Aker BP Ditches Gina Krog for Shrek


Norway's Aker BP and Polish PGNiG have entered into an agreement to swap some of their respective offshore license interests in Norway. 

The deal will see Aker exit the Gina Krog field in the North Sea, but get hold of the recent Shrek discovery located near its Skarv FPSO in the Norwegian Sea.

In detail, Aker BP will swap its 3.3 percent interest in the non-operated Gina Krog field and an 11.9175 percent interest in license 127C, in exchange for a 5 percent interest and operatorship in license 838 and cash consideration.

License 838 contains the Shrek discovery made by PGNiG. Based on preliminary estimates, recoverable resources range between 19 million and 38 million barrels of oil equivalent (boe).

The field sits near the Aker BP-operated Skarv field.

Related: PGNiG Makes Shrek Discovery

"The transaction and the transfer of operatorship [of the Shrek stake] to Aker BP will enable efficient development of this discovery as a tie-back to the Skarv FPSO. The license also holds further exploration potential," Aker BP said.

As for the other license - License 127C - which is a part of the transaction, it contains the Alve Nord discovery and the Alve NE prospect, which is also located in the Skarv area. Aker BP plans to drill an exploration well in the license in 2020.

The transaction will provide Aker BP with a total cash consideration of up to USD 62 million, consisting of a firm payment from PGNiG of $51 million upon closing and an additional payment of $11 million contingent on the development of the Alve Nord discovery.

After this transaction, Aker BP will hold 35 percent interest in license 838 and 88.0825 percent interest in license 127C, while it will have fully divested its interest in the Gina Krog field. The transaction is subject to approval by the Norwegian authorities.

More gas for Poland

For PGNiG, the deal means it will acquire an interest in the Alve Nord discovery and increase its share in the Gina Krog field. The Polish company said the deal would position it to send greater volumes of gas to Poland after the start-up of the Baltic Pipe.

Jerzy Kwieciński, President of the Management Board of PGNiG SA: "The transaction is a perfect fit for the PGNiG Group’s strategy. Firstly, it contributes to the diversification of gas supplies to our portfolio and strengthens Poland’s energy security due to the build-up of our own hydrocarbon resources. Secondly, increasing our working interest in the producing Gina Krog field will result in immediate growth of the company’s production on the Norwegian Continental Shelf and PGNiG’s EBITDA."

Related: Aker BP Q4 Profit Beats Forecast, Output to Rise 36% in 2020

As a result of the transaction, PGNiG Upstream Norway’s working interest in the Gina Krog field will increase by 3.3%, up to 11.3%. 

PGNiG expects the transaction will increase the company’s future gas production by 100 mcm a year on average. 

The Polish company said that Aker BP becoming the operator of the block containing the PGNiG's Shrek discovery would optimize the value of the Shrek discovery "through Aker BP’s vast experience, supply chain and excellent track record of delivering major development projects safely, on schedule and to budget."

"During the next years, PGNiG will continue to take a leading role in exploration on PL838, building on its recent success. It is also the intention that PGNiG will resume operatorship of PL838 once Shrek begins producing," PGNiG said. 

Following the transaction, PGNiG Upstream Norway will hold interests in 31 production licenses on the Norwegian Continental Shelf, five of which are producing. 

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