Energean Prinos field support to include State participation

A financial support plan for upstream company Energean’s Prinos field, south of Kavala, just announced by the European Commission, will be comprised of a state-guaranteed commercial loan of 90.5 million euros for the group’s domestic subsidiary, plus a supplementary loan of 9.5 million euros from the Greek State. Greek Parliament still needs to approve the plan.

As part of the plan, the Greek State will appoint a representative to the Board of Directors of the company to monitor the utilization of this financing.

Also, the financial support terms for Energean’s Prinos field, under pressure in recent years as a result of deteriorated market conditions, include a series of key guarantees for the Greek State.

Besides Energean’s bank loan, to be repaid, with interest, to the participating bank, the company’s domestic subsidiary will also need to pay related fees to the Greek State for the latter’s provision of the loan guarantee enabling the company to borrow.

The financial support will be provided until December 31, 2021, will be used to cover Energean’s investment and working capital needs over the next 12 months, and will have a maximum duration of 8 years, according to the terms.

According to Energean sources, activities at the Prinos field in 2019 and 2020 resulted in losses totaling 120 million euros. Despite an improvement in oil prices, a lack of finances for investment has led to a further reduction in output at Prinos, which is expected to lead to a further loss this year, estimated at 40 million euros.

The financing support plan will ensure the completion of development at the Epsilon deposit, which Energean considers essential to ensure ongoing operations of Prinos, along with the implementation of administrative and organizational restructuring planned by the company with the aim of reducing operating costs and moving ahead with a series of new projects.

Energean upbeat on support prospects for Prinos, 4-year extension granted

Upstream company Energean has received promising feedback from the finance and energy ministries in its effort to secure an EU support package to protect the sustainability of its offshore Prinos field, the country’s only producing unit, in the North Aegean.

The government has relayed that it is cautiously optimistic of a favorable outcome in its support-package application submitted to the European Commission.

Brussels appears to be concluding its exchange with Greek government officials handling the issue and could soon offer its approval, sources informed.

The effort has lasted nearly nine months from the time Greek government officials submitted a support request accompanied by Energean’s Prinos business plan, worth nearly 75 million euros.

The time taken in Brussels has been attributed to this essentially being the EU’s sole case concerning a support request in the hydrocarbon exploration sector.

Meanwhile, EDEY, the Greek Hydrocarbon Management Company, has granted Energean Oil & Gas, a member of the Energean Group, a four-year extension, until March 19, 2025, for exploration activities aiming to identify new fields in the Prinos and South Kavala areas, following a request submitted by the company.

Prinos field threatened by poor results, decline projection

Operations at the Prinos field, Greece’s only producing oil field, in the country’s offshore north, are in great danger of being disrupted following poor production figures in 2020 and a further decline predicted for 2021, a wider company update just delivered by Energean Oil & Gas, the field’s license holder, has suggested.

In 2020, production at the oil field reached just 1,800 barrels per day, while its inferior-quality output was sold at a discount price, between 7 to 8 dollars below Brent levels.

This level of output represents less than 4 percent of Energean’s overall production, which, last year, reached 48,000 barrels – mostly natural gas.

Output at the Prinos field is projected to drop below 1,500 bpd in 2021 as, even if a rescue plan for the facility is approved, related investments needed at the facility will take time to complete.

The rescue plan, announced last June by Energean and dubbed Green Prinos, envisions an adjustment for eco-friendly operations through a series of investments worth 75 million euros.

Energean’s administration, in its company update to analysts, expressed hope that a solution can be found in the first quarter of 2021 for its rescue plan, submitted to the Greek government, which then forwarded the plan to the European Commission.

The rescue plan has remained stuck at the European Directorate for Competition, whose approval is required.

Energean is considering the development of a carbon capture and storage project at its Prinos field, which would be the first in Greece, promising new life for the project, along with the support of investments at field E, whose development depends on the outcome of a financing bid, company officials informed.

Overall, the news for the Prinos field is not good. Losses incurred by this unit since September, 2019, when its crisis began before being further aggravated by the pandemic, have exceeded 100 million euros.

This loss, however, has not affected the overall financial results of Energean, generating significant earnings in Egypt, primarily. Israel, too, could become a major source of earnings for the company as of next year.

Prinos rescue plan may offer Greek State stake in Energean Oil & Gas SA

A government rescue plan for Prinos, Greece’s only producing oil field, in the country’s offshore north, will offer the Greek State a small stake in Energean Oil & Gas, the field’s operator, and provide state guarantees for 75 million euros in financing needed by the company in 2020 and 2021 for investments included in its business plan, according to well informed sources.

The government is believed to be just days away from announcing its finalized rescue plan for Energean’s Prinos field, hit hard by the pandemic and lower international oil prices, factors that have impacted the global upstream industry.

Greek government officials are currently discussing the Prinos rescue plan with the European Commission, whose approval will be required. Though alterations to the aforementioned solution cannot be ruled out, good news on the rescue plan appears imminent.

Energean Oil & Gas recently published a business plan that lists interventions needed for Prinos’ rescue as well as the field’s sustainability over the next 15 years. The plan’s measures include actions to reduce emissions and drastically reduce the company’s environmental footprint.

Energean has invested approximately 460 million euros at Prinos during the company’s 13 years of operations at the field, including 50 million euros between last September and May, to avoid the closure of offshore and related onshore facilities. Some 270 jobs have been protected.

Prinos field rescue effort now at the finance ministry

A government effort to rescue offshore Prinos, Greece’s only producing field, in the north, is now in the hands of the finance ministry following preceding work at the energy ministry, sources have informed.

The field, like the wider upstream industry, has been impacted by the pandemic and plunge in oil prices.

Deputy finance minister Theodoros Skylakakis is now handling the Prinos rescue case following the transfer of a related file from the energy ministry.

According to the sources, three scenarios are being considered. A financing plan through a loan with Greek State guarantees appears to be the top priority. A second option entails the utilization of an alternate form of state aid. The other consideration involves the Greek State’s equity participation in the Prinos field’s license holder, Energean Oil & Gas.

The European Commission will need to offer its approval to any of these options as they all represent forms of state aid.

Energy ministry sources have avoided offering details but are confident a solution is in the making.

Rescue talks for Prinos, Greece’s only producing field, making progress

Talks between Energean Oil & Gas and officials at the energy and economy ministries for a solution to rescue offshore Prinos, Greece’s only producing field in the north, are making progress, sources have informed.

Heightened Turkish provocations in the Aegean Sea over the past few days – the neighboring country sent a survey vessel into Greece’s EEZ – and greater US presence in the wider southeast Mediterranean region, are two developments that have injected further urgency into the Prinos field rescue talks.

The east Mediterranean is at the core of geopolitical developments that promise to create new political and energy sector conditions.

US oil corporation Chevron, America’s second-biggest energy group, has joined fellow American upstream giant ExxonMobil in the east Mediterranean with a five billion-dollar acquisition of Noble Energy.

This takeover by the California-based buyer adds to the Chevron portfolio the gigantic Leviathan gas field in Israel’s EEZ, as well as the Aphrodite gas field, situated within the Cypriot EEZ and estimated to hold 4.5 trillion cubic feet.

It also offers Chevron prospective roles in the East Med pipeline, to supply Europe via the Leviathan field, and Egypt’s LNG infrastructure, all elevating the petroleum group into a dominant regional player.

Israel and Cyprus recently ratified the East Med agreement, as has Greece, while Italy appears to be examining the prospect.

In another regional development, the Total-ENI-ELPE consortium is preparing to conduct seismic surveys at licenses south and southwest of Crete, and an environmental study southeast of Crete has been approved by Greek authorities. Also, oil majors with interests in Cyprus’ EEZ have planned a series of drilling operations for 2021.

Meanwhile, Turkey, trespassing into both Greek and Cypriot EEZ waters, consistently cites a memorandum recently signed with Libya as support for its actions, as well as its refusal to sign the UN’s International Law of the Sea treaty, strongly disagreeing with an article that gives EEZ and continental shelf rights to island areas.

Greek government officials are well aware that closure of the Prinos field amid such precarious conditions would lead to major consequences, not just economic and social, as would be the case under normal conditions, but also geopolitical.

Ministry still examining Energean Prinos rescue plan

The energy ministry is continuing its close examination of a business plan delivered by Energean Oil & Gas for the rescue of its Prinos offshore oil field in northern Greece, requiring investments totaling 75 million euros in 2020 and 2021 if the venture is to be kept afloat following the negative impact of  lower oil prices and the pandemic, according to the company.

“The ministry is continuing to examine the data provided by the company as well as the business plan. They have determined the size of the necessary funds at 75 million euros but we, too, need to verify this,” an energy ministry official informed.

Early signs of a petroleum market rebound are encouraging but this does not mean that the market has fully recovered, the official added.

The ministry acknowledges the potential damage closure of the oil field would have on the local economy and, as a result, is looking for solutions, the official added.

Energean officials have stressed that time is running out for the oil field’s rescue, urgently needing a solution to remain viable.

The government will need to utilize the EU’s temporary state aid framework to ensure financial support for the Prinos oil field, Greece’s only producing field at present, and its necessary investments.

Crisis’ impact on Prinos looked at, Energean up against time

The energy ministry has turned to specialized consulting firm assistance for a detailed analysis on the pandemic’s financial impact on the Prinos offshore oil field in northern Greece, the country’s only producing field at present.

The energy ministry’s secretary-general Alexandra Sdoukou, handling the matter on behalf of the ministry, is currently holding talks on a daily basis with officials at Energean Oil & Gas, the field’s license holder.

The company wants emergency government support amid the extraordinary market conditions, energypress sources have informed.

The two sides are believed to be closely examining related data to determine the extent of the financial damage, for this project, due to the plunge in international oil prices, prompted by lower demand amid the widespread lockdown.

Energean Oil & Gas has invested 50 million euros between September, 2019 and May to keep production flowing at Prinos, an aging field, sources noted.

Sustainability is becoming a growing challenge at this venture, employing a workforce of approximately 270 employees, market authorities have noted. A cutdown in operating costs is seen as essential.

A cash injection for “Epsilon”, a fresher field in the area also licensed to Energean, could be made as a support for the company. Another option may entail financial support by the Greek State in exchange for a stake in Energean. Alternatively, state guarantees could be offered for a bank loan.

The finance ministry is also expected to become involved in the Prinos rescue effort. Much work lies ahead before any decisions can be reached. These will require European Commission approval.

Gov’t examining pandemic’s impact on Prinos oil field

The pandemic’s financial impact on offshore Prinos, Greece’s only producing oil field, south of Kavala, is being closely examined by government officials and specialized advisors, energypress sources have informed.

Conclusions have yet to be reached on the extent of the financial damage to the Prinos oil field, licensed to Energean Oil & Gas, but it appears the government will seek financial support for this venture through the European Commission’s Directorate-General for Competition.

Though it is still considered too early for any decisions, the government has apparently already recognized the damage inflicted on Prinos by the pandemic and subsequent drop in demand and oil prices.

The Greek government has pledged production continuity and job protection for Prinos, as was recently highlighted by deputy energy minister Gerassimos Thomas.

Limits have been exhausted to keep Prinos operating, Energean Oil & Gas officials have pointed out, stressing the cost burden on the company.

 

Energean to utilize measures for crisis-hit Prinos field

Energean Oil & Gas, whose offshore Prinos oil field in the country’s north has been heavily impacted by the coronavirus pandemic’s effects on the global economy, including record-low oil prices, intends to utilize relief measures offered by the Greek government for various sectors, including the upstream industry.

The government’s relief measures, introduced to help enterprises weather the financial impact of the unprecedented coronavirus crisis, promise respite in a variety of forms, including tax payment delays, VAT discounts as well as employee allowances covering suspended work contracts.

Energean, which has invested tens of millions of euros to keep upstream  activities alive in Greece, now needs to reduce its Prinos operating costs and keep production flowing. A disruption of production and resumption at a latter date is not technically feasible. Prinos is Greece’s only producing oil field.

The oil price plunge has made big impact on the Prinos field, an old high-cost venture whose production costs are estimated at 21.5 dollars per barrel.

This specific field produces heavy crude of higher refining demands. Subsequently, Energean sells the unit’s output to BP at price levels that are between 7 and 8 dollars lower per barrel compared to Brent prices.

Production at Prinos is declining. Output peaked at 4,000 barrels per day in 2018 but fell to 3,300 in 2019 and is projected to slide further in 2020, officials noted.

Energean has cut back on investments at Prinos by 80 million dollars.

International crude prices plunged from 66 dollars to less than 25 dollars per barrel in the first quarter. Prices have not fallen so low since 2003.

 

Energean’s Prinos oil field pressured by price slump

The oil-price plunge in international markets has placed under pressure  Greece’s only producing oil field, Epsilon, an old, high-cost unit operated by Energean Oil & Gas at an estimated 20 dollars per barrel.

Energean has made a considerable, long-running effort to keep Greece’s sole oil field alive through major investment, required to achieve acceptable production levels. However, production at this oil field is unprofitable during times of deflated oil prices, as is the case at present.

Major international credit institutions are nowadays offering far less financial support to oil-producing ventures as a result of negative conditions affecting the upstream sector. Widespread climate-change policies have not helped, while the situation has now been made worse by the ongoing oil-price crisis.

Energean’s Prinos offshore oil field, in Greece’s north, is currently producing smaller amounts after hitting a record level of 4,000 barrels per day in 2018. Last year, production at the oil field fell to 3,300 barrels per day. The current year is expected to be even more challenging, pundits have noted.

Energean is now placing greater emphasis on fully developing its neighboring Epsilon oil field. The company is awaiting the construction of a new platform, a project undertaken by a consortium of Romanian companies, so that production at Epsilon may commence in approximately one year.

Energean commences its drilling campaign in Israel

Energean Oil and Gas, the oil and gas producer focused on the Mediterranean, has commenced its 2019 drilling program in Israel, consisting of three development wells and Karish North, the company has announced.

As a result of this four-well campaign, Energean has a further six drilling options available in its contract with Stena Drilling Ltd.

Energean plans to batch drill the top-hole sections of the wells, which will allow significant operational efficiencies and cost savings, the company noted.

The drilling campaign is being undertaken using the Stena DrillMAX drillship, a sixth-generation drillship capable of drilling in water depths of up to 10,000 feet.

Energean is a London Premium Listed FTSE 250 and Tel Aviv Listed E&P company with operations offshore Israel, Greece and the Adriatic.

Energean has 349 mmboe of 2P reserves and 48 mmboe of 2C resources across its portfolio.

In August, 2017, the company received Israeli Governmental approval for the FDP for its Karish Tanin gas development project, where it intends to use an FPSO and produce first gas in 2021.

Energean has already signed contracts for 4.6 bcma of gas sales into the Israeli domestic market.

Future gas sales agreements will focus on both the growing Israeli domestic market and key export markets in the region, the company noted.

In Greece, Energean is pursuing an ongoing investment and development program to increase production from its Prinos and Prinos North oil fields and to develop the Epsilon oil field in the Gulf of Kavala, northern Greece.

Energean possesses five exploration licences offshore Israel, a 25-year exploitation licence for the Katakolo offshore block in western Greece, as well as additional exploration potential in its other licences in western Greece and Montenegro.