​TECHNIKA – TECHNOLOGIA
GOSPODARDKA

ORLEN WITH ACCESS TO DEPOSITS

Henryk Piekut talks to Wiesław Prugar, M.Sc. Eng., President of ORLEN Upstream Sp. z o.o.

The last president of Petrochemia Płocka S.A. voiced the desire for having own deposits for the first time. Has commencement of activities in this direction lasted long in the concern?

There is nothing surprising in that. Extraction investments are very costly and they require time; they are risky and do not always bring expected results. It is necessary to be cautious in making such decisions, especially in a concern which has its roots in crude oil refining. The expected extraction results may appear in a long time horizon. There is not a single leading crude oil processing company which would not have at least shares in deposits. PKN ORLEN is an important player at the European market of oil-derivative products. As it turns out, commencement of such activities was justified.

Therefore, a company was established for that purpose. What are the tasks set before its management?

The strategy approved in November 2005 by the contemporary Management Board and Supervisory Board of PKN ORLEN placed very ambitious objectives before the future team of specialists. The decision was made with complete awareness of the difficulties, which are accompany such activities.

In 2006, the process of constructing the organisation which was meant to take care of exploratory activities of the concern was commenced. The team of specialists who were supposed to face such a difficult task was built basically from scratch. In comparison, companies such as PGNiG, Petrobaltic – not to mention such international potentates as Exxon Mobil or Shell – have several years of experience in this area and hundreds of experienced specialists at their disposal.

In spite of the fact that we are a young company at the market, our employees have extensive experience. Thanks to this, we have created our own project evaluation and analysis methodology. In this respect, we have adopted very high international standards. I am not familiar with similar solutions in other companies of this sector at the Polish market. Annually, we analyse approx. 60 projects. Moreover, we draw the right conclusions from such analyses, which enable us to avoid mistakes and compete with other players at the proper technical and financial level.

Currently, ORELN Upstream is working on three projects, which are constantly gaining popularity. Could you tell us something more about them?

In order to be precise: ORLEN Upstream is working directly on two projects, whereas ORLEN International Exploration and Production is working on one. Both companies belong to PKN ORLEN Capital Group.

Project in the Lublin region. It is implemented independently and it provides the concern with five years of exclusive right to search for and explore crude oil and natural gas deposits in the area of five concessions, located in the Lublin region. This area is very interesting with respect to geology.

Sieraków project. The area of cooperation is located in the region which has greatest prospects for the search of hydrocarbons in Poland. The initially examined concentration of crude oil within the Sieraków structure is located in the vicinity of largest discoveries of crude oil deposits made in the recent years by PGNiG in Poland. Implementation of a joint project with PGNiG is another stage of construction of a diversified portfolio of exploratory projects of ORLEN.

Project at the Baltic Sea. This is an exploratory project implemented together with our experienced partner, Kuwait Energy Company (KEC). A month ago, Balin Energy – our joint enterprise with Kuwait Energy Company – received the second exploratory concession in the Latvian economic zone of the Baltic Sea. These measures allow for construction of competences and experience of the team in upstream activity at the sea.

According to your estimates, how much time is needed for launching exploration of such deposits? The oil will flow in 2.5 or in 10 years?

The project in Sieraków has been researched and it is far advanced. It will soon be in the management and exploitation stage. However, the first extraction is scheduled for 2016. The building of infrastructure will take some time. Here, I would like to emphasise very good cooperation with PGNiG S.A. during implementation of this project.

And what about the Baltic deposits, will they start to produce oil sooner?

Here rush is not recommended at all. This is the sea. Two licenses that we hold within the framework of the project conducted jointly with Kuwait Energy Company, bring us closer to the first extraction of crude oil from sea deposits. According to the conducted analyses, production from these regions may already commence in 2015. Next year, we are planning to acquire a seismic 3D photograph. It will allow us to determine the location of the future openings precisely and they – it is our justified hope – will confirm the occurrence of hydrocarbons.

During a joint conference of the management boards of PKN ORLEN S.A. and PGNIG S.A. cooperation between the companies was approved. Apart from the above-mentioned Sieraków deposit, will there be any more future activities?

The joint project in the area of Sieraków commenced a new stage in cooperation between the companies in the area of exploration and extraction of crude oil and natural gas. At the present moment, we are conducting analyses of other investment opportunities, which will be implemented if our finances allow for it. Cooperation of two Polish concern may be beneficial for both of them. Being familiar with the specific nature and achievements of the two companies, I am convinced that we have a lot to learn from each other.

There are rumours about new discoveries of hydrocarbons in countries with more limited tradition in the industry. Is ORLEN planning to join companies established in such countries and support them financially? For example in Egypt...

Upstream business requires time, consistent activities and only such proceeding guarantees successes in the future. ORLEN is prepared for such activities.

We are interested in purchasing individual deposits and even entire oil companies from the extraction industry which would guarantee production. We are conducting exploratory activities in various regions of the world. Egypt is treated as a country with good potential. We receive interesting offers from Northern Africa and we are seriously considering becoming involved in a project in this region, but I cannot disclose any further details.

Thank you very much for the interview.

Przegląd Techniczny 24/2009