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France's Total says dropped shale gas licence in Poland

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(Globalpost/GlobalPost)

French oil giant Total said Monday it has decided not to renew its only shale gas exploration licence in Poland, the latest setback in the country's efforts to grow the sector.

Several other big-name energy firms have already stopped exploring for shale gas in the EU member, which has been championing its reserves in an effort to ensure energy independence from Russia.

Warsaw has long sought ways to guarantee its energy security but the desire is now all the more urgent given the East-West standoff over the Ukraine crisis.

Russia, which has threatened to cut off gas supplies to Kiev, is Europe's biggest single energy supplier and its natural gas pipelines mainly run through Ukraine.

A Total spokesman told AFP the company decided not to extend its concession in eastern Poland after reviewing geological data and well results.

"We believe that the potential of the area cannot allow us to launch a viable economic project, although the presence of gas was demonstrated by the well," the spokesman said.

"However, we are still looking for other good opportunities in Poland," he said, adding that the country remains promising for shale gas, though exploration is at its infancy.

Polish environment ministry spokesman Pawel Mikusek told AFP the licence expired on April 1.

Poland has for several years been on a drive to exploit its shale gas reserves, which are estimated at between 800 billion to 2,000 billion cubic metres.

The government has said it plans to invest 12.5 billion euros ($17.3 billion) in the sector by 2020.

Poland currently uses around 15 million cubic metres of natural gas annually, two-thirds of which is imported, mostly from Russia.

In an effort to encourage shale gas exploration, Warsaw announced last month that shale gas extraction would be tax-free through 2020.

Local and global companies have thus far sunk about 50 exploratory wells in Poland, though some have since quit.

Global energy giants ExxonMobil and Marathon Oil dropped their exploration efforts last year after finding deposits too deep to extract using fracking.

But others, including US energy majors Chevron and ConocoPhillips, the first to extract shale gas in Poland last year, remain in the game.

Many European countries -- including Total's own, France -- have refused to allow shale gas exploration or production due to environmental concerns over the fracturing or "fracking" techniques used to recover deposits.

Some other countries have failed to find commercially exploitable deposits.

Protests have erupted against fracking in countries including Lithuania, Romania and Ukraine.

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http://www.globalpost.com/dispatch/news/afp/140414/frances-total-says-dropped-shale-gas-licence-poland