Capital Athens
Time Zone EET (GMT+2)
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Population 11.3 million
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Major Religion Orthodox Christianity

Greek Companies Step Up Offshore Oil Exploration, Large Reserves Possible

By Ioannis Michaletos in Athens

Editor’s note: On 3 December, Greece’s energy ministry announced the creation of a public group to be concerned specifically with hydrocarbons research. The announcement coincided with related developments in the sector, disclosed below, that indicate the growing importance of this sector for Greek authorities and industry alike.

The Greek energy firm Energean Oil & Gas, formerly known as the “Aegean Energy Company,” is expanding its investment in oil exploration projects in Greece’s developing offshore fields.

In early December 2010, drilling equipment will arrive in the Prinos offshore oil field, while existing production at the “Epsilon field” will be stabilized. Further, new drilling will begin during a second stage- the company discovered (through its previous exploration assessments) that significant recoverable amounts of oil exist there. The current investment planning is estimated at around 20 million euros. Cumulatively, the company’s five-year investment plan exceeds 200 million euros.

During 2009, Energean successfully completed two offshore extended reach wells in the Gulf of Kavala, bringing on stream the Prinos North and Epsilon fields. This resulted in a significant increase of production rates, to 5,000 barrels of oil per day from 1,000 one year earlier.

In addition, the Greek Ministry of Energy recently approved the acquisition by Aegean Energy of a 70% interest in the Sea of Thrace offshore concession license. This offshore field, located in the northeastern Aegean near Turkey, comprises an area covering a total of 1,600 square kilometers. Further, in 2009 Energean also acquired a 2,000km 2D Seismic survey for offshore Greece identifying new potential exploration targets, currently being evaluated. This seismic survey is a geological research product and it shows the indications for hydrocarbon reserves in the specified area.

At the same time, the company is also investing in Egyptian offshore drilling through its subsidiary, Aegean Energy (Egypt) Limited. Through it, the company has received from Egypt’s Ministry of Petroleum the Deed of Assignment for the transfer to it of a 60% net interest in the West Kom Ombo (WKO) Block from Groundstar Resources.

A further 20% is expected to be approved through a series of transactions resulting in a final holding of 80% for Energean Oil & Gas; moreover, it will be the operator of the Block, with Groundstar retaining a 10% net carried interest.

Over the past few weeks, the Egyptian authorities have granted all of the necessary approvals. The company has also scheduled a series of infrastructure projects in WKO.

The contract for drilling has been awarded to the Sino Tharwa Drilling Company, while the American Halliburton Company will take care of the project management for drilling. Previous findings by Canada’s Gustavson Associates estimate that recoverable oil in WKO should amount to approximately 570 million barrels.

The estimate by both the company and by Greek energy analysts is that the Prinos “Epsilon” field has approximately 50 million barrels and 17,000 -20,000 barrels per day could be produced over the next couple of years.  A more interesting aspect is the overall potential of all known offshore fields in Greece. Recent scientific and economic conferences have presented figures of approximately 22 billion barrels in the Ionian Sea (off the coast of western Greece) and some 4 billion barrels in the northern Aegean Sea. Of the aforementioned, 10% could be exploited and have a financially viable business plan.

Other Greek regions, such as the southern Aegean Sea and the Cretan Sea have yet to be studied. The now defunct Greek national council for energy policy, in an official report published on 25 May 2008, stated that “production from the oil fields in the Northern Aegean could reach 200,000 barrels per day… Greece is one of the least explored countries in Europe regarding its hydrocarbon potentials.”

Exploitation in Sight

A development that illustrates the government’s desire to proceed in the exploitation of these oil reserves is the creation, in due course, of an organization that will manage the research and exploitation activities. It would also be responsible for attracting prospective investors. The region involved has a total surface area of around 62,000 sq. km (32,447 sq. km land, and 28,250 sq. km of sea) that were determined in late 2007.

A very reliable source in the Ministry of Industry and Development in Athens stated for that this new organization “will be formed as a public company, with the state having 100% of the shares initially,” adding that “the most likely date for its establishment is in the coming months.”

It is interesting to mention here the 2008 findings of Greek professor Antonis Foskolos, and an associate in the Canadian geological service that believes in prior forecasts of his- namely, that “the region has the potential for up to 2 billion barrels of oil.” The region discussed is not related to the seabed and EEZ confrontation between Greece & Turkey, an issue of importance for the Aegean Sea.

The former Minister of Industry in Greece, Mr. Evangelos Kouloumbis has believed and publicly stated ever since the 1990’s the Greece has significant opportunities in this respect. He recently stated for the newspaper Ethnos that Greece can cover “50% its needs with the oil to be found in offshore fields in the Aegean Sea, and the only obstacle to that is the Turkish opposition for an eventual Greek exploitation.”

Turkish opposition is mainly related to the chronic failure to reach an agreement regarding the sovereignty of the seabed between the two countries. As Professor Theodoros Kariotis of Maryland University has explained, “Greece has a lot to gain regarding the oil fields if it signs a deal with Turkey based on a double agreement that will divide both the seabed and the EEZ.”

On the other hand, the ex-minister for energy and an expert on the oil and gas business, Mr Andreas Andrianopoulos, recently made remarks on the issue. At a public conference in Athens in November 2010, he stated that “the majority of arguments relating to mass amounts of oil in the Greek territory are based on the so-called ‘assumed fields,’ which means that any research and exploration projects may well prove that the amounts discovered are much less than initially estimated, thus bringing no real return on investment- [making them] not financially viable in essence.”

The overall debate within the country has been heated over the previous months. Strong support for future exploitation was made on well-known Greek television journalist Kostas Hardavellas’ TV show on Alter Channel. The program brought together eminent experts, geologists and energy analysts, who provided ample data for the existence of significant amounts, not only of oil but also of natural gas, worth potentially hundreds of billions of euros.

Certainly, in the financially dire straits that the Greek economy finds itself nowadays, the energy sector in the country, and specifically hydrocarbons research, may well provide an exciting source of investment activity, since it may provide a great boost for the troubled Greek economy.

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