Shale Gas Co-operation Amongst Polish State Players Collapses

The Polish government’s attempt at mandating co-operation in shale gas sector amongst state controlled enterprises, has crumbled with reports that a deal amongst the five players will lapse.

In July 2012, PGNiG, copper miner KGHM and utilities PGE, Tauron and Enea, agreed to spend 1.7 billion zlotys (€415 million) on joint exploration and extraction of shale gas. 

Deadlines of November 2102, February 2013, and May 2013 to formalize a deal passed “due to ongoing talks on detailed conditions of the cooperation.”

Preliminary development was initially to be carried out on three areas within the Wejherowo concession in Northern Poland, where drilling at the Lubocino-1 well showed positive results.

The lapse of the proposed deal is another setback for the eastern European nation as it struggles to regain its position as the leader in the development of shale gas in Europe. ExxonMobil, Talisman and Marathon have already withdrawn from activity in Poland.

In December, Piotr Wozniak, Poland’s Deputy Environment Minister and Chief National Geologist responsible for drafting laws setting out regulations for the development of the shale gas industry and for licensing procedures, was removed from his position.

The Polish Exploration and Production Industry Organization (OPPPW) has been critical of the bureaucratic process and of the draft laws citing that they will increase investment risk.

A long proposed hydrocarbon extraction law has yet to be adopted adopted by the government due to a dispute between the Ministry of Environment and the Ministry of the Treasury over the role of the proposed state-owned operator National Mineral Energy Operator (“NOKE”) which would enter partnerships with companies operating in Poland as a minority shareholder.