PGNiG challenged to double output

The Polish treasury has challenged state player, PGNiG, to double its production to more than eight billion cubic metres a year by 2019, when the country’s gas imports are up for renegotiation with Gazprom.

“Going far above 8 bcm is a strategic goal by 2019,” Upstreamonline.com quoted the Treasury Minister, Mikolaj Budzanowski, told a parliamentary committee in Warsaw, Reuters reported. “It is possible, if PGNiG exploits all exploration licences it has.”

PGNiG, which has 226 exploration and extraction licences in Poland and currently produces more than 4 bcm of natural gas annually, has struggled in recent years to increase output.

“We have identified the reasons why output has not grown,” PGNiG chief executive Grazyna Piotrowska-Oliwa, also present at the committee, said, but did not elaborate.

The Warsaw-listed group is at the forefront of Poland’s shale gas drive, which the country hopes should produce its first output in 2015.

The explorer is aiming to raise output to 4.7 bcm this year with a $313m exploration spend, around a fifth of which will go to shale.

PGNiG expects gas consumption in Poland to rise by 2 bcm annually in the next two years and hopes to satisfy growing demand with its own production.

Poland already consumes more than 14 bcm of gas annually, mostly imports from Russia at a price linked to oil prices and calculated in US dollars, which Poland views as highly uncompetitive.

Budzanowski said the price PGNiG currently pays is more than other Gazprom customers in Europe pay and higher than spot prices quoted on German exchanges.

Poland hopes increasing output locally of both conventional and unconventional supplies will bolster its position in talks over a new long-term supply contract with Gazprom, expected to start in 2019 – three years before the current contract expires.