Tim Gosling in Prague -
Chevron announced on January 31 that it is to quit its hunt for Polish shale gas. The last but one energy major to traipse out of the country, the US giant looks to have put the final nail in the coffin of Warsaw's dreams of leveraging its shale reserves to transform regional gas markets.
Mirroring moves by other US majors over the past couple of years, Chevron Polska said it will give up its licences in Poland due to failure to produce commercial flows. "The opportunities here no longer compete favorably with other opportunities in Chevron's global portfolio," the company said in a statement.
Like its peers, Chevron has been hit by falling global gas prices. The company shut shale gas operations in Lithuania last year, and it's operations in Romania and Ukraine look uncertain. The recent plummet in oil prices is putting pressure on investment across the sector. ConocoPhillips remains the last energy major hunting shale in Poland.
Chevron's exit will hugely disappoint Warsaw. A Polish energy conference last month appeared to agree it was "a funeral ceremony for shale gas".
"There is a question of whether we have to freeze the whole idea," added Boguslaw Sonik, a former member of the European Parliament for Poland's ruling Civic Platform party.
Deep and confusing
Chevron had been standing tall in Poland despite the exit of most other energy majors that crowded into the country in 2010 on the back of estimates of massive unconventional deposits. Seized with enthusiasm, the government was soon eulogizing about a future game changing role on European gas markets.
However, enthusiasm soon waned as reserve estimates were slashed and test drilling disappointed. Exxon Mobil, Total and Marathon Oil have all halted shale gas exploration in Poland over the past three years.
A confused government strategy has hardly helped either. Long delays on producing clear regulations and a tax regime infuriated potential investors. Following the first wave of exits, Warsaw shunned foreign investors, and turned to put the country's state-controlled energy utilities into harness to explore for shale gas.
However, concurrent demands for huge investment in new power capacity made that a struggle. Warsaw turned on the charm to try to tempt the international players back in 2014, but the continued absence of commercial flows means interest has been muted.
Chevron signed a JV with state gas company PGNiG in March. While the pair insisted that they were clubbing together in order to accelerate the hunt, the move always smacked of desperation in the face of the difficult geology.
Environment Minister Maciej Grabowski was drafted in to spearhead a renewed push for foreign experience with drilling for shale gas and cash, which essentially means from the US. However, exploration concessions continue to retreat, dropping to only 56 from a high of 115 in 2012.
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