Greece speeds up oil and gas exploration

04.01.2012 - 10:55

Debt-stricken Greece, which currently has the least exploration for hydrocarbons in the region, is vowing to exploit its oil and gas reserves.

On 2 January, the Ministry of Environment, Energy and Climate Change (YPEKA) invited investors through an Open Door process to bid to exploit hydrocarbon reserves in three blocks estimated to hold around 250 million barrels of oil. The first two blocks, Patraikos Gulf and Katakolo, are located off the western coast, and the third block - Ioannina – is in the northwest of the mainland. Investors must submit offers by 2 July.

The bidding contest is part of Greece’s strategy to reduce energy dependence and boost security of energy supply through the dynamic development of domestic energy sources, George Papaconstantinou, Greece's minister for the environment, energy and climate change, said in an emailed statement. Already planning to develop renewable sources of energy, the Greek government’s efforts to exploit the country’s hydrocarbon reserves are an integral part of this strategy.

“Today’s invitation to investors is an important step in this direction,” he said.

Deputy Minister Yiannis Maniatis said that Greece has begun the first round of invitations for the three blocks as previously announced: “In conjunction with the progress of bidding contest for seismic exploration in the Ionian Sea and south of Crete, as well as the creation of the Greek Hydrocarbons Exploration Company that was legally established last August, we have managed in four months to cover a fifteen-year period of inertia. We are confident that the current invitation will draw interest from serious companies in the international oil market. With transparency, speed and efficiency and respect to the environment, we plan to develop all of Greece’s resources.”

On 3 January, the deputy minister briefed Greek Prime Minister Lucas Papadimos about the latest developments, saying that Athens aims to have the first oil drill on its territory by the end of 2012.

The area south of Crete is expected to hold primarily gas reserves. US firm Noble Energy’s recent offshore discovery of major gas reserves in Cyprus is boosting Greece’s hopes that there may be “satisfactory” reserves in Greece as well. “All these discoveries and especially the latest one south of Cyprus increase optimism that also in Greece – because there is a geological connection to a certain extent – there will be discovered satisfactory amounts of primarily natural gas but also oil,” a source at the Ministry of Environment, Energy and Climate Change told New Europe on 3 January.

“After we complete seismic exploration in the Ionian and south of Crete, it is estimated that we can offer 10-15 blocks in the first round.”

Fadel Gheit, a senior energy analyst at Oppenheimer in New York, told New Europe on 3 January that oil and gas majors may become interested in hydrocarbon exploration and extraction offshore Greece. He noted that natural gas discoveries in the Eastern Mediterranean, that is Cyprus and Israel, “will be a tremendous boost obviously for Europe”.

“There aren’t too many large companies involved, but I think this area is going to get very busy in the next six months or so as the bigger companies take note. Noble Energy is a very small company and Noble Energy is seeking partners. But because it’s the only company that does business in Israel that has no other interest in the Middle East that is easy on them,” Gheit said. “But ExxonMobil cannot get there because it has obviously stronger ties with the Middle East, with the Arab countries, and they do not want to take the risk of doing business in Israel because they would be on the black list of the Arab world. But if there is actually oil offshore Greece or Italy you are going to see the big guns coming in –Exxon, Shell, BP, ENI, Total, Statoil – all these companies because obviously it’s much easier for them; it’s lower risk politically and financially so it makes a lot of sense. So it’s really good for everybody.”

Regarding the areas of Patraikos Gulf, Katakolo and Ioannina, the ministry source said that 15 years ago some companies had come to these areas but due to the low price of oil and other reasons their efforts did not materialise. “Now with the price of oil above $100 and the overall mobility, it seems that there is interest. Already in preliminary talks it appears that there are companies ready to submit their bids under the set timeframe,” the ministry source said.

However, Gheit added: "250 million barrels of oil is very small. In Greece they drink more coffee than they consume oil so I don’t think that is a big amount of oil”.