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Polish Briefing 20 January, 2022 11:00 am   

Polish Briefing: PGE will issue shares to obtain funds for the energy transition | Another four licenses for PGNiG in Norway

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What goes on in Poland on the 20th of January.

PGE will issue shares to obtain funds for the energy transition

PGE has submitted an application to the Prime Minister for the State Treasury to acquire shares of the planned new series with a value of at least PLN 1.835 billion, which will ensure the maintenance of the state’s current share, i.e. 57.39 percent, the company announced on Wednesday. The main purpose behind issuing the new series of shares is to accelerate the transformation of companies and free up own funds for offshore wind energy.

On Tuesday, the management board of PGE decided to issue shares, which will bring about PLN 3.2bn. The approval for the issue must still be granted by the company’s Extraordinary General Meeting, scheduled for March 7, 2022. According to the PGE announcement, the company is applying for the acquisition by the State Treasury of no less than 214,596,820 and no more than 373,952,165 of the newly issued ordinary series E bearer shares in exchange for a cash contribution from the Reprivatisation Fund. Taking up the minimum number of shares will ensure that the State Treasury’s share in the share capital will remain unchanged, emphasized PGE.

The company indicated that if the State Treasury acquires a minimum number of new shares, the amount of the cash contribution will not be lower than PLN 1.83 billion. If the maximum number of shares is acquired, the Treasury contribution will amount to at least about PLN 3.1 billion.

As specified, the application was submitted pursuant to the Ordinance of the Minister of Finance of December 23, 2021 on the detailed procedure for the acquisition or taking up of shares by the State Treasury from the resources of the Reprivatization Fund in the years 2021-2022. If a decision is made to acquire shares in accordance with the application, the Prime Minister representing the State Treasury will conclude an investment agreement regulating the rules governing the company’s disposal of funds obtained from the State Treasury, PGE emphasized.

PGE CEO Wojciech Dąbrowski said that the main purpose of the issue of the new series of shares is to accelerate the transition of companies and release own funds for offshore wind energy. “The main purpose of the issue is to obtain funds that will allow for the acceleration of the implementation of the strategy and, at the same time, the release of funds in the period of accumulation of investment outlays in the years 2024-2026, including for own contribution to offshore. This project will cost about PLN 30 billion, half of it is covered by PGE, and we assume that the 20% own contribution will amount to about PLN 3 billion,” Dąbrowski explained. PGE is implementing an offshore wind farm project in company with Denmark’s Orsted.

Another four licenses for PGNiG in Norway

Polish Oil and Gas Company (PGNiG) has obtained four new license areas for development on the Norwegian Continental Shelf. Over 30 oil companies from all over the world competed for them. PGNiG will act as the operator in case of three of the four newly acquired licenses. As a result, the number of licenses in Norway, in which the PGNiG Group holds shares, will increase to 62.

As a result of the annual licensing round (APA 2021), the Norwegian government eventually granted shares in more than 60 production licenses to 28 companies. PGNiG Upstream Norway, a subsidiary of PGNiG, applied for shares in four licenses and succeeded in receiving four.

“We are consistently developing our business on the Norwegian shelf. We want to produce as much of our own natural gas as possible there, which will then be delivered to Poland. That is why we are expanding our license portfolio in Norway – both through acquisitions, but also through regular participation in license rounds”, commented Paweł Majewski, President of the PGNiG Management Board. “Being awarded with four new licenses is a proof of professionalism of our Norwegian staff, because the Norwegian government grants licenses only to the best geologically and technically prepared applications. In addition, it is also important that we will be assigned the role of operator for three of the four new licenses. It is also a recognition of the competence of our specialists in Norway – they will manage the works related to the development of the fields covered by the new licenses,” he added.

Two of the newly awarded licenses are located in the North Sea. PGNiG Upstream Norway will act as the operator for both of them. In case of license PL1135, it will cover 70 % of shares, the remaining shares will belong to Lotos. In the license application it was named Sanok – after a town in Poland where PGNiG holds one of its upstream branches. In case of the PL1136 license, PGNiG Upstream Norway will share interests equally with Equinor, but will retain the operator status.

The other two license applications from PGNiG concerned areas adjacent to the fields under development, and thus, in a way, extending the existing license areas. In case of the PL1055C license, PGNiG Upstream Norway will take up 60% of the shares and the role of operator, and the remaining shares will belong to Shell. In case of PL941B, PGNiG Upstream Norway will acquire 20%, and the operator’s role with 80% of shares will be taken over by AkerBP. The license is located near the Skarv field, from which PGNiG’s operations in Norway began.

Following announcement of the Awards in the Predefined Areas (APA) for 2021, the Norwegian government formally offers oil companies ownership in the licenses they applied for in 2021. Only then they officially approved by the Norwegian petroleum authorities.