ExxonMobil quits Polish shale gas hunt

By bne IntelliNews June 18, 2012

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Poland's shale gas push took anther hit on June 16 when ExxonMobil announced that it is set to quit exploration in the country after failing to find commercially viable volumes. The news is likely to increase the pressure on state-controlled companies that have been handed the baton on shale gas in recent months to successfully exploit their deposits.

"The end of shale gas exploration in Poland means a withdrawal from further prospecting in Poland," ExxonMobil spokesman Adam Kopysc told Gazeta Wyborcza. "We did not find constant, commercial hydrocarbons flow rates at our two drilling sites in the Lublin Basin near Krasnystaw and the Podlasie Basin near Siennica."

The oil giant was one of the higher profile arrivals as Warsaw handed out hundreds of exploration licences, many to US companies which hold rare experience in the successful exploitation of uncoventional gas – hard-to-get-at deposits of tight and shale gas, as well as coal-bed methane. Initial estimates put Polish shale gas reserves at around 5 trillion cubic metres (cm), though a Polish government report in March slashed likely reserves by a factor of around 10 and its hopes of developing a game-changing gas industry in Europe took a hit.

That official downgrade of estimates came on the heels of several reports from international licence holders that they are struggling to find commercially exploitable deposits. ExxonMobil, which holds six exploration licenses in Poland, said in January it would evaluate its options, reports Reuters.

In the face of such disappointment, Warsaw has been pushing state-controlled companies - with gas monopoly PGNiG leading a collection of candidates from the utilities, mining, and oil refining sectors - to lead the charge instead. That has led foreign investors to complain recently that they are now facing discrimination from the Polish authorities over new licences. The exit of the US giant is unlikely to improve that situation.

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