US backs Greece’s east Mediterranean activities, major projects

All countries in the east Mediterranean region must carry out their activities in accordance with international law, including the International Law of the Sea as stipulated by the 1982 United Nations Convention on the Law of the Sea, the Greek and US governments have jointly announced following a high-level virtual conference held yesterday on energy issues.

This statement clearly offers US support for the positions of Greece, facing Turkish provocation.

The working group’s participating Greek and US officials reiterated the commitment of the two countries to cooperate on the effort to diversify energy sources in southeast Europe, collaborate with regional partners for energy source development, and promote regional energy security.

The latest energy working group builds on steadily growing bilateral cooperation following Greek-US strategic dialogue meetings in December, 2018 and October, 2019, the joint announcement added.

The Greek team was represented by the Ministry of Foreign Affairs’ Deputy Minister for Economic Diplomacy and Openness Kostas Frangogiannis and Deputy Environment and Energy Minister Gerassimos Thomas (photo). The US team was represented by Assistant Secretary of State for Energy Resources Francis Fannon and Under Secretary of Energy Mark Menezes.

Fannon, the Assistant Secretary of State, expressed satisfaction on the completion of the Greek segment of the TAP gas pipeline project, to carry Azeri gas to Europe.

The US official also offered support for the ongoing construction of the Greek-Bulgarian IGB gas pipeline interconnection and the progress achieved in plans for an FSRU in Alexandroupoli, northeastern Greece, a South Kavala underground gas storage facility, and Greek-North Macedonian connection.

Total seeking buyer for its 50% stake in Block 2, west of Corfu

French oil and gas multinational Total appears to be preparing to sell its 50 percent stake in an offshore license west of Corfu, Block 2, preferring instead to focus on other hydrocarbon interests in Greece, west and southwest of Crete.

Total, the operator of Corfu’s Block 2 license, established a consortium for this venture with Edison and Hellenic Petroleum (ELPE), each holding 25 percent stakes.

This license was signed in October, 2017 following the launch of a tender in 2014 that offered a total of 20 offshore blocks in the Ionian Sea and south of Crete.

Total is in partnership with US major ExxonMobil and ELPE for its licenses west and southwest of Crete.

Recent activity in Cyprus’ Exclusive Economic Zone (EEZ) – an area in which Total has joined forces with Italy’s Eni to take on Block 7 – as well as developments in the wider eastern Mediterranean, has turned the French oil and gas giant’s attention to this region, sources told energypress.

Further changes are expected in the Greek market. ELPE is believed to be seeking partners for exploration and production licenses it has acquired alone.


Investors will ‘abandon Crete blocks if discoveries not significant’

Two offshore blocks west and southwest of Crete, licensed out just days ago to a three-member consortium comprised of Total (40%), ExxonMobil (40%) and Hellenic Petroleum-ELPE (20%), promise far greater production potential than blocks further north in the Ionian Sea, but investors will leave if these Cretan blocks do not offer significant output, a top-ranked official has noted.

Investors will abandon their efforts if a production target of at least 500 million barrels is not reached as the investment costs are considerable, Yiannis Basias, the head official at EDEY, the Greek Hydrocarbon Management Company, told state-run radio Proto Programma.

He denounced environmental concerns being expressed, describing these as inexplicable, “unless the intention is to stop the exploration activity altogether.”

Hydrocarbon companies spend vast amounts of money to ensure the avoidance of problems as, besides affecting the environment, local economy and health of individuals, any accident would also instantly blacklist companies and trouble their futures, the EDEY chief highlighted.

Sizable discoveries promise to greatly change Greece’s image and standing in the southeast Mediterranean region, Basias remarked, adding that the country’s economy would gain some balance for a less burdensome future.

At present, economic gains generated by tourism are immediately offset by costs concerning  natural gas and crude costs, the EDEY chief said.

Energean set for 20-year output high of 1.5m barrels in 2018, new drilling

Officials at Energean Oil & Gas, nowadays a publically traded company following last March’s listing on the London Stock Exchange’s main market, avoided disclosing too much information at a company presentation yesterday but confirmed the achievement of a 20-year production high of 1.5 million barrels for 2018, at a production rate of nearly 4,100 bpd.

Half this amount – 2,000 bpd – was provided by the company’s Prinos North oil field, which began producing last February following horizontal drilling.

Company officials also noted a new drilling effort will be staged at the Epsilon oil field, located in the Gulf of Kavala, northern Greece. Output here will signal Greece’s first point of utilization and oil production since the Prinos and Prinos North fields.

Energean’s detailed new production guidelines are expected to be announced by the board in January.

Beyond Greece, Energean, a leading independent E&P company focused on the Eastern Mediterranean region, plans to commence 3D seismic surveys at a section of offshore licenses held in Israel as well as at two offshore licenses in Montenegro.

In March, Energean plans to drill at its Karish North license in Israel, aiming to discover 34 billion cubic meters of natural gas. This drill has been given an almost 70 percent chance of succeeding.

Last November, Energean began constructing a Floating Production, Storage and Offloading (FPSO) unit to be installed in the east Mediterranean region. It will offer an annual production capacity of 8 billion cubic meters.

Energean’s listing on the London Stock Exchange was the biggest IPO by a petroleum firm in the past four years and the sole entry in 2018. Energean’s share has since been one of the best FTSE 250 performers, rising 35 percent.

Just under two months ago, Energean was also listed on the Tel Aviv Stock Exchange (TASE) secondary list.



Snam plans to ‘establish Athens as base for southeast Mediterranean’

Snam will aim to contribute to Greece becoming a regional energy hub in the southeast Mediterranean, Federico Ermoli, chief international assets officer at Italy’s Snam, heading one of two bidding teams vying for a 66 percent stake in DESFA, the natural gas grid operator, has stressed in an interview with Greek daily Kathimerini.

Snam and its bidding partners, Spain’s Enagás Internacional and Belgium’s Fluxys, submitted a binding offer to the DEFSA tender last Friday. Staged by TAIPED, the state privatization fund, its content is still being processed before offers are opened, probably late next week.

Another Spanish entry, Regasificadora del Noroeste (Reganosa Asset Investments) joined forces with Romania’s Transgaz and the EBRD, the European Bank for Reconstruction and Development, for the other offer.

“We aspire to further develop the company and contribute to making Greece an energy hub in the Mediterranean for natural gas stemming from various regions,” Ermoli remarked, while adding that DESFA requires strong partners capable of making investments for the future of the firm, country and its geopolitical role.

Commenting on Greece’s strategic importance for Snam, Ermoli said the firm intends to establish an office base in Athens to manage its activities concerning interests in the southeast Meditteranean region.

“The region possesses many natural gas opportunities from the Caspian region, Russia, and possibly Israel, Cyprus and Lebanon,” Ermoli noted. “Italy and Greece have an important role to play in the establishment of an energy union and a strategic partnership for the Mediterranean.”

Snam holds a 20 percent stake in the regional TAP natural gas pipeline project now being developed. A segment runs across northern Greece.





Energean share offer generating interest, spurred by east Med prospects

An upcoming Energean Oil & Gas share offer at the London stock exchange worth a sum of 500 million dollars has generated considerable British media interest beyond publications specializing in the enery sector. The media coverage to date has included reports in the Financial Times, Daiily Telegraph and The Times.

The level of success achieved by Energean Oil & Gas, Greece’s only privately owned hydrocarbon exploration and exploitation firm, is important for the country’s national morale ahead of Greece’s planned return to international capital markets, when the third bailout program soon expires.

Last year, the firm – launched in 2007 as Aegean Energy before switching to its current business name – took a big step by acquiring the Karish and Tanin fields, offshore Israel, from Israel’s Delek.

Officials in London have already declared Energean’s upcoming share offer as a guaranteed success, basing their upbeat projections on the certified 2.4 trillion cubic meters of natural gas and 33 million barrels of light crude oil at the firm’s Israeli fields.

The exploitation effort of these deposits is expected to cost 1.6 billion dollars with first gas expected to be produced in 2021.

Energean Oil & Gas plans to invest 395 million dollars – of the total of 500 million dollars anticipated from the London share offer – at its Israeli facilities as well as a further 353 million dollars, over the next four years, for development of its Greek fields.

Less than a fortnight ago, Energean Oil & Gas extended its long-term offtake agreement with BP for its Prinos license in northern Greece by four years, until November 1, 2025.

All of the group’s production of crude oil from the Prinos basin is currently sold to BP under the offtake agreement.

The discovery of offshore hydrocarbon deposits in waters controlled by Israel, Egypt, Lebanon and Cyprus has prompted global energy firms to turn to the east Mediterranean region, despite problems faced by all the aforementioned countries with neighboring countries.

Details concerning the development of East Med, a 2,000-km pipeline planned to carry southeast Mediterranean natural gas deposits along a route stretching from Israel to Europe, need to be finalized, including the project’s route and development method.

This project, estimated to cost 6 billion euros, is expected to cover energy needs in the region and EU member states.



East Mediterranean action suggests gas export boundaries stretchable

Heightened natural gas sector activity witnessed in the east Mediterranean region over the past few days, combined with various other moves, including changing regional market conditions, to a certain degree, suggest gas exports to more distant markets beyond the east Mediterranean are possible.

Developments in recent days have included the establishment of an agreement for Israeli gas supply to Egypt, which coincides with an increased drive by Greece’s Energean to finance an ambitious investment plan.

The Israeli firms Delek Drilling and Noble Energy have just signed two binding agreements to export gas to Egyptian company Dolphinius Holdings Ltd. The energy companies will supply 64 billion cubic meters (bcm) of natural gas from the Tamar and Leviathan gas fields over ten years.

The two sides will, as a first objective, seek to transport the gas via the existing EMG pipeline, which previously transported gas in the opposite direction, from Egypt to Israel.

If this is not possible, other options include exporting the gas via pipeline to Jordan and then to Egypt or via a new pipeline linking Israel to Egypt.

The Israeli gas will be directly aimed at the Egyptian market, not Egypt’s two LNG terminals for liquefaction, meaning the agreement does not represent an additional step for Delek Drilling and Noble Energy. For the time being, both firms are continuing to eye regional markets ahead of more distant ones.

This agreement, in an indirect way, should facilitate the export of Cypriot gas for liquefaction at the Egyptian plants, as it leaves unutilized larger production capacities at the terminals.

A recent move by Greece’s Energean into the Israeli gas market with gas sales and purchase agreements for natural gas supply from its Karish and Tanin fields, offshore Israel, at price levels 33 percent less than those paid by Israel’s power utility for supply from the Tamar gas field, has prompted the utility to react and request a price reevaluation from its suppliers. They have remained adamant, noting no changes will be made until at least 2021, based on supply contracts already signed.

Energean’s entry into the Israeli market has certainly not gone by unnoticed. The increased level of competitiveness resulting from this entry vindicates Israeli government and market officials who, in the past, had backed competition and the  division of gas fields so as to enable the entry of new players.

The maintenance of low prices in Israel could eventually make exports to more distant markets, such as European markets, more viable.

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.


New hydrocarbon technologies ‘boosting sustainability’

The Greek Hydrocarbon Management Company (EDEY) is examining the prospect of staging more international tenders, driven by the belief that new technologies are making related investments sustainable despite lower petroleum prices, the company’s chief executive Yiannis Bassias has told industry publication GeoExPro.

Offshore areas southwest of Crete and in the Ionian Sea represent a stable part of the wider east Mediterranean region, compared to other troubled areas, Bassias stressed in the interview.

The Zohr (Egypt) and Aphrodite (Cyprus) natural gas field discoveries in the east Mediterranean have established Greece’s western flank as a key center of oil investor interest, he added.

The EDEY chief pointed out that a plan to reprocess seismic data promises to unlock mineral resources in the country’s offshore areas.

Bassias noted that 12,500 square kilomoters of 2D seismic data collected by Norway’s PGS in 2012 is being reprocessed. The first batch of results is expected within the current month, further findings are expected in January, while the entire reprocessing initiative should be completed next June, the EDEY head informed.

The company is also considering collecting new 3D seismic data in the Ionian Sea’s north, including west and south of Corfu, Bassias informed. He expressed support for the collection of more detailed data in an area south of Crete covering 4,000 square kilometers.

Greece’s western side has emerged as a strategically significant corridor, as is highlighted by the number of natural gas pipelines hosted in the area, such as the TAP project, now being constructed and planned to run across northern Greece, Albania and the Adriatic Sea to Italy, the EDEY chief noted.

Bassias admitted that oil exploration ventures off Crete remain a high-risk investement promising high returns.

Favorable hydrocarbon market conditions rekindling investors

The recent discoveries of major hydrocarbon deposits in the east Mediterranenean region, Greece’s relative political stability and – contrary to most neighbors – lack of geopolitical issues, as well as the reduction of hydrocarbon exploration and recovery costs are all combining to currently offer favorable market conditions for investors, as reflected by their rekindled interest of late.

Virtually all of the global oil industry’s major players are believed to be eyeing the Greek market as a result of these favorable conditions, pundits have pointed out.

Visits to Greece by officials representing top-notch energy companies, increased entries into an electronic data room set up by EDEY, the Greek Hydrocarbon Management Company, and an increased number of requests for meetings with local authorities are all firm indicators of the growing interest.

The avoidance of time-consuming bureaucratic procedures is a key concern for prospective investors. To date, investors have focused most of their attention on offshore areas in the Ionian Sea and off Crete.

Within the next few weeks, Norwegian seismic survey company PGS is expected to make available improved results offering greater clarity of data collected in the past.

Among the major international players, Total and Exxonmobil have already purchased seismic suveys for Greek areas. Just recently, Spain’s Repsol entered the Greek market by reaching a farm out agreement with Energean Oil & Gas for a 60% interest in the latter’s Ioannina and Etoloakarnania blocks. Other major firms such as Eni, Shell, Statoil, as well as regional players like MOL and INA, are all believed to be considering making investments in Greece’s hydrocarbon sector.



Military report highlights region’s complex issues

A report published recently by a high-ranking Greek military academy, believed to echo classified information, notes that the role of the military, among other factors, amid a competitive southeast Mediterranean environment possessing hydrocarbon deposits needs to be defined.

It also makes a note of the ongoing political turmoil in the wider region, including the emergence of fragile states, problems of dysfunctional and failed states, possible de facto border revisions, the role of political Islam, the refugee problem, ambitions of regional countries and competition for energy sources.

The report reminds that the southeast Mediterranean region represents a crucial energy supply corridor for Europe while adding that the EU is heavily dependent on oil and gas imports as 35 percent of these supplies hail from Russia.

This lack of diversification in energy supply also poses a threat for Greece, the military report pointed out.