LOTOS and CalEnergy to jointly develop gas fields in the Baltic Sea

abarrelfullabarrelfull wrote on 31 Oct 2012 06:30
Tags: calenergy europe lotos poland upstream

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LOTOS Petrobaltic S.A. and CalEnergy Resources Poland Sp. z o.o. will cooperate in the development of B4 and B6 gas fields on the Baltic Sea. The total quantities of natural gas reserves amount to as much as 4 billion cubic metres. The two companies executed a cooperation agreement in Gdańsk on October 30th 2012.

The project provides for joint operations of LOTOS Petrobaltic S.A. and CalEnergy Resources Poland Sp. z o.o. to be carried out through a special purpose vehicle (SPV), whose costs and profits will be shared between its owners in the following proportion: LOTOS Petrobaltic - 51%, CalEnergy Resources - 49%.

– We are satisfied that CalEnergy Resources Poland Sp. z o.o. will be our partner at B4 and B6 fields – said Paweł Olechnowicz, CEO of Grupa LOTOS S.A. – Its qualifications and potential allow us to be optimistic about the success of development of our gas fields.

– This is a project that has interested CalEnergy for some considerable time and we are very pleased to now have the potential opportunity to work with LOTOS Petrobaltic on developing these fields – said Peter Youngs, Managing Director of the CalEnergy Resources group of companies – We very much hope that the new hydrocarbon tax legislation, to be published in November, will not jeopardize the project economics for offshore fields.

Under the pre-construction work programme, seismic acquisition and selection of a preliminary field development concept are scheduled for 2013-2014. After those both parties will be capable to make the final investment decision (FID) regarding gas fields development. Moreover the project enables LOTOS Petrobaltic to pursue other gas field exploration and development as a potential tie-in to B4 and B6.

CalEnergy Resources Poland Sp. z o.o. is a member of MidAmerican Energy Holdings Company, a consolidated subsidiary of Berkshire Hathaway Inc.

Under the terms of the agreement CalEnergy Resources Poland Sp. z o.o. will fund both CalEnergy Resources Poland Sp. z o.o.’s and LOTOS Petrobaltic’s share of the seismic survey acquisition and the preliminary field development concept expenditures. Completion of the agreement is subject to a number of conditions precedent, which include determination that the new hydrocarbon tax legislation does not harm the project’s economic viability.

Agreement conclusion launches mutual cooperation including the process of setting up an SPV and license transfer.

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