PKN Orlen did not manage to sign to an E&P cooperation deal with KazMunaiGaz Reuters reported CEO Piotr Kownacki as saying in Baku on Friday.
Our view: PKN is struggling to get access to crude production assets and this is likely to become more difficult given the current surge in crude oil prices. Although PKN Orlen medium-term strategy sets aside US$ 130m annually for upstream projects between 2007 and 2009, we now see this under pressure. However, we do not take the news as negative: we still consider upstream expansion plans of PKN as a risk factor for shareholders: in our view there is a decent chance for PKN to overpay for upstream assets in the lack of experience and harsh competition.