PKN places two offers for Lithuanian oil terminal

Poland's leading refiner PKN Orlen PKNA.WA filed made two proposals that could give it control of the Lithuanian Klaipedos (KNF1L.VL) oil terminal, the company's chief executive Jacek Krawiec said on Friday.

The Lithuanian government, which controls the terminal, will decide on the offers in January, Lithuania's Prime Minister Andrius Kubilius said.

"We want to get either a minority stake with operational control right, or a majority stake," Krawiec told a press briefing. "It makes no difference to us (which option Lithuanian government choses)."

PKN Orlen, which already controls Lithuanian refinery Mazeikiu, has suffered a blow after Russian crude supplies to the refiner via the Druzhba pipeline were choked off.

This forced it to ship crude via the offshore terminal in the Baltic Sea at higher cost. Mazeikiu also exports 60 percent of its output via sea routes and the Klaipedos terminal would help it cut down on transport expenditures.
Source: By Nerijous Adomaitis, Patryk Wasilewski Andrew Callus, reuters.com

Ukraine, Poland agree to reverse flow of key oil pipeline

The leaders of Ukraine and Poland agreed Friday to reverse the flow of a key oil pipeline in western Ukraine in mid-2008, a move to improve regional energy security and reduce dependence on Russian crude.

The 670-kilometer, or 410-mile Odessa-Brody pipeline is currently used to transport Russian oil southward for export via the Black Sea from the port of Odessa.

But President Viktor Yushchenko and his Polish counterpart Lech Kaczynski pledged to return to the pipeline's original design and begin shipping oil from Caspian Sea nations such as Azerbaijan northward from Odessa to Brody, near the Polish border, according to a statement on Yushchenko's Web site.

"Only such a straightforward option of using Odessa-Brody has a future. Any other options simply don't exist," Yushchenko said, according to the statement.

"I am convinced that this project will be implemented," Kaczynski was quoted as saying. "Naturally, it is in our Polish interests."

Yushchenko said that by mid-2008, oil will start moving northward in the pipeline to Brody, from where it will be transported further north by rail.

Under an agreement struck earlier this year by Ukraine, Poland, Lithuania, Azerbaijan and Georgia, the pipeline is to be extended 490 kilometers to the Polish port of Gdansk on the Baltic Sea.

Yushchenko predicted the extension could be built over the next two years, while Kaczynski predicted it could be finished in 2011-2012, according to the statement.

However, Alexander Dikusarov, spokesman for the state pipeline company Ukrtransnafta, said that while construction of the extension will begin in mid-2008, the flow of the oil will be reversed later.

The pipeline, built in 2001, has long been the subject of geopolitical jostling amid competition over control of export routes from the former Soviet Union. It remained largely idle amid political bickering over its use until 2004, when then-President Leonid Kuchma opened it for transport of Russian oil southward to Odessa for export.

The following year, Yushchenko, the new pro-Western president, decided to revert to the original plan for moving shipments from Kazakhstan and Azerbaijan north and west from the Black Sea port.

Source: iht.com

Aurelian Oil & Gas Announces Successful Testing of Trzek-1, Poland

Aurelian Oil and Gas PLC, on behalf of Energia Zachod Sp. z o.o, its 90% owned Polish subsidiary, announces the initial results of testing its Trzek-1 well in Central Poland.

Highlights:

• Gas column of 89 meters discovered
• Confirmation of potentially commercial flow rates - initial short term flow rates up to 215,000 m3/d, then on restricted flow of 71,000 m3/d.
• Well now shut in for two week period to build up pressure
• Intention to install, in 2008, processing facilities to enable long term production testing
• Gas produced from long term production test is expected to be sold
• 3D seismic survey planned over Siekierki structural trend, commencing no later than January 2008, to provide greater definition of the structure
• Further drilling planned; a potential follow-up location in the southeast of the trend is also being considered for drilling in 2008.

The well was drilled earlier this year to a depth of 3,935 metres. A gas column of 89 metres, coinciding with gas shows recorded during drilling, was logged in Rotliegendes sandstones and confirmed by pressure data. The rig was released on 29 July to await testing using a workover rig and fraccing crew.

The interval 3,652 metres to 3,657metres (total vertical depth) was perforated and then fracture stimulated on 1 November. Pinnacle Technologies was responsible for treatment design and Halliburton carried out the stimulation treatment.

The well initially flowed at short term rates up to 215,000 m3/d (7.6 MMscf/d). The rate was then restricted to 71,000 m3/d (2.5 MMscf/d) at a wellhead pressure of 73 bar (1060 psi) to restrict production of underlying water. As anticipated, the gas contains 12.8% nitrogen, a normal quantity for this region. Gas flow was continued until 17 November and the well is now shut in for a two-week pressure build-up.

The stabilized flow rate and pressure data indicate that the well is capable of producing gas in sufficient volume to supply an existing sales point 4.3 kilometres from the well. Subject to full analysis of the test data and the granting of the necessary consents by relevant authorities, it is intended to install processing facilities in the course of 2008 to allow a long term production test with sale of the produced gas. This test will provide valuable information on long term reservoir response.

The Siekierki structural trend is a large feature, approximately 25 kilometres long and extending under the eastern suburbs of Poznan, Poland’s third largest city. A 3-D seismic survey over the whole trend is now planned to start no later than January 2008. This survey will provide greater definition of the Siekierki feature. Further drilling, which may involve horizontal legs and multiple fracs, will follow the full integration into the data base of the results of this survey. A possible follow-up location in the southeast of the trend is also being considered for drilling in 2008.

Energia Zachod Sp. z o.o is a 90% subsidiary of Aurelian, with the remaining 10% held by Avobone NV.

Michael Seymour Aurelian’s Managing Director commented:

“These test results are highly significant for us. The drilling of this first well on the Siekierki trend for over 20 years has been central to Aurelian’s development since inception and it is very pleasing to report its success.

The confirmation of potentially commercial flow rates now triggers immediate plans for putting Trzek-1 onto long term production test and we are confident that we will be able to sell the gas produced. A contract for the 3-D seismic survey is also expected to be signed within the next month. We already have an option on a rig slot for a follow-up well, with serious consideration being given to early drilling.

These initial results are encouraging and we look forward to updating further on Trzek as the work programme develops.”
Source:oilvoice.com

Poland's Polkomtel Ebitda, Net Profit To Rise In 2007

Poland's mobile operator Polkomtel expects its net profit to rise in 2007 from 2006, the company's Chief Executive Jaroslaw Bauc said Monday.

Bauc also added that the operator's earnings before interest, taxes, depreciation and amortization, or EBITDA, will also rise in 2007, while revenue likely won't diverge from 2006.

Polkomtel's 2006 net profit was 1.12 billion zlotys ($387.5 million), while its Ebitda was PLN2.48 billion and its revenue was PLN7.36 billion.

Speaking at a news briefing to announce the company's 2006 results, Bauc said that "Polkomtel's net profit growth in 2007 should be similar or slightly higher than last year."

Polkomtel's 2006 net profit rose by 5% compared with its 2005 net profit.

Bauc added the company's rise in Ebitda in 2007 should outpace the net profit growth, mainly due to higher amortization.

He said Polkomtel's revenue in 2007 "should not fundamentally diverge from 2006" and listed the market regulator's decision on interconnect fees between operators as the big element of uncertainty.

Bauc said he expects Polkomtel's investment in the network to reach an all-time high in 2007, and "certainly not less than 2006's PLN1.21 billion."

The chief executive didn't reveal what the company's management will propose for its 2007 dividend but said it won't be less than 50% of net profit. Polkomtel's 2006 dividend represented 92% of the company's net profit in the year.

Polkomtel expects to have 14 million subscribers at the end of 2007, up from 12 million at the end of 2006 and 12.7 million at the end of the first quarter of 2007.

However, Bauc said many of these are multiple subscribers, using services from different operators. Bauc added that the crucial element is customer loyalty, with the key indicator being how well the company retains customers.

The chief executive said 2007 is likely to be a significant year for the telecom sector in Poland for several reasons. Market penetration will exceed 100% in Poland by the end of the year, Bauc said, and he also highlighted falling fees and changes to allow customers to migrate from one operator to another while retaining the same telephone number.

Bauc said that in some Western countries more than 50% of mobile customers changed their operator after gaining the right to do so and retain the same number. "If this awaits us in Poland, we will have a real revolution," he said.

Another recent market change is the launch on March 16 of Poland's fourth mobile operator P4 under the Play brand name, offering third-generation services using the universal mobile telecommunication system, or UMTS.

"Play's offer is quite different from Polkomtel's, but it is a complimentary one," said Bauc. "As a bonus, it is being offered on our network," he added.

Polkomtel, Poland's number-two mobile operator by sales last year, is controlled by four state-dominated companies. Oil refiner PKN Orlen, copper producer KGHM Polska Miedz, power grid operator Polskie Sieci Elektroenergetyczne and coal trader Weglokoks together hold almost 61% of the telecom company.

The remaining 39% is split evenly between Vodafone Group and Denmark's TDC, which is negotiating to sell its Polkomtel stake to the other shareholders.

Source: By David McQuaid and Malgorzata Halaba,
cellular-news.com