERU, a gas supplier in Ukraine and a long-time partner of PGNiG, previously owned Karpatgazvydobuvannia and held the license for gas exploration in the Western part of the Lviv region.
“Our successful activities so far and strong cooperation with ERU have whetted our appetite to further tap the potential of the Ukrainian market,” Majewski said.
Preliminary analysis has been promising so far, according to the Polish company. The area holds the same potential as Przemyśl, Poland’s largest natural gas field, estimated at 20 billion cubic meters of gas.
The Polish company plans to drill a natural gas well in the second half of 2022 and carry out further tests for more research. If the company is successful in finding gas in the development land, it will begin production in 2023, PGNiG president Paweł Majewski said.
Majewski believes that PGNiG can help strengthen both Ukraine and Poland’s energy security by increasing the number of sources for gas production and building new supply routes.
Since August 2016, PGNiG has been working together with ERU to export natural gas to Ukraine. Both companies supplied gas for the needs of the Ukrainian gas transmission network and storage operator Ukrtransgaz.
In December 2019, they signed an agreement to conduct exploration and production operations together in the Lviv region, targeting potential gas reserves. Then in May, PGNiG was given permission from the Antimonopoly Committee of Ukraine to acquire a majority stake in Karpatgazvydobuvannia.
ERU is one of the largest private gas traders in the country. Natural gas represents nearly one-third of the country’s total energy demand.
Although Ukraine’s energy efficiency has somewhat improved in the industrial sector, the overall economic growth has slowed because there are not enough investments made in the modernization of energy infrastructure, which leads to unstable energy supplies and inefficient energy consumption.
Ukraine lacks the modern technology to bring out its full potential in natural gas production, Yuriy Vitrenko, CEO of Naftogaz, the country’s largest state-owned national oil and gas company, said during a webinar held by the U.S.-Ukraine Business Council in June.
