Are Polish companies losing interest in Polish shale?

Shale gas well in Krynica Poland
Shale gas well in Krynica Poland. Source: Wikicommons, author: Karol Karolus

After the exodus of foreign companies from Poland, Polish oil and gas companies – which until recently led the exploration work in the country – have now began to abandon shale activities.

Despite Polish Government’s ongoing commitment to unconventional oil and gas, the country’s great promise turned into a disappointment when all but one foreign drillers left Poland quoting confusing legislature and difficult geology. Other negative factors included the falling oil prices and a serious reduction in Poland’s estimated shale gas reserves.

“For us the situation is dramatic. All projects have to be put on hold,” a manager of a small energy company in Poland told Reuters, pointing to hundreds of layoffs as investors withdraw and servicing firms remain idle.

Following the departure of Chevron earlier this month, the only foreign exploration company still betting on Polish shale is ConocoPhillips, which – according to a company spokesperson – continues to evaluate results of its recent testing in Poland. There have also been unconfirmed rumours that ConocoPhillips was looking for a local partner but the spokesman declined to comment on the matter.

Just 10 investors remain in the Polish Exploration and Production Industry Organization, a lobby group that had 23 members in 2013.

But worse is still to come. According the Polish daily, Gazeta Prawna, PGNiG and PKN Orlen, the two state-owned oil and gas companies which have so far been in the lead of shale exploration, have now decided to take a step back.

Warsaw Voice reported on Friday that Orlen has just returned one of the concessions near Hrubieszow, southeastern Poland and is left with eight out of the initial ten.

PGNiG, in turn, gave up four concessions and is left with 11. The firm wants to focus on the most promising fields, spokesperson Dorota Gajewska explained, adding that exploration works have proved more geologically and technologically challenging than expected.

“Shale gas and energy security will still be our priority,” stated Prime Minister Ewa Kopacz earlier this month, but the future of Polish shale seems more uncertain that it has ever been.

Investors are eagerly waiting for a report due from the Polish Geological Institute, probably by mid-year, on the most updated reserves estimates. According to Reuters, if the reserves are revised down, subsidies will be needed to stop Poland from further haemorrhaging investors.

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