PGNiG'S 10th Anniversary in Norway is full of success
Updated: Nov 14, 2018
Oil and gas companies are constantly looking for opportunities that allow them to grow and expand their businesses. The international market has acknowledged the potential and advantages offered by the Norwegian offshore oil and gas sector and, as a result, Norway has experienced a considerable inflow of international players. One of them is PGNiG Upstream Norway, subsidiary of the Polish Oil and Gas Company. It has recently celebrated its 10th anniversary.
Historically, Poland was dependent on Eastern Europe for gas supply, but it deemed the situation unsustainable and aimed for diversification. “We serve around 7 million domestic customers every day and PGNiG has a statutory responsibility to supply its customer securely and continually,” says Marek Woszczyk, CEO of PGNiG Upstream Norway. “For this reason, we have built our own portfolio with gas purchases from multiple sources rather than relying on one source,” adds M. Woszczyk. He recognizes that only one third of the company’s customer needs are covered with domestic production while the rest of the supply has to be imported, mainly from Russia.
Poland has prioritized the implementation of a plan meant to significantly reduce imports to guarantee energy security in the country. “The Norwegian Continental Shelf is full of hydrocarbons; therefore, establishing a branch here was a natural choice,” says M. Woszczyk. “We were motivated by the relatively short distance between the countries as well as the predictability of the operating framework and regulations,” says M. Woszczyk.
In addition to this predictability, the Norwegian market has proven to hold an attractive resource and exploration potential, which is attractive to investors. “We appreciate the predictability of the Norwegian business environment and even though the rules and regulations are demanding, we respect them and follow them accordingly because they are beneficial for the whole company in the long run,” says M. Woszczyk. “We see a long-term perspective which perfectly fits our needs. PGNiG Upstream Norway celebrates 10 years of activity in Norway and we are happy to continue our operations here,” he adds.
The company started its operations in Norway in 2007 by successfully launching an acquisition process and buying an interest in the Skarv field which is PGNiG’s main asset in
Norway. “We are very happy with the output generated by the Skarv field,” says M. Woszczyk. During the following 5 years, PGNiG increased its portfolio by acquiring 4 assets from Total: Vilje, Vale, Morvin, and Gina Krog. “For the fist time, in 2012, PGNiG Upstream Norway was assigned as an operator of an exploration license on the Norwegian Continental Shelf,” says M. Woszczyk.
The company has expanded its portfolio by acquiring an interest in the Storklakken field from Aker BP in 2017 (the name has been recently changed to Skogul by the Norwegian Petroleum and Energy Ministry). “We keep trying to hold interests in at least 20 exploration licenses a year and we are constantly on the lookout for new opportunities,” says M. Woszczyk.
Norway plays a key role for the Warsaw-based Polish Oil and Gas Company. “The Norwegian branch accounts for roughly 20% of the total PGNiG Capital Group’s EBTIDA, making it one of the strongest subsidiaries in the group,” says M. Woszczyk. “Other upstream branch is located in Pakistan, but financially, it contributes less than our branch,” he adds. Despite the challenges, PGNiG Upstream Norway has taken advantage of the available opportunities in the country. In addition, PGNiG considers that the standards the Norwegian branch has to comply with have a positive impact on the Capital Group’s activities as a whole. PGNiG’s success story in the Norwegian market is a remarkable example of the opportunities available for international players.
Despite the challenges that arose during the down-cycle of the oil and gas market, PGNiG achieved stable growth in 2017. With strong traditions in exploration, the Polish company has gathered extensive expertise in domestic G&G onshore activities. However, after 10 years of operations in Norway, the company has fully adapted to offshore exploration. “It is the people who are the core asset of this company. Geological and geophysical competence is required both in onshore and offshore exploration,” says M. Woszczyk. “The main factors behind the stable growth that we have achieved are the commitment, devotion, and dedication of our employees,” adds M. Woszczyk. PGNiG has put together an international team and strived to understand the cultural differences and embrace them. “Being an open multi-cultural company enables us to effectively cooperate with our partners and to set long-term goals,” says M. Woszczyk.
One of PGNiG’s success stories is the recent start of production in the Gina Krog field. “At the beginning, some experts questioned the potential of the field. This is not the easiest asset to develop and operate, but together with our partners, we have managed to reach a desirable level of production,” says M. Woszczyk. “The Gina Krog platform is a state-of-the-art facility and we are satisfied and comfortable with the way the field is being developed,” he adds.
On the other hand, PGNiG’s largest share of production in Norway comes from its first acquisition, the Skarv field, which is a key example of the kind of opportunities that can be capitalized on by oil and gas companies in this market. M. Woszczyk mentions that the Polish company’s shares in the Gina Krog field are not dominant, but with 8% of equity, it is the second diamond in the crown.
PGNiG Upstream Norway is also looking into the opportunities in the Barents Sea. In 2012, the company was awarded its first Barents Sea license and has been attentive to the developments in the area since then. “For now, the area is lacking success stories in terms of drilling, but we keep our fingers crossed that the day when someone will make another significant discovery is soon to come,” says M. Woszczyk. “We do understand that to make a breakthrough in the Barents Sea, a better infrastructure development is required,” concludes the CEO of PGNiG Norway.