The oil will be delivered to a delivery point in Germany via a pipeline belonging to Przedsiębiorstwo Eksploatacji Rurociągów Naftowych "Przyjaźń" S.A. The transportation of the crude oil will be the subject of a separate agreement concluded between TOTAL TOTSA and PERN.

The value of the contract has been estimated on the basis of forecast crude oil sales over the next five years and amounts to approx. USD 900 mln (approx. PLN 2.6 bln). The price of the oil will be established on the basis of Brent Dated quotations and payment for the crude oil delivered will be settled in US dollars.

The agreement was concluded for an indefinite term starting from 1 January 2010 and can be terminated by either of the parties.

According to PGNiG S.A.'s strategy, prospecting and extraction operations are important factors in building the company's value. PGNiG S.A. having access to its own deposits, both in Poland and abroad, is a key element in achieving that objective.

Crude oil is extracted by two branches of PGNiG S.A., in Zielona Góra and Sanok. The Zielona Góra Branch extracts crude oil in nine oil and gas fields, while in Sanok it is extracted in 21 oil/gas and oil fields. Total production of crude oil and condensate in 2008 amounted to 496,000 tonnes, of which 449,000 tonnes were extracted in the Zielona Góra Branch and 46,000 tonnes in the Sanok Branch. Revenues generated from crude oil sales in 2008 amounted to PLN 776 mln. 

Work is currently underway near Lubiatów, Międzychód and Grotów, where there are approximately 7.2 mln tonnes of documented reserves of extractable crude oil. Once it has been completed in 2013, PGNiG S.A. plans to reach a level of annual oil extraction in Poland of 0.9 mln tonnes, which does not include potential geological discoveries in that period. The investment will involve constructing 14 bore-holes on deposits of crude oil and natural gas.

The most important fields of the Zielona Góra Branch include those in Góra, Grodzisk Wielkopolski, Gorzów Wielkopolski, Karlin and Ostrów Wielkopolski. It also exploits the largest crude oil deposits - BMB (Barnówko-Mostno-Buszewo) - which are in the Gorzów area, as well as smaller deposits such as those in Kosarzyn, Zielin and Buk.

With regard to prospecting work abroad, one of the most promising areas is prospecting for and then extracting oil in Egypt. Reserves in the Bahariya concession, which is held by PGNiG, are estimated at 22 mln tonnes. A gravimetric survey plan has already been prepared for the area of the concession and a procedure for selecting a contractor for the work is currently underway. In 2010, work will include gravimetric field work and the commencement of 2D seismic studies. Outlays of PLN 55 mln are planned for that period.

PGNiG S.A. has spent approx. PLN 800 mln on prospecting for deposits this year. In 2010, a similar amount will be designated for that purpose. 

Joanna Zakrzewska

PGNiG's Press Agent