Energean wants partnership with ELPE for western Greece

Energy minister Panos Skourletis wants the prospect of Energean Oil & Gas and ELPE (Hellenic Petroleum) establishing a partnership for joint work at an onshore hydrocarbon block in the Arta-Preveza area to be explored. The minister also disclosed that the two firms have submitted bids of equal worth to a tender for the project.

The two Greek companies held a first meeting on Monday to discuss the possibility of establishing a partnership for the Arta-Preveza deposit, Energean chief executive Mathios Rigas revealed yesterday.

The company head stated it makes business sense for the two companies to collaborate, noting that it would also be a good idea for Energean and ELPE to project the Greek market’s potential abroad.

However, certain issues separating the two companies must first be resolved before a partnership may be established, Rigas noted. He made reference to pending legal issues concerning seismic surveys conducted by Energean in the Kavala area, northern Greece, as an example.

Greece’s exploration and exploitation tender offering onshore blocks in western Greece is the least of Energean’s concerns at present. The dramatic plunge of crude oil prices, which has hammered the global oil industry, is the key concern for Energean, the country’s only oil producer. Besides the Arta-Preveza bid, Energean is the sole bidder for a license in Etoloakarnania.

During the festive season, the company plans to begin pumping from a local drilling effort expected to add 800 barrels to its current production of 2,000 barrels per day. Energean estimates that if 80 percent of its investment for this effort, valued at 200 million dollars, is completed, it will be in a position to counter lower crude prices as the company’s production level may reach levels of between 4,000 to 5,000 barrels per day. If so, Energean will be able to cover operating costs even if crude prices fall to levels below 30 dollars per barrel.

The fallen crude prices pose major problems for development of new blocks, such as Energean’s Katakolo license in western Peloponnese, for which the company is set to launch a sustainability study. This deposit is estimated to contain between three million and five million barrels of crude. It is believed that crude price levels of 35 dollars per barrel do not make this project feasible as required costs cannot be covered.

The Katakolo deposit is significant as it may develop into the first oil production point in Greece’s west and offer valuable information that may be utilized in the wider region.

As for Energean’s international business activities, the company is intensifying effforts to emerge as a key regional player in the Mediterranean, with a focus on the Israeli market.

Rigas, Energean’s boss, has revealed that the company will bid for blocks that must be sold by Israel’s Delek and US company Noble Energy, after Israel’s competition committee ruled that the two companies have established a monopoly. Energean has already been certified by Israeli authorities for blocks acquired at the Sara & Mira fields.

As a first step, Delek will surrender its Tanin & Karish fields, while the sale of its large-sized Tamar block is expected to also be sold within the next few years.

Energean is expected to seek a partner in its bid to secure these blocks as considerable capital amounts will be needed. Investment requirements at the Tamar block, alone, are estimated at one billion dollars, according to Noble Energy.

Besides its maneuvering for a share of the Israeli market, Energean is also seeking to penetrate the Adriatic region. It is participating in a tender staged by Montenegro, delayed as a result of the withdrawal of the US firm Marathon. In addition, Energean plans to conduct two drilling projects at its West Kom Ombo license in Egypt next year.