Poland is trying to reduce its reliance on Russian oil and gas Shutterstock

State-controlled refiner Grupa Lotos and Poland’s gas monopoly PGNiG have reached a strategic agreement for the joint exploration of conventional and unconventional oil and gas. The deal has been struck to help increase domestic production of energy.

Under the agreement, Lotos will be given the option of acquiring a share in each of PGNiG’s seven exploration licenses in Poland, some of which cover unconventional oil and gas.

The agreement gives Lotos the opportunity to acquire stakes in the concessions. But PGNiG has reserved the right to act as an operator in each of them.

“The theoretical and practical knowledge of geologists, adequate risk management and a robust financial base are key to success in gas exploration projects,” said Grażyna Piotrowska-Oliwa, president of the management board at PGNiG.

“I want to leverage these assets the best I can and I am glad that for our prospective licenses in the north of Poland we have acquired a partner whose business profile aligns well with our own capabilities,” she added.

Cooperation between the two companies is aimed at speeding up exploration for hydrocarbons in Poland, as well as to raise output of oil and gas produced domestically.

Poland currently relies heavily on Russian gas supplies, which are expensive and whose reliability is questionable.

Poland’s average gas consumption is over 14.5 billion cubic meters a year, only one-third of which is covered by domestic sources.

“The agreement we signed … is of material importance to national energy security,” said Paweł Olechnowicz, Lotos CEO.

“We expect that the joint effort with help increase the volumes of both oil and gas produced in Poland and, consequently, further diversify the sources of supply for domestic customers,” he said, adding that the door is also open for joint offshore projects and projects outside Poland, as well as for commercial cooperation.

Additionally, PGNiG recently signed an agreement for cooperation with KGHM, Tauron, PGE and Enea regarding the prospecting for and production of shale gas.