Polish govt gives conflicting signals over push to develop shale gas

By bne IntelliNews May 15, 2013

bne -

Poland plans to pass legislation in an attempt to reignite foreign investor interest in its push to explore for shale gas, an official claimed on May 14. That flies in the face of recent reports that Warsaw has lost its enthusiasm for the unconventional gas, and has no interest in supporting exploration - particularly by companies from overseas.

The Polish cabinet should finally adopt a bill aimed at making its shale gas sector more friendly to increasingly wary investors by the end of June, Environment Minister Marcin Korolec told an energy conference on May 14. "I expect the shale gas draft bill to be adopted by the end of June and Parliament should do the same by the end of the year," he said, according to Reuters.

Uncertainty over regulations governing the exploration and production of unconventional gas, as well as over taxation, has done much to hold back Poland's shale gas industry. The new regime would lighten the many bureaucratic obstacles to exploration, including environmental limitations, and create a state operator to take part in energy consortia.

However, poor test results and falling estimates of the volume of recoverable reserves have really done the most damage, say experts. Last week, Canada's Talisman Energy and Marathon from the US sold their interests in exploration licences in Poland, following ExxonMobil out of the country. All three had arrived in 2011, when estimates of trillions of cubic metres of shale gas set Warsaw dreaming of a game-changing role in the European gas market and tempted a host of foreign investors to snap up exploration rights. However, with estimates dropping by close to 90% last year and test results disappointing, interest fell off a cliff.

The government spent 2012 herding state-controlled companies into its push to develop shale gas instead, which is playing havoc with the investment plans in the power sector especially.

According to Deputy Environment Minister Piotr Wozniak, continued hope of attracting experienced shale gas prospectors from overseas is driving the legislative push. "Foreign capital is incredibly important for the development of shale gas exploration in Poland, as Polish companies do not have the experience and capital needed," he said. "It is especially American companies that Poland has to rely on, as they are the most experienced ones," he added.

However, according to the local press, Wozniak left investors with exactly the opposite impression at a private meeting last week with a group of foreign investors and diplomats to discuss the forthcoming legislation, which was originally promised for 2011.

Rzeczpospolita reports the official left investors with a clear message that Poland has no intention of supporting foreign investment into the segment. One participant told the newspaper that the official had particularly singled out US and Canadian companies. "This was a declaration of war with North America," the investor said, according to Warsaw Business Journal. "People responsible for energy issues are pushing forward the idea that the energy sector should remain in Polish hands."

Meanwhile, recent speculation suggests that Warsaw's enthusiasm for the whole shale gas idea has waned. In particular, the sackings of Mikolaj Budzanowski from his post as treasury minister in April, closely followed by that of the CEO of national gas utility PGNiG, have raised significant questions.

Both were leading proponents of the shale gas development, with PGNiG pushing hard to raise the pace of exploration around the country, which remains relatively limited thus far. While it has not been confirmed, the speculation is that the government may have now changed tack, and that the casualties are a sign the ambitions for unconventional gas have now been scaled down, in particular, to halt the disruptions to the government's investment plans for the power sector.

Notice: Undefined index: social in /var/www/html/application/views/scripts/index/article.phtml on line 259

Related Articles

UK demands for EU reform provoke fury in Visegrad

bne IntelliNews - The Visegrad states raised a chorus of objection on November 10 as the UK prime minister demanded his country's welfare system be allowed to discriminate between EU citizens. The ... more

Poland's Law and Justice nominates hardline cabinet

Wojciech Kość in Warsaw -   Poland’s Law and Justice (PiS) party, which won an outright majority in the parliamentary elections on October 25, has announced a hardline ... more

Kaczynski expected to appoint hardline cabinet

Wojciech Kość in Warsaw -   The Law and Justice (PiS) party, which won an outright ... more