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Total joins Polish shale hunt

Poland pre-empts EU shale-drilling ban, as Total enters the play

FRANCE’s Total is buying a 49% interest in two of ExxonMobil’s shale-gas projects in Poland. The major is farming into the Chelm and Werbkowice concessions, in the southeast Lubin basin. ExxonMobil will retain a 51% interest and will operate the blocks.

ExxonMobil has carried out seismic work on the concessions, which were awarded in March 2009 and December 2008 respectively, and which each cover around 1,000 square km. An exploration well drilled at Chelm is under evaluation.

Total says its entry into Poland reflects its “commitment to expanding activities in unconventional gas, notably in Europe”.

In February, the ExxonMobil said it was looking for partners in its unconventional operations in the Poland’s Podlasie basin. Total’s decision to farm into the acreage comes just days after France voted in favour of a bill to ban hydraulic fracturing (fracing) in the country. If the bill passes a second vote in the senate, on 1 June, it will become the first country to ban fracing.

Energy security

Following France’s vote on 12 May, Poland warned the European Commission not to roll out the ban across the continent. Marek Karabula, state-owned PGNiG's deputy chief executive, said last week that individual EU members have the right to self regulate, describing it as a matter of “energy security”.

Maciej Kaliski, head of oil and gas at Poland’s Economic Ministry, also spoke out against EU attempts to interfere with Polish shale-gas regulations and suggested the ban in France was the result of lobbying efforts from the country’s nuclear industry. "Some 80% of energy in France comes from nuclear,” Maciej Kaliski told local media, “shale gas poses competition for their sector."

Around 20 foreign firms hold shale-gas exploration licences in Poland, including Lane Energy and ConocoPhillips. The foreign operators are hunting for the 187 trillion cubic feet of recoverable resources that the US Energy Information Administration believes the country could hold.

Kash Burchett, an analyst from IHS Global Insight, claimed Poland’s warnings to the EU are “somewhat redundant” considering the lack of control the European Commission has over such issues. “In reality, the EU has virtually no say over sovereign states' subsoil regulations, or the development of domestic resources,” he said. “The commission has no legally binding jurisdiction over the issue, it can at best make recommendations.”

Break free from Russia

But although it’s unsurprising that Poland – which has high hopes of developing domestic shale gas resources to break free from its dependence on Russian imports – is unenthusiastic about the ban in France, the 12 May statements were “surprisingly aggressive”, he added.

Given that in 2006, former Polish foreign minister Radoslaw Sikorski compared the Nord Stream pipeline project (in which Russia’s Gazprom owns a 51% stake) to the Nazi-Soviet Molotov-Ribbentrop pact of 1939, these comments should be “taken in context”, said Burchett. Nord Stream is a direct link from Russia to Germany, bypassing traditional transit states in eastern Europe, such and Ukraine and Poland.

More significant obstacles to a successful Polish shale-gas industry are a lack of infrastructure to deliver production to markets, either at home or abroad, Burchett added.

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