EDEY set to deliver opinion on Crete, Ionian hydrocarbon contracts

EDEY, the Greek Hydrocarbon Management Company, plans to forward, to the energy ministry, a study evaluating details of contracts for three hydrocarbon licenses in the Ionian Sea and off Crete between late April to early May, energypress sources have informed.

Early in March, two consortiums submitted bids for three blocks to international tenders. Total-ExxonMobil-ELPE (Hellenic Petroleum) submitted offers for two blocks west and southwest of Crete. Repsol-ELPE made an offer for the Ionian Sea block.

The EDEY study is focused on technical, legal and financial aspects of the contracts prepared. It is a mandatory step before the participants may be declared prefered bidders.

Once the green light is given, the Greek State will be able to commence licensing negotiations with the consortiums. The aim is to finalize procedures within the next few months, which will clear the way for investments and exploration work.

Both the Greek government and local hydrocarbon sector are placing great emphasis on this specific effort as the interest expressed by ExonMobil, Total and Repsol has raised hopes of potential hydrocarbon discoveries.

Greek State, Latsis group touching up ELPE deal with hydrocarbon issues

Hydrocarbon exploration and exploitation rights either already acquired by ELPE (Hellenic Petroleum) or being sought, for blocks off Crete and in the Ionian Sea, are the focus of final-stage negotiations between the Greek State, represented by the government, and the Latsis corporate group aiming for a deal that will enable the sale, by the privatization fund, of a 51 percent stake and management rights of the petroleum firm to prospective buyers through an international tender.

The Greek State currently holds a 35.5 percent stake of ELPE and Paneuropean Oil, a member of the Latsis corporate group, controls a 45.47 percent stake.

Once the two sides reach a deal, seen happening any day now, according to pundits, then a 51 percent stake of ELPE will be offered to a strategic investor.

The two sides are believed to focusing on matters concerning how they will share future profits for hydrocarbon exploration and exploitation agreements already signed by ELPE as well as blocks being targeted.

The issue is rather complicated as ELPE holds exclusive rights for certain blocks (Arta-Preveza, northwest Peloponnese) but is a member of various consortiums for all its other hydrocarbon interests.

ELPE and Italy’s Edison have established a 50-50 partnership for a Gulf of Patras block. It holds a 25 percent stake in Block 2 off Corfu. France’s Total holds a 50 percent stake in this venture and Edison controls the other 25 percent. ELPE also holds a 20 percent stake in a consortium that has submitted the only offers for two offshore blocks south and southwest of Crete. Total and Exxon Mobil each hold 40 percent stakes in these initiatives. Also, ELPE and Spain’s Repsol hold 50 percent stakes in an offer submitted for another Ionian Sea block.

Once the government and Latsis group have signed an agreement, TAIPED, the state privatization fund is expected to swiftly announce an international tender. Its terms are expected to shape the turnout of interested investors.

According to the revised bailout, the tender was supposed to have been announced by the end of March. It could be launched this month, barring unexpected developments.

ELPE’s share price has remained relatively steady at levels of between 7.8 and 8 euros over the past month or so despite its privatization prospects. Based on the share’s closing price yesterday, ELPE’s equity-based value is 2.39 billion euros, meaning a 51 percent stake may be estimated at 1.19 billion euros.

Extended period of higher oil prices would benefit local aspirations

It remains to be seen if the currently improved market conditions for the global petroleum industry, prompted by higher oil prices, will last long enough to benefit Greece’s hydrocarbon aspirations.

Greece is looking to push ahead with hydrocarbon exploration and exploitation agreements for fields southwest of Crete as well as in the Ionian Sea.

Earlier this week, British Petroleum announced that the increase in oil prices, combined with lower production costs, helped the petroleum giant increase its profit by 2.8 billion dollars in 2017, following a one-billion dollar drop in 2016. BP’s improved performace in 2017 represents the firm’s best performance, in the hydrocarbon exploration sector, since 2004.

Also highlighting the petroleum industry’s upbeat prospects, ExxonMobil recently announced that it expects a fivefold hydrocarbon production increase by 2025.

 

Data room for Ionian Sea, Crete offshore blocks now ready

EDEY, the Greek Hydrocarbon Management Company, has prepared a virtual data room set up to offer prospective bidders information on Cretan and Ionian Sea offshore blocks that will soon be offered through international tenders.

Prospective bidders will be permitted access to the data room, containing information on matters such as seismic, drilling and legal issues, as soon as the tender is published in the EU’s official journal, the OJ. Publication is expected soon.

Bidders, who will be charged a 1,000-euro data room entrance fee, will use the information provided to prepare bids for two international tenders offering licenses west and southwest of Crete as well as the Ionian Sea.

Besides a data room for Athens, equivalent rooms have been set up in London, Oslo, Kuala Lumpur and Houston.

Investors will have 90 days to submit their bids once the tenders are officially announced in the OJ. The appraisal period of offers is scheduled to last two months.

Licenses are then expected to be issued within a three-month period. Once approved by a special committee and Parliament, these licenses will offer investors 8-year terms for exploration and 25 years for production.

A consortium comprised of Total, ExxonMobil and ELPE has already declared an interest for blocks west and southwest of Crete. Energean Oil & Gas is interested in the Ionian Sea offerings.

 

 

Crete offshore blocks tender set for EU gazette publication

An international tender offering exploration and exploitation rights to offshore blocks southwest and west of Crete, as well as the Ionian, is expected to be published in the Official Journal of the European Union (OJ) within the next ten days, sources have informed.

The tender, announced on August 17, also needs to be published in the OJ, the EU’s official gazette of record, before the countdown for binding offers begins. Once published, interested parties will have 90 days to submit their offers to EDEY, the Greek Hydrocarbon Management Company.

Certain pundits have linked the anticipated speed-up of the tender’s publication to ExxonMobil’s Cretan interest and Greek Prime Minister Alexis Tsipras’s current official visit to the US for a meeting with President Donald Trump.

The interest expressed by ExxonMobil, joined by France’s Total and ELPE (Hellenic Petroleum) as consortium partners, prompted Greece’s energy ministry to proceed with the tender.

If no other investors emerge with offers, then the Greek State will move ahead and begin negotiations with this three-member consortium.

Italy’s ENI, which discovered Zor, the gigantic Egyptian gas field, is rumored to be interested in two Crete offshore blocks, one southwest, the other west of the island. The Italian firm has already established operations in Cyprus and is eyeing the wider southeast Mediterranean region.

‘ExxonMobil plans to invest €5bn for Crete exploration’

Global oil industry giant ExxonMobil has committed itself to investing 5 billion euros for hydrocarbon exploration and exploitation in the Greek market, Economy and Development Minister Dimitris Papadimitriou told investors at the 12th annual London roadshow of Athens-listed firms, as part of the government’s wider effort to present Greece as a market now beginning to attact major investments.

The minister made reference to a series of foreign investment plans for the Greek market, including that of ExxonMobil.

Sources have confirmed the ExxonMobil intention to set aside 5 billion euros for investments in the Greek market, developments permitting.

An international tender offering exploration and exploitation licenses for offshore blocks west and southwest of Crete is still in progress, meaning that the minister’s reference to ExxonMobil does not represent a finalized investment plan. Rivals, such as Chevron, for example, could suddenly emerge with a better offer, or the tender could sink.

ExxonMobil has joined forces with France’s Total and Greece’s Hellenic Petroleum (ELPE) for the Crete tender.

It should also be reminded that, besides Prinos, in the country’s north, no other location in Greece has yet to produce confirmed hydrocarbon deposits. All is still at a speculative stage.

By comparison to Papadimitriou’s hasty remarks concerning ExxonMobil’s investment plan for Greece, energy minister Giorgos Stathakis has remained far more reserved.

Bidders for the Crete hydrocarbon international tender, offering two offshore blocks, one south of the island, the other southwest, measuring nearly 40,000 square kilometers in total, face a December deadline.

Offers will need to be submitted to EDEY, the Greek Hydrocarbon Management Company. According to the tender’s terms, bids will be appraised within 60 days of the deadline and contracts signed within 60 days of the appraisal’s completion.

 

ExxonMobil looking to set up regional office base in Greece

Highlighting ExxonMobil’s growing interest in Greece’s hydrocarbon market, the global oil industry powerhouse is reportedly looking to set up an Athens office ahead of an international tender offering exploration and exploitation licenses for offshore blocks west and southwest of Crete, sources have informed.

This tender was prompted by investment interest expressed in the aforementioned areas by a consortium comprised of ExxonMobil, Total and ELPE (Hellenic Petroleum).

According to sources, ExxonMobil wants to provide an operating base for a team of company officials to work on the upcoming Crete tender as well as other possible investments in Greece and neighboring countries.

A highly-ranked ExxonMobil official traveled from Houston, Texas to attend an energy conference held just days ago in Alexandroupoli, northeast Greece. The US Ambassador to Greece, Geoffrey R. Pyatt, who also took part in the event, spoke favorably of the US firm’s interest in the Crete hydrocarbon tender.

ExxonMobil already maintains a strong presence in the wider east Mediterranean region. Last December, the US oil firm and Qatar Petroleum were declared the winning bidders of Cyprus’s Block 10, southwest of the island. A few days ago, this consortium announced that it plans to stage two drills in 2018.

ExxonMobil is believed to consider the east Mediterranean as one of the world’s most promising new hydrocarbon regions. The discovery of Zohr, a gigantic deposit in Egypt’s maritime zone, has proven to be a game changer for the hydrocarbon prospects of the wider region. The development is seen as a pivotal factor behind ExxonMobil’s decision to become involved in the Greek hydrocarbon market.

 

Tenders stir up interest amid survey purchase complaints

Licences to be offered by the Greek State for exploration and exploitation of offshore blocks in the Ionian Sea and off Crete now appear to be drawing wider attention following an initial interest displayed by investors that prompted authorities to organize three tenders.

However, prospective investors are believed to be discontent with a term requiring them to purchase existing seismic surveys. The terms of the upcoming tenders were recently published in the local gazette.

Initial interest expressed by a consortium comprised of ExxonMobil, Total and ELPE (Hellenic Petroleum) for two blocks off Crete, one southwest, the other west, led authorities to announce a tender, while Energean Oil & Gas got the ball rolling for a third tender offering an Ionian Sea block.

Though new firms now entering the picture have yet to be named, authorities have noted that these are mid-scale and large-scale enterprises which have eyed the Greek market in the past.

Shell, Japex, Dana Petroleum, INA and Hunt are believed to be among the oil companies maneuvering ahead of the tenders.

The sale procedures are expected to be launched towards the end of September, when published in the Official Journal of the European Union. Investors will then have 90 days to submit their offers. Greek authorities will push for the appraisal procedure of offers to have been completed by early 2018.

Prospective investors have expressed objections against a term requiring all participants to purchase existing seismic surveys concerning their respective areas of interest. PGS has conducted surveys covering 12,347 square kilometers of offshore Greek territory.

A number of sources told energypress that investors should have the right to conduct their own seismic surveys and then purchase the PGS data as additional information only if needed.

It is estimated that the cost of purchasing seismic surveys concerning the Ionian Sea block is roughly two million euros, while the price tag for the seismic surveys linked to the two blocks off Crete is estimated at five million euros.

 

 

Crete, Ionian oil exploration tender officially announced

Greek authorities have officially announced an international tender offering exploration and exploitation licenses for offshore blocks west and southwest of Crete.

The tender was prompted by investment interest expressed in the aforementioned areas by a consortium comprised of ExxonMobil, Total and ELPE (Hellenic Petroleum).

As was expected, leasing agreements will be offered to investors. Taxation rates of 20 percent will be included in the terms, along with a 5 percent regional tax.

According to the international tender’s terms, bid appraisals will be processed over 60 days and agreements signed 60 days after this stage has been completed. This essentially means that the procedure should be completed at the end of this year, or, possibly, early in 2018, assuming no extraordinary delays.

Hydrocarbon licensing changes avoided ahead of Crete tender

The government has softened its stance on an intention to implement hydrocarbon sector revisions that could offer investors production sharing agreements rather than leasing agreements for new tenders.

Governmemt officials fear that such changes to the licensing system would undermine the prospects of future tenders, including an imminent effort aiming to offer investors blocks off Crete. This upcoing effort has drawn the attention of international oil industry giants such as ExxonMobil and Total.

KYSOIP, the Government Council for Economic Policy, which yesterday endorsed a hydrocarbon sector modernization plan forwarded by energy minister Giorgos Stathakis, decided to keep the current licensing model unchanged – at least for the time being.

The minister’s modernization plan will aim to reduce the amount of time needed by authorities to issue exploration and exploitation licenses.

Though any imminent hydrocarbon leasing model changes should not be expected following yesterday’s KYSOIP decision, future revisions, which would make the Greek State a partner in oil exploration and exploitation ventures, along the lines of models applied in African, Latin American and Central Asian countries, cannot be ruled out.

Cyprus drilling, now started, prompts flurry of diplomatic, military activity

The West Capella drilling ship hired by a consortium comprised of Total and Eni launched its exploration work at Block 11 in Cyprus’s Exclusive Economic Zone (EEZ) last Wednesday, as was scheduled, amid heightened diplomatic and military activity, as anticipated by the Cyprus government.

Turkey has made clear its intentions to escalate the tension amid the intensifying competition for natural gas and other interests in the region.

The West Capella drilling ship, which has reached Block 11’s sea bed, at 1,698 meters below sea level and on a slight angle towards the southwest, has been given a 21 percent chance of discovering a natural gas field, a relatively high probability rating. Drilling is expected to reach 2,230 meters. The initial results are expected to be determined by mid-September.

As a result of Total’s involvement, France is keeping a close watch on the overall developments. The country’s defense minister Florence Parly, expected in Cyprus today, will visit French frigates that initially arrived in the wider area to contribute to the United Nations Interim Force in Lebanon (UNIFIL) before being moved to Larnaca, on the southern coast of Cyprus, over the past few days.

The visiting French defense minister, who is scheduled to hold talks with her Cypriot counterpart, Christoforos Fokaidis, may also visit Total’s drilling platform.

Besides the French frigates, Cypriot, US and Greek forces have also been deployed to protect the drilling activity and Total’s interests. The region already represents a crucial launching pad for operations in Syria and Iraq.

French President Emmanuel Macron is keeping an open line of communication with the Cypriot government. In addition, Cyprus’s Foreign Minister Ioannis Kasoulidis recently traveled to France for an official visit.

Making the current hydrocarbon exploration activity in Cypriot waters even more complicated, the West Capella drilling ship arrived to the country’s EEZ just days after the breakdown of the latest UN-backed Cyprus reunification talks.

In the lead up to the drilling at Cyprus’s Block 11, a US State Department official declared that the US recognizes Cyprus’s rights to develop sources within its EEZ, adding that Washington will continue to discourage any actions that may escalate tension in the region. This statement has been interpreted as a show of support for the Cypriot government and Total. Many pundits have linked the US support to the prospective interests of US energy giant ExxonMobil in Cyprus and Greece.

The State Department official also added that the US continues to believe that Cypriot oil and natural gas revenues need to be shared fairly between the divided island’s Greek and Turkish communities.

The Cypriot govermnent has declared that Turkey’s aggressive response comes as no major surprise. Fokaidis, the Cypriot defense minister, stressed there is no reason for alarm, adding that “the sooner we stop being involved with what’s happening at the drilling rig the better.”

However, he also admitted the situation is being closely monitored, adding that Cypriot officials are implementing plans they have been trained to implement, cooperating with all interested parties, and remaining focused – seriously and calmly – on the national objective, which is “to fulfil our energy plans.”

 

Crucial times for Cyprus’s hydrocarbon aspirations

Cyprus’s hydrocarbon aspirations face a crucial test this week as, firstly, ongoing research will determine whether needed additional deposits exist and, secondly, activities planned for the next few days should indicate how far Turkey is prepared to take its reactions.

The West Capella drilling ship hired by a consortium comprised of Total and Eni is scheduled to reach Block 11 in Cyprus’s Exclusive Economic Zone (EEZ) at 3am on Wednesday morning and prepare to start work within 24 hours.

This initiative represents part of a new and ambitious exploration drive that is expected to take about one year to complete.

The findings will be of pivotal importance as they will determine the possible existence and size of hydrocarbon deposits at Block 11, which would emerge as an addition to the deposit already discovered at Block 12. Estimates and forecasts only have real value if confirmed by drilling efforts. All is possible. The result could be an utter disappointment or a major future-altering discovery for the island is also possible.

The endeavor will also test Turkey’s true capacity for reaction, beyond its regular cast of verbal threats, against major international petroleum powerhouses that have acquired rights to Cypriot blocks and are gradually making progress to begin work.

Four drilling endeavors have taken place within Cyprus’s EEZ over the past seven years. Two of these were carried out by US firm Noble Energy, at Block 12, and two by Italy’s Eni, at Block 9.

The deposit discovered within Block 12, dubbed Aphrodite, may have provided momentum to Cyprus’s overall hydrocarbon drive, but its quantity, alone, is not sufficient to make the development of gas storage and transmission projects sustainable. The discovery of a new deposit is crucial as it could provide the additional hydrocarbon quantity that is needed to make such investments worth pursuing.

The discovery of Zohr, a gigantic deposit in Egypt’s maritime zone, has turned the attention of major petroleum firms to Cyprus. France’s Total has joined forces with Italy’s Eni to explore Blocks 11 and 6, while Eni has acquired exclusive rights for Block 8.

Also, the world’s largest oil and gas company ExxonMobil, until recently led by US Secretary of State Rex Tillerson, has been joined by another industry giant, Qatar Petroleum, for the rights to explore Cyprus’s Block 10.

The upcoming hydrocarbon exploration endeavors planned for Cyprus have been made more complicated by the breakdown, just days ago, of latest UN-backed Cyprus talks in search of a reunification deal.

Reacting to previous exploration endeavors around Cyprus, Turkey has responded in a standard way, sending a seismic vessel into Cypriot EEZ waters, accompanied by at least one frigate monitoring from a distance. Turkish reaction will certainly not be missing this time either, and could well be stronger following the recent collapse of the Cyprus reunification talks. Just how far Turkey is prepared to go remains to be seen.

 

 

 

 

 

ELPE, Exxon, Total express exploration interest for broad offshore area

A powerhouse consortium comprised of ExxonMobil, Total and ELPE (Hellenic Petroleum) has expressed an interest to Greek authorities for hydrocarbon exploration work covering a gigantic offshore expanse southwest of the Peloponese and stretching all the way to the island Gavdos, south of Crete, according to souces.

Quite clearly, the trio is interested in exploring deep-sea regions for which sufficient data does not yet exist. The only favorable hydrocarbon hints at this stage are limited to encouraging signs provided by previous seismic surveys at specific areas.

The wider area of interest, measuring numerous square kilometers, includes offshore blocks that had been incorporated into an international hydrocarbon tender back in 2013.

The areas framed by the consortium are not located in any disputed zones. All are clearly located within Greece’s Exclusive Economic Zone (EEZ), as prescribed by the United Nations Convention on the Law of the Sea.

The Greek State does not face any deadline as to the time period it has at its disposal to respond to the consortium’s proposal. However, once the proposal has been officially received, the Greek State will need to publish the consortium’s expression of interest in the Official Journal of the European Union (OJ), formalizing its acceptance and setting the terms of an international tender. The publication will need to remain in the OJ for at least one month.

An announcement of a tender within the current year, followed by the launch of seismic survey work in 2018, whose results will determine future moves, is viewed as timely progress.

ELPE, ExxonMobil, Total eyeing blocks in Ionian, south of Crete

ELPE (Hellenic Petroleum), ExxonMobil and Total officials are currently processing data in order to identify locations of interest with the objective of submitting an exploration and exploitation offer to the Greek State and EDEY, the Greek Hydrocarbon Management Company, by August, as one consortium.

This expression of interest by the prospective consortium will prompt local authorities to launch a related tender.

According to sources, the three companies are focusing their interest in the Ionian Sea’s north, as well as south of Crete, all the way to the small island of Gavdos, Greece’s southernmost point.

As these locations are high-risk, high-cost deep-sea areas, ELPE will look to establish a consortium offering its partners fair shares for their demanding roles. ExxonMobil and Total are expected to take on shares of 40 percent each with ELPE holding 20 percent in the venture. Drilling ventures at waters of such depths are estimated to cost approximately 100 million dollars each.

ExxonMobil’s extensive experience in deep-sea exploration and financial strength were key factors in the interest shown by ELPE for the establishment of a partnership as the areas of interest are challenging, both technically and financially.

ExxonMobil has already purchased a package of seismic data produced following survey work conducted by Norwegian firm PGS three years ago.

Energean Oil & Gas also expressed an interest, yesterday, in the new round of offshore licenses expected to be offered by the Greek State. The company plans to capitalize on its expertise being gained at Israeli offshore blocks.

At this stage, it appears that Energean Oil & Gas and Repsol, currently conducting joint onshore exploration work in west Greece, at blocks in the Ioannina and Etoloakarnania areas, will attempt to broaden their venture to the sea extensions of these blocks.