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.

Greek upstream investments suspended, oil crisis hits hard

The current oil crisis, prompted by a Saudi-Russian price war and lower demand amid the coronavirus pandemic, comes as the latest setback for the upstream sector. The oil price slide, during which prices have plummeted to levels as low as 25 dollars per barrel, had added to the strain already felt by investors as a result of excessive bureaucracy in the Greek market.

Upstream players, troubled by the overall uncertainty, are believed to have suspended their investment plans despite a mild market rebound over the past few days, lifting oil prices to levels between 33 and 34 dollars per barrel.

Energean Oil & Gas’ Katakolo license off western Peloponnese and the Gulf of Patras license, co-owned by Hellenic Petroleum (ELPE) and Energean, rank as Greece’s two most mature upstream projects.

An environmental study for the Katakolo license has not yet been approved by the energy ministry. Even if it had, Energean would not move ahead with the venture under the existing market conditions. Current oil price levels would simply not cover investment costs.

Just before Christmas, investors behind the Gulf of Patras license were given an 18-month extension to begin drilling at this project, taking the date to June, 2021. Regional port facilities had been deemed insufficient by the consortium. All activity for this investment has also been suspended, sources informed.

ELPE-Edison granted extra 18 months for troubled Patras license

Hellenic Petroleum ELPE, the local partner of Gulf of Patras license in western Greece, has been granted an 18-month extension to complete second-phase work at the license. Project delays have been attributed to inadequate port infrastructure and bureaucracy.

ELPE, joined by Edison as a consortium partner for this hydrocarbon project, requested more time to complete the second phase, including exploratory drilling.

The consortium was expected to conduct its first drilling operation at the Gulf of Patras license this year but has been slowed down by insufficient port facilities at the regional Patras and Astakos ports, as well as environmental licensing procedures, according to sources.

ELPE and Edison require adequate port facilities, including storage, to ship in the project’s drilling equipment.

The Gulf of Patras drilling operation is seen as a project that could prompt further hydrocarbon investments, especially if this field’s probable oil deposit, estimated at 140 million barrels, is confirmed.

Bureaucracy and a lack of strategic planning for development of the country’s upstream sector has kept investors at a distance, oil company officials and industry experts have repeatedly noted over a number of years

The regional infrastructure’s inability to serve this venture’s needs has frustrated officials. The Gulf of Patras tender was launched back in 2012.

A previous extension had given the ELPE-Edison consortium until April 2, 2018 to complete the project’s second phase. This deadline has now been extended to October, 2, 2021.

 

ELPE’s Gulf of Patras drilling delayed until ’21, red tape cited

Exploratory drilling by ELPE (Hellenic Petroleum) at its Gulf of Patras license in western Greece will be delayed until 2021 instead of the first quarter of 2020, as was officially planned, or, late 2020, the unofficial target, primarily as a result of bureaucratic obstacles, according to updates offered by company officials at an EAGE (European Association of Geoscientists and Engineers) event just held in Athens.

The Gulf of Patras license was awarded to a consortium comprising ELPE and Edison through an open-door tender launched in 2012 and completed in 2014. Energean Oil and Gas is also involved as a result of its recent acquisition of Edison’s E&P.

The license area, situated between Kefalonia, Achaia and Etoloakarnania, measures 1,419 square kilometers.

Preliminary research work has been completed, identifying wider areas to be explored, including specific drilling spots.

The delay of a concession agreement for a port in the wider region, needed to facilitate drilling needs, has held back the venture.

ELPE has, so far, unsuccessfully sought concession agreements with four ports, Patras, Kyllini, Aigio and Astakos.

Any port that would accept heavy drilling equipment needs to have included such activities in its official operating plan. The detail has prompted bureaucratic issues for ELPE in its effort to secure a port facility.

The project is a high-cost venture as it will be performed in deep-sea territory. Preliminary estimates put the size of the prospective reserves at 140 million barrels.

 

ELPE Upstream seeking earlier start for Gulf of Patras drilling

ELPE Upstream, a new division established by the ELPE petroleum group, aims to begin drilling at its license in the Gulf of Patras, western Greece, sooner than originally planned, probably in autumn next year, if related licensing procedures and studies are completed ahead of municipal and regional elections next May.

Hydrocarbon exploration and production remains a priority for ELPE despite the petroleum group’s ongoing privatization, a complex and challenging procedure offering a 50.1 percent stake.

The Greek State, selling 20.5 percent of its 35.5 percent stake in ELPE, is expected to maintain a strong presence in ELPE Upstream. Paneuropean, ELPE’s main shareholder owning 45.47 percent, is selling 30.47 percent.

The Gulf of Patras offshore license, covering 1,900 square kilometers, was awarded to ELPE through an open-door tender launched in 2012 and completed in 2014. Potential recoverable hydrocarbon reserves at this license have been estimated at 100,000,000 barrels.

ELPE also has ambitious exploration and production plans for offshore licenses in the Ionian Sea and off Crete.