Kavala UGS binding offers in July, pricing rules unchanged

RAE, the Regulatory Authority for Energy, has left unchanged, following consultation, a pricing framework for a prospective underground natural gas storage facility (UGS) at the almost depleted natural gas field of “South Kavala” in the Aegean Sea’s north, a step enabling the project’s binding-bids stage to go ahead, energypress sources have informed.

According to the tender’s latest schedule, included in a European Commission report published yesterday, binding bids will be submitted towards the end of July, while, in the lead-up, the two bidding teams, a consortium comprising gas grid operator DESFA and GEK TERNA, and rival bidder Energean, will be updated on the license’s details.

The tender is expected to be completed towards the end of October.

According to the project’s pricing framework, 50 percent of the UGS facility’s development cost, budgeted at 314 million euros, will be guaranteed through regulated earnings.

The project’s operator will need to retrieve the remainder either from the Greek State, on the grounds of strategic reserve maintenance, or from other users of the facility.

 

Energean Israel signs new Gas Sales and Purchase Agreement

London, 3 May 2022 – Energean plc (LSE: ENOG, TASE: אנאג) is pleased to announce that Energean Israel has signed a new Gas Sales and Purchase Agreement (“GSPA“) for up to 0.8 bcm/yr.

Mathios Rigas, Chief Executive of Energean, commented:

“We are delighted to have signed a new GSPA of up to 0.8 bcm/yr for our flagship assets in Israel, delivering on one of our key milestones for 2022. This is the third in a row for us from the Israel Electric Corporation (“IEC“) power plant privatisation programme and I want to thank Edeltech and Shikun & Binui Energy for their continued trust and confidence. I’m pleased to also confirm that the Energean Power FPSO has sailed-away and we look forward to delivering first gas from Karish, which remains on track for Q3 this year.”

East Hagit Power Plant Limited Partnership commented:

“This is another important step in the completion of the East Hagit acquisition, and a further stage of the joint process by Edeltech and Shikun & Binui Energy to increase competition and efficiency of the electricity market, for the benefit of Israeli consumers.”

New GSPA signed with the East Hagit Power Plant Limited Partnership

Energean has signed a new GSPA, representing up to 0.8 Bcm/yr, to supply gas to the East Hagit Power Plant Limited Partnership (“EH Partnership“), a partnership between the Edeltech Group and Shikun & Binui Energy. EH Partnership was the winning bidder in the IEC East Hagit tender process, the third IEC power plant in the current series of four to be privatised. Energean is also a supplier of gas to Ramat Hovav and Alon Tavor, the first two power stations privatised in the series.

The GSPA is for a term of approximately 15 years, for a total contract quantity of up to 12 bcm.  The contract contains provisions regarding floor pricing, offtake exclusivity and a price indexation mechanism (not Brent price linked). The GSPA has been signed at levels that are in line with the other large, long-term contracts within Energean’s portfolio. The agreement has the potential to generate revenues of up to $2 billion over the offtake period and is subject only to buyers’ completion of the privatisation process, including lenders’ consent.

Combined with the spot sales agreement signed in March 2022 with IEC, the agreements have enhanced Energean’s gas sales portfolio towards filling the 8 bcm/yr of capacity on the Energean Power FPSO.

Operational update – Karish Project

The Energean Power FPSO has sailed-away from Singapore and Energean remains on track to deliver first gas from Karish in Q3 2022.

 

 

Sanctions on Russia boost Greece’s upstream prospects

The EU’s revised natural gas strategy, seeking alternative solutions as a result of sanctions imposed on Russia, has created favorable conditions for Greece’s upstream sector as the Greek market could become a destination for upstream companies operating in Russia and now needing to shift.

EDEY, the Greek Hydrocarbon Management Company, has forwarded letters to upstream companies already maintaining interests in Greece, informing them of the government’s intentions for a renewed, more ambitious hydrocarbon strategy.

EDEY also intends to hold meetings with these upstream companies to determine their levels of interest in the Greek market and shape its actions accordingly.

Total and ExxonMobil maintain hydrocarbon interests in Greece as co-members of a consortium holding two offshore licenses, west and southwest Crete. The two companies each have 40 percent stakes in this consortium, Greece’s ELPE holding the other 20 percent.

The consortium, it is believed, aims to conduct seismic surveys next winter at the offshore Crete licenses, still at early exploratory stages.

Besides these two licenses, a further four licenses have been granted in Greece. Energean maintains an onshore block in the Ioannina area, northwestern Greece. The company also holds a 75 percent stake at Block 2, northwest of Corfu, with ELPE as its partner. Also, ELPE holds two offshore licenses in the west, Block 10 and Ionio.

These six licenses could generate total turnover of 250 billion euros by 2030, assuming a 20 percent success rate during exploration, according to a conservative forecast made by EDEY.

Drilling for natural gas to begin with licenses in country’s west

Exploratory drilling for natural gas deposits at a total of six licenses in Greece will begin in the country’s west with two Greek companies, Hellenic Petroleum (ELPE) and Energean, leading the way, according to the outcome of talks yesterday at the headquarters of EDEY, Greek Hydrocarbon Management Company, which were headed by Prime Minister Kyriakos Mitsotakis.

Drilling is expected to begin in mid-2023 at Energean’s onshore Ioannina block; followed, a year later, by drilling at Block 2, an offshore license northwest of Corfu that is held by Energean (75%) and ELPE (25%), following Total’s withdrawal; as well as Block 10 and Ionio, two offshore licenses held by ELPE.

Two further licenses, west and southwest of Crete, both held by a consortium that has brought together TotalEnergies (40%), ExxonMobil (40%) and ELPE (20%), are regarded as the most promising of all six licenses but, at the same time, are the least developed in terms or preliminary exploratory work. The consortium aims to conduct, next winter, seismic surveys covering 6,500 square kilometers.

Energean has already conducted a seismic survey at its Ioannina block, the most developed of all six licenses in Greece, and has set a drilling target.

Greece, Cyprus, Israel look to push ahead with key projects

The prospective East Med gas pipeline and a subsea electricity grid interconnection, projects that would link Israel with Cyprus and Greece and which are being heavily promoted as a result of the EU’s new energy policy, aiming to end the continent’s reliance on Russian gas as soon as possible, are expected to dominate the agenda of today’s trilateral meeting in Jerusalem between the energy ministers of Greece, Cyprus and Israel.

Energy company representatives will, for the first time, also be participating in a trilateral meeting of energy ministers involving the three countries, highlighting the determination of all three countries, and the EU, for swift progress on projects and agreements that would contribute to greater energy diversification for Europe.

Greek energy minister Kostas Skrekas will be accompanied by Kostas Xifaras, chief executive of gas company DEPA Commercial; Mathios Rigas, CEO of upstream company Energean; and Manos Manousakis, CEO of Greek power grid operator IPTO.

Representatives of corresponding Cypriot and Israeli companies will also be taking part in today’s trilateral meeting.

Prospects for the development of the EuroAsia electricity grid link promising to connect the three countries have grown considerably as Israel appears to have swept aside previous reservations. Israel has wanted the completion of the Crete-Cyprus link as a prerequisite ahead of further development.

 

 

Energean set for Israeli license drills, anticipating 110 bcm, exports to EU

Energean is preparing to conduct drilling operations at five Israeli EEZ offshore licenses secured by the company through a tender in 2017 and anticipates natural gas deposits of 110 billion cubic meters to serve exports to the EU, now looking for ways to end its reliance on Russian natural gas.

According to sources, Energean plans to begin its drilling effort within the next few days, at Block 12, before following up with drilling at Block 21 and Block 23.

Energean is also planning a follow-up confirmation drill at Karish and development at Karish North.

Energean plans to export, beyond Israel, natural gas extracted from all but one of the five aforementioned licenses, Karish.

Energean has already signed an agreement with Egypt’s EGAS for gas to reach the country via pipeline and, from there, via two terminals, be made available for export, including to Europe.

 

RAE to propose 50% consumer coverage of Kavala UGS cost

RAE, the Regulatory Authority for Energy, will propose that consumer surcharges cover 50 percent of the total development cost of a prospective underground natural gas storage facility (UGS) at the almost depleted natural gas field of “South Kavala” in the Aegean Sea’s north, sources have informed.

The authority is expected to include the UGS project on the agenda of its board meeting tomorrow and may forward, for consultation, its pricing policy and project funding proposal on Friday.

According to the same sources, the RAE plan includes a 35 percent cost-coverage proposal for the UGS project through EU funds or other support mechanisms – the Kavala project is on the EU’s PCI list, enabling EU funding – and 15 percent coverage by the investor.

The energy ministry appears to agree with RAE’s proposal for consumers to cover 50 percent of the UGS project’s cost through surcharges.

The need for strategic gas reserves has been further highlighted by the current energy crisis.

A pending regulatory framework from RAE is expected to soon be finalized, which would enable privatization fund TAIPED to move ahead with its next steps in the UGS’s tender. The procedure has remained stagnant for months.

The tender’s two final-round qualifiers, GEK TERNA – DESFA (Greek gas grid operator) and Energean, still need to submit binding offers. Should no other obstacles arise, the two qualifiers are likely to have submitted their binding offers within the next three months.

Five hydrogen projects seeking inclusion on IPCEI list

Authorities at the energy and development ministries are working on approval procedures for five hydrogen-related projects involving as many companies – Damco (Copelouzos group), Snam, Energean, TAP and gas grid operator DESFA – all seeking their inclusion on the EU’s list of Important Projects of Common European Interest (IPCEI).

Damco is interested in developing a low-carbon blue hydrogen production facility in Greece’s north. The project is planned to use natural gas for the production of hydrogen, while also capturing carbon emissions.

A Damco partnership with Italy’s Snam, involved in a number of hydrogen projects, is looking to develop three hydrogen producing facilities, in Athens, Thessaloniki and Alexandroupoli, as well as hydrogen reloading railway stations.

Energean plans to develop a blue hydrogen plant of virtually zero emissions at Prinos, using natural gas and combining carbon capture and storage technology. Energean has already being given recovery fund approval and funding for this project.

DESFA, the gas grid operator, wants to develop hydrogen transmission projects.

TAP is interested in developing projects linked to the major White Dragon project – involving the country’s biggest energy groups with gas company DEPA Commercial as head coordinator, for a hydrogen producing facility in northern Greece’s lignite-dependent west Macedonia region – with the intention of transporting and exporting hydrogen to European markets through interconnections.

Once the five hydrogen projects are approved domestically, their investors will need to prove the maturity of the projects, technically and financially, in accordance with IPCEI criteria.

 

RAE close to decision on Kavala UGS pricing regulations

RAE, the Regulatory Authority for Energy, is preparing to decide on business pricing regulations for a prospective underground natural gas storage facility (UGS) at the almost depleted natural gas field of “South Kavala” in the Aegean Sea’s north, a step that would pave the way for the second round of binding offers in an ongoing privatization offering contracts for the development and operation of the facility.

The facility’s pricing regulations are scheduled to be discussed at a RAE board meeting this Thursday, sources informed.

The authority may opt to not take a final decision on the pricing regulations during this session and instead announce a preceding public consultation procedure of brief duration, between one and two weeks, to take into account the resulting feedback and then decide on the pricing regulation details, the sources added.

A gas grid operator DESFA and GEK TERNA partnership, as well as Energean Oil & Gas have advanced to the second round of the project’s tender staged by privatization fund TAIPED.

According to a previous RAE decision, 50 percent of the project’s cost will be passed on to gas network users. As for the other 50 percent, 35 percent is expected to be covered through EU funding, assuming the project is included on the EU’s Projects of Common Interest (PCI) list, while the remaining 15 percent will be taken on by the eventual investor.

BSTDB loan to accelerate country’s hydrocarbons sector development

Financing to support implementation of ongoing development of Energean’s Epsilon field in Prinos

The Black Sea Trade and Development Bank (BSTDB) is providing a loan of up to EUR 90.5 million to Energean Oil and Gas S.A. (Energean), the only Greek oil and gas producer. The proceeds will fund Energean’s investment plans – in particular the development of the Epsilon and Prinos fields – and will also support its working capital needs and the finalization of structural expenditures in the Prinos infrastructure complex.

The project will create jobs for suppliers of goods and services in the drilling and construction industries, as well as maintaining livelihoods in key Greek businesses amidst the on-going Covid-19 pandemic.

“Following the successful start of our cooperation in 2018, BSTDB’s continued support to Energean underlines our commitment to help Greece harness its indigenous natural resources for long-term economic growth, contribute to increased fiscal revenues and develop exports in the region. It will have an important development finance impact at a vital time when businesses try to recover from the global pandemic. Furthermore, while we are all committed to promoting renewable energy generation and cleaner energy sources, an essential element of this process is to ensure that the transition goes smoothly, and without disruptions that may undermine the shift to climate finance. Judicious use of fossil fuels, according to high standards of efficiency and pollution mitigation, remains a key part of ensuring the shift to greener energy generation,” said Dmitry Pankin, BSTDB President.

“Our new collaboration with BSTDB is crucial for the development of the Epsilon Oil Field that will extend the life of Greece’s sole hydrocarbon producing asset for several years. It also demonstrates the confidence the banking sector has to well structured and realistic development plans. Our goal is not only to further develop the hydrocarbon resources in the Gulf of Kavala, but also convert Prinos into a carbon neutral industrial complex that will be a landmark in the Mediterranean”, said Dr. Katerina Sardi, Energean Oil & Gas Managing Director and Country Manager in Greece.

Energean expects first oil from the Epsilon development in 1H 2023.

Energean Oil & Gas S.A. is a 100% subsidiary of Energean Plc, (LSE:ENOG TASE:אנאג), a London Premium Listed FTSE 250 listed E&P company with operations in eight countries across the Mediterranean and UK North Sea. Energean’s production comes mainly from the Abu Qir field in Egypt and fields in Southern Europe. The company’s flagship project is the 3.5 Tcf Karish, Karish North and Tanin development, offshore Israel, where it intends to use the newbuild fully-owned FPSO Energean Power, which will be the only FPSO in the Eastern Mediterranean, to produce first gas, commencing mid-2022. More info on: www.energean.com

The Black Sea Trade and Development Bank (BSTDB) is an international financial institution established by Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey, and Ukraine. The BSTDB headquarters are in Thessaloniki, Greece. BSTDB supports economic development and regional cooperation by providing loans, credit lines, equity and guarantees for projects and trade financing in the public and private sectors in its member countries. The authorized capital of the Bank is EUR 3.45 billion. BSTDB is rated long-term “A” by Standard and Poor’s,  “A2” by Moody’s and “A+” by the Russian credit rating agency ACRA. For information on BSTDB, visit www.bstdb.org.

Energean to ramp up natural gas production in Egypt

Energean’s plans to develop and increase natural gas production from its concession areas in Egypt, have been discussed during a meeting in Cairo between H.E. the Minister of Petroleum and Mineral Resources of Egypt Tarek El Molla and Energean CEO Mathios Rigas.

During the meeting, Mr. El. Molla and Mr. Rigas discussed the company’s plan to link gas discoveries in North Idku and North El Amriya to the existing production facilities in Abu Qir, offshore Alexandria.

Mr. El Molla stressed the importance of the continuous cooperation and coordination between the ministry and international companies to speed up the implementation of new projects, aimed at increasing Egypt’s oil reserves and production.

“Energean is one of the foreign partners who invested in Egypt in the recent years after its acquisition of Edison’s assets worldwide”, the Minister of Petroleum and Mining Resources said. He added that the company has great potential and seeks to pump new investments to maximize the exploitation of gas resources from the Mediterranean region, which is a major center of its operations.

Mr. Rigas confirmed that Energean seeks to increase investments in natural gas development projects in the Mediterranean region. The company also focuses on implementing a plan for exploration and production activities in the deep layers using the latest technologies.

It should be noted that, in 9M 2021, Energean’s production from the Abu Qir fields averaged 4.3 million cubic metres and 4,000 barrels of oil (totaling app. 30,000 barrels of oil equivalent) per day. Production from the North Idku and North El Amriya fields is expected to commence in 2H 2022 and expected to average app. 2.2 million cubic metres and 2,000 barrels of oil (totaling app. 15,000 barrels of oil equivalent) per day.

 

ELPE, Energean withdraw from Gulf of Patras license

Hellenic Petroleum (ELPE) and Energean have decided to withdraw from their Gulf of Patras license in western Greece, the two companies have informed EDEY, the Greek Hydrocarbon Management Company.

The Gulf of Patras area’s hydrocarbon quantity, believed to measure at least 100 million barrels, will now remain unconfirmed, following this latest development.

In January, 2020, the consortium had applied for an 18-month extension to complete second-phase work at the Gulf of Patras license. At the time, the consortium had cited insufficient port facilities for entry of the project’s drilling facility and other equipment.

The consortium would have had to conduct a first round of drilling this winter or abandon the project. It opted for the latter.

The Gulf of Patras license was originally granted to ELPE through an open-door tender launched in 2012 and completed in 2014.

Italy’s Edison was also a partner but it withdrew and was replaced by Energean.

The project area covers 1,900 square kilometers. Its estimated hydrocarbon reserves, estimated at between 100 and 140 million barrels, had the potential to offer annual turnover of roughly 200 million euros.

 

Gas network upgrade cost in north crucial for UGS sustainability

The cost of reinforcing the gas network in northern Greece, a key component to the financial sustainability of a project entailing the development of an underground natural gas storage facility (UGS) at the almost depleted natural gas field of “South Kavala” in the Aegean Sea’s north, has been discussed at an energy ministry meeting involving officials of RAE, the Regulatory Authority of Energy, gas grid operator DESFA and the privatization fund TAIPED.

Officials are seeking full clarity on the level of investments needed for the gas network in northern Greece so that natural gas can be transported to and from the prospective UGS.

According to DESFA, the country’s gas grid operator, northern Greece’s gas network now requires an upgrade as the prospect of a UGS facility was completely unanticipated when the region’s grid was initially designed and developed.

DESFA-GEK TERNA and Energean Oil & Gas have advanced to the second round of a project tender staged by TAIPED.

Energean granted 30-month extension for Ioaninna field

EDEY, the Greek Hydrocarbon Management Company, has granted upstream company Energean a second extension, for two-and-half years, from April 3, to conduct exploration work at its onshore Ioaninna field in Greece’s northwest.

Energean had previously been given a six-month extension beyond April 3, which expired yesterday.

The upstream company, listed on the London and Tel Aviv bourses, requested further exploration time for its Ioaninna field as a result of bureaucratic delays linked to the withdrawal of former field project partner Repsol, which was the operator with a 60 percent stake, sources informed.

The extension highlights Energean’s determination to not abandon its licenses and keep exploring for possible hydrocarbon deposits, despite the unfavorable conditions and prospects for fossil fuels, company sources told energypress.

 

Halliburton also joins Energean for Israel drilling, beginning 1Q in ‘22

Two of the world’s biggest companies, in their respective fields, will participate in Energean’s new drilling program for Israel, scheduled to begin in the first quarter of 2022, an effort through which the company hopes to discover hydrocarbons the equivalent of one billion barrels of oil, primarily as natural gas.

American multinational Halliburton, one of the world’s biggest oil field service companies, has announced an agreement with Energean for three to five drilling procedures offshore Israel, following four drilling efforts completed in 2019 on behalf of Energean in the area, which led to the discovery of the Karish North gas field, set to begin production in 2023, one year after production at Karish, the main field.

Energean has already selected another major global player, Stena Drilling, for the supply of drilling equipment.

According to official announcements, confirmed drilling procedures to be completed in 2022 are: 1) Karish North, containing 33 billion cubic meters of natural gas and 31 billion barrels of certified liquid hydrocarbon (2P) stocks, with first gas production set for the second half of 2023; 2) Karish Main-04, to seek additional hydrocarbon quantities at the main Karish field, estimated at an equivalent of 166 million barrels of oil; 3) at Block 12, for an exploratory drill dubbed Athena, between the Karish and Tanin fields, aiming for 20 billion cubic meters of natural gas and a further 4 million barrels of liquid hydrocarbons.

 

Network users to cover 50% of South Kavala UGS project cost

RAE, the Regulatory Authority for Energy, has approved guidelines specifying how the development cost will be shared for an underground natural gas storage facility (UGS) at the almost depleted natural gas field of “South Kavala” in the Aegean Sea’s north, thereby settling one of the main regulatory issues that remained for an ongoing tender offering use, development and operation of the facility.

According to the RAE decision, 50 percent of the project’s cost will be passed on to gas network users. As for the other 50 percent, 35 percent is expected to be covered through EU funding, assuming the project is included on the EU’s Projects of Common Interest (PCI) list, while the remaining 15 percent will be taken on by the eventual investor.

In the event that the UGS is excluded from the EU’s PCI list, the Greek State will consider becoming a project partner so that the cost for gas network users is not increased.

DESFA-GEK TERNA and Energean Oil & Gas have advanced to the second round of a project tender staged by privatization fund TAIPED.

The almost depleted natural gas field, where the UGS will be developed, is located 18 km south of the main coastline of Kavala, roughly 6 km west of the island Thasos, at a sea depth of 52 meters.

Repsol transfer of Ioannina block stake to Energean done, 4 players left

Spain’s Repsol has completed its strategic withdrawal from the Greek hydrocarbon market with the finalization of a transfer of its 60 percent share in the onshore Ioannina block, northwestern Greece, to project partner Energean.

Energy minister Kostas Skrekas’ ministerial decision needed for the transfer’s finalization was published yesterday.

Repsol revealed its intention to withdraw from the Greek market early this year when the Spanish company and its partner for the Etoloakarnania block, Energean, both notified the Greek State and EDEY, the Greek Hydrocarbon Management Company, of their decision to return their Etoloakarnania block rights.

This was followed by the transfer of Repsol’s share in the Ioannina black to Energean in March, while, late in July, the Spanish company announced its decision to withdraw from an Ionian Sea block, its last remaining license in Greece.

Repsol’s new business plan will limit the company’s presence to just 14 of 34 markets in which it has maintained interests. Repsol has also set an objective to reduce its annual investments in the upstream sector from 2.4 billion euros in 2019 to 1.6 billion euros by 2025.

Besides Repsol, Hellenic Petroleum (ELPE) has also withdrawn from two onshore blocks, Arta-Preveza and Northwestern Peloponnese, made official on August 13.

Four investors remain active in Greece’s hydrocarbon exploration and production market, ELPE, Energean, France’s Total and the USA’s ExxonMobil, at a total of 11 licenses.

 

 

Repsol leaving last Greek concession, domestic upstream aspirations fading

Spain’s Repsol is believed to be in the process of abandoning its last remaining hydrocarbon concession in Greece, an Ionian Sea block, even though the company has yet to officially notify EDEY, the Greek Hydrocarbon Management Company.

It remains to be seen whether ELPE (Hellenic Petroleum), Repsol’s partner in the Ionian Sea block, will follow suit and return its share to EDEY. ELPE officials have not clarified the group’s position.

Repsol previously returned to the Greek State its stake in an Etoloakarnania concession along with project partner Energean, and also transferred its stake in an Ioannina block to the Greek upstream company.

Like all major oil groups, Repsol has suffered major financial setbacks as a result of the pandemic and drop in oil prices, serving as catalysts in the company’s decision to restrict its exposure to the upstream sector.

At the beginning of this year, Repsol announced a decision to exit 14 countries, including Greece, from a total of 28 in which the company has held interests.

Upstream players are looking to readjust following the impact of the pandemic and more ambitious climate-change targets, including by the EU.

These developments appear to be shelving Greece’s ambitions for hydrocarbon discoveries following initiatives launched 11 to 12 years ago.

Both ELPE and Energean have requested and received extensions from EDEY for a series of concessions held within Greek territory.

Energean’s Prinos field losses seen reaching €32m in 2021

Upstream company Energean’s Prinos field concession, south of Kavala in northern Greece, is projected to incur yet another increase in losses this year, in excess of 32 million euros, according to a 2021 budget submitted by the company to EDEY, the Greek Hydrocarbon Management Company.

These losses, which do not include debt payments for investments made in previous years, will add to accumulated losses of 200 million euros incurred by the company through its operations at Prinos, Greece’s only active hydrocarbon field.

Production at the Prinos field is expected to narrowly exceed a total of 500,000 barrels this year, according to the company budget’s projections.

The budget’s projections were based on the assumptions of an average Brent index oil price of 60 dollars per barrel, reduced revenues of between 7 and 8 dollars per barrel at the Prinos field as a result of the inferior quality of oil produced, as well as a euro-dollar exchange rate of 1.20.

Based on these figures, the Prinos field’s revenue for 2021 is projected to reach 22.3 million euros, with expenses reaching 54.3 million euros.

Despite the negative results amid an unfavorable climate, Energean plans to recommence investments at the Gulf of Kavala’s “Epsilon” field with an amount of 13 million euros, part of total investments worth 23 million euros.

Prinos is currently producing from 14 wells, two out of which are horizontal at the North Prinos and Epsilon Fields.

The horizontal drills at the Epsilon field are expected to begin producing 15 months after the recommencement of investments.

These investments will include the completion of a new platform at the Lamda deposit, to emerge as the first new platform in Greece since 1977. Prinos began producing 40 years ago.

 

 

Energean signs contract with Stena for drilling effort, offshore Israel

Energean plc has announced that its 100% subsidiary, Energean Israel Limited, has signed a contract with Stena Drilling Limited for its 2022 – 2023 growth drilling programme offshore Israel, which is expected to target the derisking of unrisked prospective recoverable resources of over 1 billion barrels of oil equivalent (“boe“).

The contract is for the drilling of three firm wells and two optional wells, with the first firm well expected to spud in 1Q 2022. The firm wells are all expected to be drilled during 2022, and consist of:

  • The Karish North development well, a key part of the Karish North development. The scope includes re-entry, sidetracking and completion of the previously drilled Karish North well and completion as a producer. The Karish North development will commercialise 33 Bcm (1.2 Tcf) of gas plus 31 mmbbls of liquids 2P reserves (a total of 243 mmboe) and is expected to deliver first gas in 2H 2023.
  • The Karish Main-04 appraisal well, which is expected to target further prospective volumes within the Karish Main Block, including the potential oil rim that was identified as part of the KM-03 development well drilling. Total unrisked recoverable volumes estimated to be targeted by the well are 166 mmboe.
  • The Athena exploration well, located in Block 12, is situated directly between the Karish and Tanin leases. Athena is estimated to contain unrisked recoverable prospective resource volumes of 20 Bcm (0.7 Tcf) of gas plus 4 mmbbls of liquids; of which the primary target is estimated to contain unrisked recoverable prospective resource volumes of 10 Bcm (0.4 Tcf) of gas plus 2 mmbbls of liquids 1 with a 70% geological chance of success. Success at Athena would be expected to significantly de-risk approximately 90 Bcm (2.5 Tcf) plus 19 mmbbls of remaining unrisked recoverable prospective resource volumes located within Block 12 and Tanin.

Two factors support the commercialisation of a Block 12 discovery. Firstly, Block 12 was a new licence award to Energean Israel Limited in 2018; produced volumes will therefore generate no royalty payments in respect of Energean Israel Limited’s original acquisition of the block. Secondly, the more proximate location of the potential development to the expected location of the Energean Power FPSO is also expected to reduce like-for-like development costs when compared with Tanin.

The drilling campaign will be undertaken using the Stena Icemax drillship, a state-of-the-art ice-class harsh environment dual-activity dynamically positioned drillship, capable of drilling in water depths of up to 10,000 ft.

Mathios Rigas, Chief Executive Officer of Energean, commented:

“We are delighted to be working with Stena again; and this five-well programme follows the three-well development drilling programme and 243 mmboe Karish North discovery, all successfully executed with Stena over 2019 and 2020.

Our five-well growth programme offshore Israel, commencing 1Q 2022, has the potential to double Energean plc’s reserve base with resource volumes that can be quickly, economically and safely monetized. Combined with first gas from our flagship Karish gas development project in mid-2022, the next 12-months are set to be truly transformational for Energean.”

 

Upstream projects awaiting Greek State reassurances

Local and foreign upstream companies holding exploration and production licenses for hydrocarbon reserves on Greek territory, offshore and onshore, are awaiting Greek State reassurances for their ventures following a cabinet reshuffle that has resulted in a change of leadership at the energy ministry, bringing in Kostas Skrekas in place of Costis Hatzidakis.

Oil companies, delaying investment plans as a result of the pandemic and lower oil prices, are waiting for a vote of confidence from the Greek State, market sources insist.

The fall in oil prices, currently at levels of about 50 dollar a barrel, may have halted upstream investments internationally, but, nevertheless, this is a good time for resolving bureaucratic obstacles and preparing local communities for prospective exploration efforts that promise to contribute to job creation and economic recovery.

Four upstream investment plans are currently either at an advanced stage in terms of prospective drilling or at preliminary exploration stages.

Of all four plans, Energean’s license for Katakolo, western Greece, is at the most mature stage. Public consultation on an environmental impact study concerning this project’s drilling requirements was completed in December, 2019. The regional authority for western Greece has offered its approval. Even so, a year later, the energy ministry has yet to deliver its decision on the environmental study.

A license for the Gulf of Patras field, held by Hellenic Petroleum (ELPE) and Edison, is also at a mature stage. The partners requested, and were granted, an extension for the start of drilling at this field. EDEY, the Greek Hydrocarbon Management Company, granted the pair a further 15 months, until January 23, 2023, to facilitate their preparations.

Sources have attributed this additional time to a lack of appropriate regional port facilities, needed to facilitate the installation of equipment required for drilling. ELPE and Edison had previously been given another extension, until October, 2021.

On another front, a partnership comprising Repsol and Energean has until April to start a second stage of exploration activities at its Ioannina block in northwestern Greece. Local community approval is needed. The government needs to take action on the issue.

A fourth upstream project carrying geopolitical weight concerns licenses held by a consortium made up of Total, ExxonMobil and ELPE for offshore fields west and southwest of Crete. Though company representatives recently informed Crete’s regional authorities that seismic surveys are planned to begin towards spring, there have been no further updates or any signs of action.

Energean: Completion of Acquisition of Edison E&P

Energean has completed its acquisition of Edison Exploration & Production S.p.A. (“Edison E&P“) from Edison S.p.A. (“Edison“), the company has announced in a statement. The gross consideration* for the transaction, as at the locked box date of 1 January 2019, is $284 million and the final net consideration (net of cash acquired) is $203 million.

Mathios Rigas, CEO of Energean, commented:

“Completion of our acquisition of Edison E&P marks a key milestone along our path to becoming the leading independent, gas-producer in the Mediterranean and significantly advances us towards our goal of delivering material free cash flows and shareholder returns in a sustainable way.”

Highlights:

  • The deal diversifies Energean into 9 countries of operation and provides a range of organic growth opportunities
  • Increases 2P reserves and 2C resources to in excess of 850 mmboe, app. 70% of which is gas
  • Provides a clear path to get us to production of 130,000 boepd once Karish is on stream and cements our position as the largest independent E&P listed in London
  • The integration plans are well-advanced and the process is progressing smoothly

 

Energean Power FPSO hull sails away from China

Energean Oil & Gas’ Enegean Power FPSO hull sailed away from the COSCO yard in China today and will now be towed to the Sembcorp Marine Admiralty Yard in Singapore, where the topsides will be integrated, before the completed FPSO is towed to the Karish field in Israel for installation and hook-up, the company has announced in a statement.

The sailaway of the hull from China represents the achievement of a key milestone in the Karish project timetable, the statement noted.

During the construction of the hull in China, more than 5 million man hours free of LTI’s have been completed. Including the construction of the topsides in Singapore and other relevant works, more than 10 million man hours free of LTI’s have been completed so far in the construction of the Energean Power FPSO.

Energean has also successfully completed the drilling of the three development wells in the Karish Main field and is confident that the three development wells can produce at combined rates of 800 mmscf/d, which is sufficient to fill the capacity of the FPSO (8 BCM per year), the company statement added.

On another important development, the Karish gas sales pipeline (30 & 24 inch) was shipped from Greece last week and offloaded successfully at Limassol Port, Cyprus.

The pipeline will be loaded from the Limassol port on PSVs and from them on the Karish Field pipe-laying vessel Solitaire.

The gas sales pipeline of approximately 90 km will transport gas from the Enegean Power FPSO to an onshore valve station at the Dor landfall in Israel.

First gas on the Karish project is on track for H1 2021.

Update on the Edison E&P acquisition

Also, Energean and Edison have entered into a formal amendment to the Sale and Pusrchase Agreement on 2 April 2020, in which:

  • the Algerian Assets shall be excluded from the scope of the acquisition of Edison E&P;
  • in recognition of the exclusion of the Algerian Assets, there will be an adjustment to the total consideration of the acquisition of approximately $150 million (as at the lock-box date of 1st January 2019).

Energean is working to complete the acquisition of Edison E&P as soon as is possible in 2020, subject to the approval of its shareholders and the other relevant governments, the company statement noted. Thereafter, completion of Energean’s agreement for the sale of Edison E&P’s UK and Norwegian subsidiaries to Neptune for a consideration of $250 Million plus contingent consideration of up to $30 million (as previously announced), will be completed as soon as is reasonably practicable, it added.