2013-01-31 09:09:08 - Recently published research from Business Monitor International, "Poland Oil & Gas Report Q1 2013", is now available at Fast Market Research

BMI View: Strong government support and industry interest in developing a nascent shale gas industry in Poland leaves BMI cautiously optimistic with regard to the country's gas production outlook. We expected modest volumes of shale gas to be commercially produced by 2016. Poland's obligations to reduce its carbon emissions by 2020 under EU policy will also lead to a marked rise in its gas consumption as the country switches from coal to gas for power generation.

The main trends and developments we highlight for Poland's Oil & Gas sector are:

* Undeterred by the Polish Geological Institute (PGI)'s downward revision of its recoverable shale gas estimates - from the Energy Information Administration (EIA)'s previous estimates of 5.3trn cubic metres (tcm) to

0.346-0.768tcm - Poland is sticking to Prime Minister Donald Tusk's late 2014/early 2015 schedule for the commercial production of shale gas. We are cautiously optimistic on Poland's shale gas prospects and expect to see gas production rise from 6.2bn cubic metres (bcm) in 2011 to 7.2bcm in 2016, thanks to modest domestic shale gas production. Gas output will rise at a quicker pace thereafter to reach 14.2bcm by 2021.
* Shale gas exploration in Poland continues to present a mixed picture. ExxonMobil pulled the plug on the search for shale gas in June 2012, after two test wells in the Lublin and Podlasie Basins failed to flow commercial quantities of gas. UK-based independent 3Legs Resources also bowed out of its Dabie-Laski concession in August 2012. On the other hand, San Leon Energy, Aurelian Oil and Gas, Talisman and local gas giant PGNiG have had encouraging results from their exploration activity. French major Total has also reaffirmed its commitment to Poland's shale plays. The Ministry of Environment expects 41 more wells to be drilled in 2012.
* Poland's treasury has called for refiner Grupa Lotos SA to expand its non-refining portfolio, particularly in the upstream segment, mirroring a trend in the country whereby the government is pushing state-owned firms into the development of its shale gas resources. A consortium consisting of PGNiG, copper miner KGHM and utilities companies Polska Grupa Energetyczna, Tauron and Polska Energia is considering a shale gas joint venture (JV) while . Poland's largest refiner PKN Orlen announced in July 2012 that it plans to spend US$87bn on shale gas exploration in 2012 alone.
* BMI expects to see a marked rise in Polish gas consumption by the end of our forecast period, from 17.0bn cubic metres (bcm) in 2011 to 20.4bcm by 2016. EU policy, which requires a 20% reduction in carbon emissions by 2020, will force Poland to speed up the rate at which it constructs gas-fired power stations and cuts the amount of coal used in power generation. Demand could increase to 23.9bcm by 2021. The availability of cheaper domestic gas from a rise in shale gas production could make gas more appealing as a power source and pose an upside risk to our forecasts.
* The Swinoujscie Liquefied Natural Gas (LNG) import terminal is expected to open by 2014, despite construction delays. This LNG import terminal and a planned interconnector joining Poland and Slovakia - to be operational by 2017 - will ease Poland's reliance on gas supplied by Russia.
* While production growth in conventional oil will be stagnant, we expect a modest rise in oil consumption, driven by domestic economic growth. Despite a visible slowdown in economic activity, we expect growth to bounce back after 2014 and see oil demand increasing to 652.300 barrels per day (b/d) by 2016, implying annual growth of up to 1.5%. With domestic supply forecast to fall from 27,200b/d in 2012 to 26,900b/d in 2016, total liquids import requirement could reach 625,300b/d in 2016, up from 548,300 in 2011.


Full Report Details at
- www.fastmr.com/prod/529455_poland_oil_gas_report_q1_2013.aspx


Liquids shale production could pose an upside risk to our total liquids output forecast. In addition to shale gas resources, PGI estimates that Poland could hold as much as 1,576-1,964mn bbl in shale oil resources, which would mean domestic oil production could meet the country's needs for 10 years. As with its shale gas, exploration is needed to validate PGI's estimates. However, oil pipeline operator PERN is reported to be already planning pipelines to transport crude from Poland's potential shale reserves. At the time of writing we assume an OPEC basket oil price for 2013 of US99.10/barrel (bbl), falling to US$96.20/bbl in 2014. Global GDP in 2013 is forecast at 3.0%, up from an assumed 2.6% in 2012reflecting some recovery in the US, though uncertainty with regard to the eurozone debt situation and an apparent Chinese slowdown will continue to hamper growth. For 2014, growth is estimated at 3.2%.

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