Tim Gosling in Prague -

French giant Total said on April 14 that it is to join the exodus from the Polish shale gas hunt. The announcement puts a dampener on Warsaw's recent bid to reinvigorate its ambition to become a major gas producer.

A Total spokesman said that the company has not renewed its only shale gas exploration licence in Poland. Total said that despite the presence of gas, it has concluded the area it was exploring, in eastern Poland near Chelm, is not economically viable.

"Poland remains a promising country for shale gas, but the exploration process is in its infancy and the industry needs more data and time to understand the geology of Polish sedimentary basins," a Total spokesman said, according to Reuters, adding that the license had expired on March 31.

The Polish authorities confirmed the news. "Their exploration licence expired on April 1 and Total has not requested a renewal," ministry spokesman Pawel Mikusek told AFP, without giving a reason for the decision.

The exit of yet another explorer will be hugely disappointing for Warsaw, which has spent 2014 trying to resurrect investor interest in its shale gas drive.

About-face

On the back of estimates of massive unconventional deposits, Warsaw originally launched dreams of becoming a major gas producer in 2010. Foreign investors snapped up licences, but the enthusiasm soon waned as reserve estimates were slashed and test drilling results disappointed. Several, including Exxon Mobil, Marathon Oil and Talisman Energy, have since quit.

Barely disguising Warsaw's ire, Prime Minister Donald Tusk's government pushed state-controlled companies into the fray in their stead. However, huge demands for investment in new power capacity have made that a struggle.

That has seen another about-face, as Poland has this year launched a new charm offensive to persuade those foreign investors still on the ground to stay and raise their efforts, and others to take another look. The first step was an announcement from London-listed San Leon in late January that it's close to producing "the first commercial shale gas flows in Europe".

Recently appointed Environment Minister Maciej Grabowski has been drafted in to spearhead the renewed push for foreign experience with drilling for shale gas and cash. "This year, I think at least 30 wells for shale gas will be made," Grabowski said in February. "To date there were 55. This year will be a turning point for shale gas".

On March 11, the government announced it has approved draft legislation on a regulatory framework and tax regime designed to boost investor interest. Previous drafts had been slammed by investors, while the government's failure to nail down the legislation had left huge uncertainty for companies urged to spend big on expensive exploration efforts.

Tusk offered another hostage to fortune on March 11, when he insisted the draft bill would be sent to parliament within a fortnight, and said he hoped for "speedy proceedings," especially given the Russian-Ukrainian tensions. The lower house has yet to see the bill.

Mother nature

However, as Tamas Pletser of Erste Bank pointed out in February, Warsaw can offer whatever regulatory and tax temptations it likes, but can't overcome the fact that test drilling indicates many Polish shale gas deposits are commercially unviable. "The new law was missing for a long time, but what we really miss is the good results of the fracturing," the analyst points out.

"It seems to us that Poland cannot meet earlier expectations, even though new technologies may result in a breakthrough a few years from now," he adds. "We believe that the companies cannot change 'Mother Nature,' but they can lobby for a better law and lower taxation."

Yet Poland has spent the last month or two front and centre in warning against Central Europe's heavy dependence on Russian gas. The crisis in Ukraine has seen it seek to put its sluggish bid to boost domestic production with unconventional gas back on a fast track, but it has received little but bad news in return, thus far.

Total's exit is clearly a blow, but it's the large US companies with strong shale gas experience that are the most valuable to Warsaw. ConocoPhillips retains an interest, albeit only via a partnership with 3Legs Resources.

Chevron is the major US operator that remains on the ground. However, in another disappointment, it signed off on a deal on March 31 that sees it pool data with Poland's national gas company PGNiG - which is charged with leading the domestic shale gas effort. The two companies suggested they could also pool test drilling efforts on several adjoining licences in a bid to "optimize costs"; none of which suggests investor uncertainty is waning.