Pressured by the ongoing plunge in international crude prices, Energean Oil & Gas, Greece’s sole oil producer, has rescheduled its oil exploration agenda and will start drilling sooner than planned at deposit “E”, a spot the company considers as possessing the greatest level of potential of various blocks it intends to explore in the wider Kavala region, northern Greece.
Drilling at deposit “E” was originally planned for the second half of 2016, following exploration in the northern Prinos area, but has now been prioritized for the beginning of next year.
With oil currently trading at around 50 dollars, Energean has decided that it needs to increase production levels as soon as possible if its investment in the wider Kavala region is to remain economically feasible.
The company’s rescheduled drilling plan will bring forward fifteen drilling projects planned for the 2015-2016 period. Beginning with a focus on deposit “E” is regarded by the company as the only means of swiftly reaching its production objective of 5,000 barrels per day, from 2,000 barrels at present.
Proven reserves at Energean’s deposit “E” stand at 15 million barrels, compared to 12 million barrels at its Prinos deposit, and three million barrels at the northern Prinos spot.
Energean’s original plan, set last July when crude was trading at about 100 dollars a barrel, entailed beginning with seven drilling efforts at Prinos in March, followed by one drilling project at northern Prinos in 2016, and, finally, seven further drills at deposit “E” in the second half of 2016.
Increasing daily production to 5,000 barrels will make feasible Energean’s investment in the area even if crude drops further to thirty dollars a barrel, the company has estimated. Despite the wider changes being prompted by the dramatic plunge in oil prices, Energean will stand firm on its objective of pumping thirty million barrels of oil over 2015 and 2016.
Just weeks ago, it was confirmed that Energean Oil & Gas acquired a 20 percent equity share held by Canadian company Petra Petroleum in a consortium formed for onshore oil exploration in the Ioannina region, northwestern Greece. The decision by the Canadian company to withdraw its investment activity from Greece and focus its efforts on southeastern Asia provides Energean with total ownership of the consortium.
Energean company officials stressed that the position to be maintained by US fund Third Point – it acquired a stake in Energean in 2013 for 60 million dollars to be used to finance new drilling ventures – as a result of the intensifying political uncertainty in Greece will not be affected as Energean is targeting foreign markets. In January, 2014, Energean signed a six-year agreement worth 500 million dollars with BP to supply oil to the multinational. In this particular case, Energean is more concerned about the plunge in oil prices than Greece’s political climate.