The Hellenic Institute of Hydrocarbons (HELLINY – www.elliny.gr), following the recent developments concerning the exploration and production (E&P) of hydrocarbons (HC) in Greece, namely: (a) the call for tenders for hydrocarbons exploration and development in three areas in Western Greece and (b) the non-exclusive seismic of a total length 12431 kms, that were shot over a 200000 km2 area off Ionian Sea and to the South of Crete, considers as its duty to intervene and express its opinion to the responsible Ministry, the Government and the Greek Public.
Ministers, officials and several others continue and make frequent announcements, aiming to play a leading role in E&P of HC in Greece, with the same wrong tactics.
Our country and our people are in the last five years feeling a huge economic crisis and we should turn this situation round the quickest possible. Consequently, the Hydrocarbons exploration must be driven in the right direction.
The Government as a whole and the Prime Minister have the duty to intervene and set the right procedures.
In particular we note:
- 1. Call for tenders for the blocks of Ioannina, Katakolon and the Western part of Patras Gulf.
With regard to the negotiations, it is widely known that the three (3) concession areas (Epirus, Katakolon and Patraicos Gulf) are already ‘scientifically’ known, with abundant geological, geophysical and drilling data. The participating Companies are aware of this. So the main goal is to accelerate the drilling program in order to determine the petroleum potential of the areas.
We hope that whatever is stated above will not be an excuse and will not create additional delays in the exploration and exploitation of mineral resources of the country in other promising areas such as that of SE Crete, the Aegean and the SE Mediterranean.
Ministry of Energy and Environment, without having the right staff and with great delays, has proceeded to this call for tenders for three areas in Western Greece which has resulted in the submission of 9 offers, where the following 11 Petroleum companies have taken part:
1. Hellenic Petroleum S.A (HELPE) has a small E&P Department, but its main activities are concemtrated in refining and marketing of oil(2 offers).
2. Melrose Resources Plc (taken over by Petroceltic in 2012) has licenses in France, Romania, Bulgaria, Turkey and Egypt while its daily production of oil (net oil production) in 2012 was 28, 000 boe / day (HELPE partner).
3. Energean Oil & Gas represents a Greek investment fund, with a proven interest in expanding its activities in Greece in the field of E&P and is the sole producer of oil in Greece (offers for all 3 areas).
4. Schlumberger is one of the largest companies -world wide- in oil field services (Energean’s technical partner).
5. Edison International SPA, had an operating income of € 1, 003 million of which € 887 million came from Edipower (electricity-generating company) as presented in their 2011 balance sheet (HELPE partner).
6. Petra Petroleum is a Canadian company, mid-cap listed on the Toronto Stock Exchange with focus primarily on exploration in Mediterranean and North Africa (Cyprus, Lebanon, Spain, Greece, Egypt) countries and has also participated in the second concessions round of Cyprus Republic (Energean partner).
7. Arctic Hunter Energy Inc. is based in Vancouver, Canada, listed on the Stock Exchange, with main geographical orientation being North America. This is a very small company with a market capitalization (market cap) of 1, 9 million dollars.
8. K.O Enterprise Inc.
9. Chariot Oil & Gas Ltd is owned by Adonis Pouroulis, of Cyprus origin, known for his involvement with diamonds in South Africa.
It is oriented to the African Continent and today holds four licenses (eight concession areas) and is operator in Namibia.
10. Trojan Oil & Gas was established in 2010, is related to Mike Seymour a Geologist and Entrepreneur who has been involved in the past with other schemes in the Balkans.
11. Grekoil Energy Ventures Ltd, interested in the Katakolon area.
Our opinion is that the companies participating in the Greek bid round are medium to small or minimal in size. This bids procedure did not have the expected turnout of big companies and this is due -inter alia- to the following reasons:
• There was a lack of a strategic plan for concessions in Western Greece and lack of an international markets research.
• Larger concession areas should have been created to attract more participants and bigger oil companies.
• There was no preliminary lobbying and public relations promotion in order to prepare the ground for the concessions round. In contrast to this, superficiality and poor knowledge of the procedures is noticed, while an unprecedented communications campaign has been internally launched, not to mention the lack of qualified personnel.
The Ministry and its personnel have very limited experience to complete their task.
From the other side, although there are so many experienced ‘geo’ scientists in Greece and abroad, who are already aware of the actual work and the related procedures, they have not been utilized.
This matter is very serious and will soon become of utmost importance, when we will enter the stage of final negotiations, contracts finalization, and the technical, economic and legal monitoring and follow up of operations.
The experience of Prinos and AGIP concessions in Greece can be very useful to all the people engaged in these procedures.
In the three concession areas we had following offers:
- 1. Ioannina area:
- Joint Venture (JV) of Energean-Petra-Schlumberger
- JV of HELPE-Petroceltic(Melrose)-Edison
- Arctic-Hunter-KO Enterprises
Ministry has proceeded to a ‘second’ round by discarding offers of HELPE and Arctic as incomplete offers
- 2. Patraikos Gulf
- JV of HELPE-Petroceltic(Melrose)-Edison
- (JV) of Energean-Trojan-Schlumberger
Ministry has proceeded to a ‘second’ round by discarding Chariot’s offer as an incomplete one
3. Katakolon area
- Greek Oil Energy Ventures
- (JV) of Energean-Trojan-Schlumberger
A final decision on who will be the successful bidder for each of the three areas will be announced at the end of June, 2013.
2. Non exclusive seismics
Tenders procedure finished in March 2012 and the evaluation committee was composed again by almost entirely the same people as in other committees with limited field experience, let alone with experience in this kind of procedures.
Shooting by PGS of 12431 2D kms in the 200000 km2 offshore area covering Ionian Sea and South of Crete lasted from November 2012 to February 2013 and processing will finish by fall 2013. PGS can market exclusively these data for a year and then Ministry depending on the findings will launch a new concession round in this area.
3. Exclusive Economic Zone – EEZ
The Hellenic Institute of Hydrocarbons, has fully supported the EEZ declaration procedures and later on, after negotiations, the delimitation of the EEZ in our country.
Not only for the important National implications involved, but also because it is an essential tool in the design and proclamation of concession areas, that will lead to the discovery and exploitation of hydrocarbon deposits. It goes, without saying that everything should proceed cautiously, with solid steps under an agreed National plan and based on international treaties and the terms of UNCLOS 82.
Greece is a State with a lot of islands and the final delimitation of the EEZ will give us a strategic competitive advantage, which by all means should be supported and applied under a difficult but favorable to our interests’ international situation, especially in the hydrocarbons sector, because it will provide a stable legal environment, which is essential for attracting investment.
Greece needs to get into the energy scene in the region to strengthen its geopolitical and strategic role.
It should however be borne in mind that the Greek EEZ is also the European EEZ. The probable discoveries within the EEZ of Greece will not only be a fortune for Greece but for Europe, as well and may be critical- depending on the size of discoveries- in changing the EU Energy outlook. For this reason the attention of entire Europe is needed, which is looking for the diversification of energy sources and related incoming pipelines strategy, in order to modify its Energy policy for the coming decades.
4. E&P activities in North Aegean
Prinos and a couple of smaller fields in North Aegean have been in production since 1981.
This year, Energean Oil Company, owner of the concession, has agreed a 25 years extension of the concession that is essential for their long term exploitation plans of new fields. It is remarkable to notice here, that despite current bleak economic situation in Greece, a US fund (Third Point) has decided to invest 60 mil.$ in Energean’s Greek upstream activities.
The question remains. Why no one has taken advantage of the experienced Greek upstream scientists who have large field background and have negotiated and undertaken supervision of oil field operations with great success.
The Hellenic Institute of Hydrocarbons (HELLINY) is present and monitors these tender/ evaluation procedures that can hide many surprises. Statements lately by the team leader, Mrs Stamataki that reserves are limited, have confused the future investors.
Our opinion is that the Prime Minister Mr. Antonis Samaras, has set it right that Greece is really a prospective area as far as its hydrocarbons potential is concerned, a fact that is confirmed by the available geological and geophysical data.
In any case HELLINY in its role to contribute to this National effort, will be watching all related developments and execution of these procedures closely, and express publicly its opinion to the Greek Public.
Upstream Industry in Greece and related Ministry’s activities could flourish with following actions:
- Creation of a team of experienced geoscientists/ engineers/Lawyers/ Economists.
- Cooperation with an International renowned Consultant, if needed.
- Reevaluation of existing exploration data.
- Following this step define oil prone areas and –possibly- additional exploration targets.
- Negotiations with possible investors (big names as well as mid-sized).
- Possible improvements of the concessions Law.
- Declaration and Delimitation of EEZ.
- Apply strict Environmental regulations.
- Define exploration blocks, set size.
- Communicate with local communities.
- Start tender procedure with existing legislation.
- Negotiate, finalize Contracts and follow up Contractor’s operations with experienced staff.
- Make arrangements so that Greek Public will not participate in the costs.