CAPITAL: Warsaw

MONETARY UNIT: Zloty

REFINING CAPACITY: 382,000 b/cd

OIL PRODUCTION: 4,810 b/d

OIL RESERVES: 115 million bbl

GAS RESERVES: 5 tcf

The Polish refining industry was in flux during 1999.

The government had been reducing duties on imported oil and planned to fully eliminate them Jan. 1, 2001 to help the profitability of refineries.

Meanwhile, Poland raised $580 million from the sale of 30% in Polski Koncern Naftowy SA, the nation`s leading refiner and fuels distributor.

It sold 126 million shares at 19.5 zloty each. Analysts had predicted they would sell at about 21 zloty.

PKN had 2,000 gas stations and planned to build 300 more by 2002 to meet growing demand. The company had a 75% share of crude oil processing in Poland and 40% of retail fuel sales.

Half of the stock offering was sold to international institutions, a quarter to Polish retail investors, and an eighth each to domestic institutional investors and employees.

The government said allowing 45% of PKN to be traded freely should attract more international investors to the stock market. Analysts valued PKN at between $2 billion and $2.7 billion.

Unionized refinery employees delayed the merger for several months until the company agreed to guarantee jobs for workers or compensate those who were fired.

The government was unable to sell Rafineria Gdanska SA, the second-biggest Polish oil refinery by sales with 17% of the market. The government was working on an alternative plan for selling the refinery.

Rafineria needed a cash infusion of up to $1.3 billion to boost production and build new gas stations.

Upstream

EuroGas Inc., New York, formed a 50-50 joint venture with Poland Oil & Gas Co. to acquire a 50% interest in four gas fields in western Poland.

EuroGas planned to build a gathering system to connect the fields to a proposed power plant in Zielona Gora. Potential production was 38 MMcfd. EuroGas estimated reserves of the four fields at 403 bcf.

In other action, Apache Corp. acquired a farmout in three Polish Oil & Gas Co. (POGC) concessions covering about 200,000 acres near Krakow.

Operator Apache and partners FX Energy Inc. and POGC planned to began production on the Lachowice concession from existing POGC wells.

The partners also had the option to take part in the development of adjoining POGC concessions, Zywiec-Wadowice and Stryszawa-Lanckorona. The companies would each earn one-third interests in the concessions` production and reserves once facilities were completed.

In exploration, Apache was covering FX Energy`s drilling costs in exchange for a 50% stake in FX Energy`s Lublin and Carpathian exploration areas.

The agreement made FX Energy and Apache equal partners in a total of 14.9 million acres, including FX Energy`s Pomeranian project area and Apache`s Warsaw West area. Exploratory drilling was due to start in 2000 and 2001. FX Energy`s Baltic area is excluded.