Poland's largest state-owned oil and gas company PGNiG and U.S.-based ERU Management Services LLC have signed an agreement on cooperation in the exploration and production of hydrocarbons in western Ukraine, close to the Polish border.

The agreement between the two companies provides for joint operations on a license on a hydrocarbon section located in Ukraine's Lviv region (near the Polish border). An exploration well will first be drilled to a depth of up to 2,500 meters, and geophysical surveys will be performed to select further well locations. Work will commence once all relevant approvals and permits have been secured, PGNiG said in a statement on December 9.

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As reported, facilities at the Przemyśl deposit are producing gas at an annual rate of some 0.5 billion cubic meters (bcm), but in 1971 production totaled 3.7 bcm. Proven recoverable reserves of natural gas in the field were estimated at approximately 74 bcm (65 bcm already extracted).

However, based on the recently performed geophysical surveys and re-evaluation of the previously collected data, PGNiG estimates that Przemyśl may hold an additional 20 bcm of gas. These estimates have been confirmed by new exploration wells and workovers performed by PGNiG in recent three years.

PGNiG and ERU have been involved in exporting natural gas to Ukraine since 2016. The two companies have also supplied gas to Ukraine's state-run gas transport system operator Ukrtransgaz. In August 2019, PGNiG purchased a cargo of U.S. liquefied natural gas (LNG) for ERU, which was regasified at the President Lech Kaczyński terminal in Polish Świnoujście and sold to ERU for storage in Ukrainian facilities.

UNIAN memo. Energy Resources of Ukraine (ERU) is a group of companies with foreign investment, which is engaged in the implementation of projects in Ukraine's energy sector.

Poland's state-run oil and gas firm PGNiG is engaged in the exploration and production of natural gas and crude oil, as well as their imports, storage, sales, and distribution. It is also involved in the generation of heat and electricity, as well as in geophysics and drilling services.