Yes, shared pool fragement gives ORA-4031. Metalink Oracle Notes
clearly say ORA-4030 is PGA issue.
I am wondering whether there is some bug in automatic PGA memeory
management using PGA_AGGREGATE_TARGET, so somehow Oracle is placing
some limitation on how much PGA a process can have and this limit is
recahed (instead of my process running out of memory on sever - 20GB is
free).

I have been talking to Oracle support, If they cannot figure this out,
I may try manual way of PGA memory management.