Polish shale gas deal expires, source says no renewal

WARSAW Tue Dec 31, 2013 11:17am EST

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WARSAW Dec 31 (Reuters) - Five Polish state-controlled companies said their deal to cooperate on developing the country's shale gas resources would expire on Tuesday, and according to a source close to the matter, the arrangement will not be renewed.

Gas monopoly PGNiG, copper miner KGHM and utilities PGE, Tauron and Enea agreed in 2012 to spend 1.7 billion zlotys ($566 million) on joint exploration and extraction of shale gas.

But they missed a number of deadlines for mapping out details of the deal and said in separate statements that they had now let it expire.

The source, who is close to one of the firms in the group, said there would be no renewal of the arrangement.

Neither PGNiG, which led the joint project, nor any of the other partners were immediately available for further comment.

The deal's expiration adds to a series of mixed signals from the shale gas industry on its prospects in Poland, eastern Europe's biggest economy.

Enthusiasm towards unconventional gas reserves in the country faded earlier this year after three global players decided to pull out, quoting poor results, red tape and an uncertain legal landscape.

U.S. energy giant Chevron, however, joined forces with PGNiG earlier in December on shale gas exploration in Poland.

Polish Prime Minister Donald Tusk attempted to revive hopes for the sector by appointing a new environment minister in November and setting him a goal of intensifying shale gas exploration.

Poland launched a major push into shale three years ago when Tusk said the country would seek to produce unconventional gas on a commercial scale in 2014.

The plan has suffered setbacks, however, as Poland's estimated recoverable reserves were slashed by 90 percent.

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