Disinterest may prompt new deadline for offshore blocks

A heightened campaign promoting an exploration and exploitation tender for twenty offshore blocks in Greece’s west and south of Crete, intensified by the country’s energy minister after its deadline was recently extended to July 14, does not seem to have prompted any increase in the level of investor interest, and now has officials considering a further deadline extension.

Besides major companies of the west, the campaign, led by Production Reconstruction, Environment and Energy Minister Panagiotis Lafazanis, was stretched out to also target oil firms in countries such as Russia, China, Japan, Brazil, and Venezuela.

According to energypress sources, no additional oil companies have purchased seismic data packages for the twenty offshore areas, to the disappointment of Norwegian company PGS, which had conducted the research work and now seems headed towards incurring a loss on the venture. Three early buyers, Exxon Mobil, Total, and Elpe (Hellenic Petroleum), had purchased the packages prior to the energy ministry’s lastest round of promotional work. Even so, market sources support that Exxon Mobil and Total are not preparing to submit offers.

Sector authorities have noted that even if oil companies were to purchase the seismic survey packages now, the July 14 deadline would now allow them sufficient time to analyze the data and prepare offers.

Whether a new deadline extension may help the effort remains to be seen. If it does decide to extend the deadline, the energy ministry will do so hoping for some sort of normalization in the Greek economy if a bailout agreement is reached with the country’s creditor representatives. Foreign investors have held back, in all sectors, amid the overall uncertainty, aggravated further by the prolonged bailout negotiations.

Although major oil companies have grown accustomed to working under precarious conditions in areas such as Iraq and the Middle East in general, even amid conflict zones, the major political and financial risk entailed is partially offset by an already established level of familiarity, as a result of the clearer hydrocarbon potential picture formed by many years of study.

Greece’s hydrocarbon prospects, on the other hand, remain largely unknown. The offshore areas offered are new to the hydrocarbon field and located amid deep waters, which, combined with the political and economic uncertainty factors, make Greece a high-risk market.

Lower international oil prices are no help either, not just for Greece, but all prospective exploration. This year alone, investment projects worth over 150 billlion dollars involving companies such as BP, Exxon Mobil, Total, Anadarko, Marathon Oil, and Shell are in danger of being scrapped. The projects under greatest risk are those located in deep seas and unexplored areas. Greece’s offshore blocks qualify for both. Greek officials are looking for major players backed by experience in such demanding conditions.