Ministry’s revision plan, a risk, catches oil majors by surprise

Major foreign oil companies showing an interest to invest in Greece’s hydrocarbon market have been caught off guard by an energy ministry intention for legal framework revisions, meaning legal adjustments investors will need to make may prompt delays, which is paradoxical to the ministry’s ultimate objective for swifter progress in this sector.

Top-level government officials had previously assured investors that prospective exploration and exploitation ventures would be based on the exisiting license system.

The ministry has declared that it wants to reduce the amount of time needed by authorities to issue exploration and exploitation licenses. However, its intention to switch from a lease agreement to production sharing agreement system for the sector will force investors to make legal revisions for protection.

These legal adjustments by prospective investors will require at least six months, while forthcoming tenders could be end up being delayed by about a year, pundits have informed.

All this comes at a time when procedures are already underway for the announcement of a tender concerning offshore blocks located northwest, west amd southwest of Crete.

In seeking to make revisions at such a crucial time, the ministry is taking a risk. The Greek hydrocarbon market was rocked by delays in 2014, when a major tender was staged. Investors showed limited interest as the tenders at the time ended up coinciding with a drastic drop in oil prices.

Wider developments in the Mediterranean, including the discovery of new hydrocarbon deposits, have provided the Greek market with a second opportunity.

It remains to be seen if major oil companies will remain interested in the Greek hydrocarbon market should legal framework revisions be carried out.