Petrolinvest: An Emerging Polish Shale Player
Petrolinvest S.A., part of a group of companies owned by one of Poland’s richest individuals, is one of the few Polish companies focused on the potential of the country’s shale gas plays.
But not long ago, Bernard Le Guern, President & CEO of Petrolinvest, said he had only a slight notion of Polish shales.
“When I joined Petrolinvest I agreed with Mr. Ryszard Krauze, our dominant shareholder, to look for opportunities and when the subject emerged, I was not aware of the depth of the opportunity,” he admitted.
“Strictly from a business aspect, we would like to make sure our involvement is agile and utilizes the necessary cautiousness,” Mr. Le Guern said of Petrolinvest’s shale gas exploration operations.
With shale gas E&P, Petrolinvest is beginning a new area of development. Le Guern reported that the oil & gas enterprise currently had nine licenses and 7,500 square kilometers of acreage in Poland.
He said that Petrolinvest knew it had forged a successful team for tapping into Polish shales with its American partner, Hallwood Energy with which it had formed a joint venture this past July.
Le Guern recalled, “We had a strong discussion with Hallwood and split into two companies: 1) Silurian Hallwood has four licenses and will be IPO-ed on AIM stock exchanged in London; 2) the remainder is Silurian Energy Services Sp. z o.o., with five licenses in two different regions, where we are the full owners.”
“Hallwood has proven knowledge and success with the shale gas market in the US, an effective extraction technology. Together, we’re more credible,” he explained.
Silurian Hallwood, he said, would be making an initial public offering, so that it could raise significant funds.
“We are much more advanced on the first four licenses and have a reasonable path,” explained Mr. Le Guern. “We have a credible plan, local knowledge, good management, and the technical know-how from an experienced partner.
“It’s a real equity story,” he added. “It’s down the road and we’ll have to work on it, but the first critical success may not be so far away.”
“We understand the Polish environment,” he said of Petrolinvest, which was preparing an independent report and next year was planning to begin its exploration operations.
For the company’s five other licenses in which Petrolinvest is the majority shareholder, the company is seeking another major partner.
Mr. Le Guern said that he was aware of the responsibility that came with taking on the task of exploiting Poland’s shales.
“We are part of a few Polish companies entering into a venture that will likely be critical for the economy, which is an amazing motivating aspect,” he explained, noting that it was about strengthening the Polish economy, as the country was presently dependent on external partners to meet its energy needs.
“It’s extremely exciting, as I have a decent understanding of the country’s energy dependence – it’s an Achilles heel, a weakness. It will not lack gas, but this remains an area for which a solution has not been found.
“We’re planning on being here (shale gas market) for the long term in Poland,” he said of Petrolinvest. “We have competences and resources, and an industrial approach: a proven entrepreneur that likes to develop businesses.
“Next year we would like to be recognized as one of Europe’s successful oil and gas initiatives,” he continued.
In terms of how shale gas was starring in Polish politics, Mr. Le Guern said he believed that the issue was being fairly communicated.
“The government is making sure that the shale gas players are following the rules, but I think they have a comprehensive view on their side combining three things: one, that the state achieve its goals; two, that the business fits in; and three, that long term considerations are taken into account, like protection of the environment. If these three things are maintained, the sector will be long term and viable,” he said.
He added that Petrolinvest was also involved in some renewable energy projects in Poland which the company was involved in some years ago through one of its other subsidiaries.
“We thought ‘Let’s integrate this dimension into Petrolinvest.’” he recalled. “Wind is the only viable form of renewables in Poland, where hydro and solar are not ideal, even though there is a target in the next few years to come up with a 15% share of renewables.
“We can go fast and can be one of the actors here with windfarms that can be taken over by a major electricity operator in the next couple of years,” he said of Petrolinvest’s role in renewables.
President of Petrolinvest’s Management Board for a bit over a year now, Mr. Le Guern, who began his 20-year stint in Poland in the aerospace industry on a localization project, said this was his fourth industry.
“I like changing it as it avoids the routine. I find it intellectually interesting to understand the key items of a new business: what are the crucial levers, what is the business model and how to articulate a critical plan?”
Petrolinvest, he explained, bore a clear trajectory towards success.
“Today we have a clear view of where we want to go. For me as a member of a team, I feel I can be the voice of a comprehensive plan for the next few years.”