Greece's time for another look
The country's offshore has been ignored for years, but discoveries in surrounding regions have piqued interest
While offshore hydrocarbons finds have mounted across the East Mediterranean—notably in Israel, Cyprus and Egypt—Greece has struggled to attract explorers to its adjacent chunk of deep-water acreage. Now, ExxonMobil and Total are in the vanguard of companies preparing to take another look.
The Greek energy ministry said on 31 May that a group comprising those two firms and Hellenic Petroleum had submitted an expression of interest in exploring two areas south of Crete-acreage to the west of Cyprus and north of Egypt. The companies held talks with the government earlier that month.
If this interest turns into hands-on exploration it will be a coup for Athens, which badly needs fresh investment to boost its troubled economy, but whose last effort to attract interest to the south-of-Crete area via a licensing round in 2013 produced next to no interest.
What has changed since then is that Cyprus and Egypt have produced more evidence of offshore gas reserves, including Egypt's giant Zohr gasfield—with an estimated 30 trillion cubic feet of gas in place—where Eni is hoping to start production in late 2017. Add to these Israeli fields, such as Leviathan, further east, a new gas discovery by Eni in offshore Libya and renewed interest in Algerian offshore exploration further west, and Greece finds itself on the periphery of an expanding, high-profile hydrocarbons province; one that is probably more prone to gas, though the explorers will be hoping for oil too.
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None of that guarantees that this Greek acreage will yield major discoveries. While the geology has some similarities to that elsewhere in the East Mediterranean, it is not adjacent to other finds. However, it's not surprising that the supermajors are keen to revisit the area and the Greek government has funded fairly extensive seismic surveys across much of the acreage in the past, giving them a starting point in terms of data.
"It's very deep water and the wells are going to be expensive. But the companies have learned quite a lot more about East Mediterranean geology since 2013, so it's probably worth them having another look at the area south of Crete with a fresh lens," says Bas Percival, an Eastern Mediterranean upstream analyst at Wood Mackenzie, a consultancy.
Both Exxon and Total are active in Cyprus and signed new licensing deals there earlier this year. If Greek reserves could also be added to the mix, then economies of scale could result, making investment decisions that much easier.
Hellenic Petroleum also adds financial clout to the equation, having been substantially enriched by profits from its core refining operations lately and now seeking to plough some of that wealth into building its upstream activities. The company has interests in onshore or near-shore blocks in Albania, Egypt, Libya and Montenegro.
Hellenic is also involved in a new wave of exploration in and around mainland Greece, where low-level exploration has been taking place for years, but where the pace is picking up.
Last October, a group led by Total, which included Hellenic and Italy's Edison, was named as the preferred bidder for an offshore block in the Ionian Sea. Hellenic Petroleum bid independently for two other blocks in the same region.
In March, Greece-based Energean Oil & Gas, the country's only producer with output of 3,500 barrels a day from a site in the Prinos Basin in the country's northwest, agreed to farm out a 60% interest in its onshore Ioannina and Aitoloakarnania blocks in western Greece to Spain's Repsol. The company became operator under the deal and which plans to carry out 2-D seismic in 2017-18. The acreage is in the Hellenide fold belt, which also includes the Ionian Basin and Apulian platform which are "on trend" with recent large discoveries made in Albania, Energean says.
In May, Energean also signed a licence agreement for the Aitoloakarnania block in the Ionian basin, which is a geological continuation of the Ioaninna block, which has been explored by the firm since 2014. Hellenic, Energean and Edison also have interests in various other blocks in Western Greece.
Explorers in the region will be hoping to have similar success to others in the wider Adriatic Basin, which, Energean estimates, has yielded discoveries of more than 10bn barrels of oil and 30 trillion cf of gas in Albania, Italy and Croatia.
To keep the momentum going, Hellenic Hydrocarbons Resources Management (HHRM), the government authority handling licensing in Greece, said it planned to open up new onshore exploration next year, including some in central northern Greece towards the Albanian border.
However, HHRM has, temporarily at least, abandoned formal licensing rounds—presumably because of the poor response to rounds held in recent years—preferring to hold talks with individual bidders instead.