Offshore Hydrocarbon Developments in Greece and the Eastern Mediterranean – Harry Theocharis, Independent MP, Hellenic Parliament, 30 October, 2018

by on November 21, 2018

Offshore Hydrocarbon Developments in Greece and the Eastern Mediterranean
Harry Theocharis
Independent MP
Hellenic Parliament
30 October, 2018


Let me start by thanking ERPIC for the opportunity to discuss the Greek oil and gas fields, as well as the role of the Greek companies in the past six months in terms of exploiting the reserves that lie in the East Med basin. Obviously, this is a very wide region and some Greek companies play some role in that and we will discuss it, especially the Israeli gas fields.

The Greek energy sector has continued its growth process during the whole of 2018. The developments lie mainly in two fields.

The first is the internal market, and in the internal market the consortium of TOTAL – Exxon – Hellenic Petroleum S.A. (HELPE) has won the Cretan blocks, while the consortium of Repsol – HELPE has one the Ionian block and they have made significant steps in moving forward the process of developing these fields. The active presence of major American and European companies highlights the prospects of the Greek fields and the dynamic of this area as an alternative to the politically unstable and hostile existent sources that supply Europe. We understand that European policy dictates to diverse as much as we can our resources, obviously within the market framework and the price pressures.

In terms of the second pillar of our discussion, Energean Oil & Gas is deepening its presence in the Israeli fields, advancing with its strategic plan. The Israeli – Greek cooperation in energy issues is strengthened by the fact that Energean has proven to be a very reliable partner of the Israeli state in terms of exploiting and pushing forward the use of the fields that have already been awarded, as well as participating in the process of the five plots that were awarded to the company and will start the process of exploiting those plots as well.

There are many challenges that the oil industry faces, and especially HELPE, which is a Greek incumbent oil corporation and it’s a company that mainly drives the creation of consortia which undertake the responsibility for exploiting the Greek plots.

On one hand we have a very promising acreages (‘frontier’ areas) in many parts of Greece, and the fiscal terms are very competitive and attractive for investments in hydrocarbons exploration and production industry.

On the other hand, however, these offshore fields – especially in the southwest of Crete – display a very complex geological history and are located in ultra-deep waters – the depths exceed 3000 meters in most of this area. So this means that very deep wells are required and correspondingly the cost of both prospecting and finding out whether there are any fields there, and as well exploiting afterwards those fields is significant.

The ‘Ionian’ block, located in the southwest of Corfu Island, covers an extensive offshore area of 6,671 square kilometers and has average water depths of around 1300-1500 meters. This is a shallower area, but still an area which has significant depths. The area is under-explored with few wells drilled so far in nearby locations outside the block. In terms of geological point of view, it is expected that any possible discoveries will be analogue to the ones that have already been found in Albania and Italy which are adjacent to the area.

From a hydrocarbon exploration point of view, offshore Crete represents a frontier area. It’s an area that has a significant hope to bring a number of reserves. The reserves of the greater East Med basin have increased the hope of the industry to find significant finds there. But as we’ve said, the problems are not to be taken lightly, especially the depth. 

In terms of the latest developments of the Cretan exploration, on 5th March 2018, following the ‘Call for Tenders for the exploration and exploitation of hydrocarbons Offshore West Crete and Southwest Crete’ (Official Government Gazette 2848/11.08.2017), the consortium of TOTAL E&P Greece B.V. (40%, operator), ExxonMobil Exploration & Production Greece (Crete) B.V. (40%) and Hellenic Petroleum S.A. (20%) has submitted an offer for granting of rights for those areas.

On 3rd July 2018, by Ministerial Decision, the above-mentioned consortium was declared as the Selected Applicant for granting rights of hydrocarbons exploration and production for the two offshore blocks of Crete, West Crete and Southwest Crete.

The exploration stage will be up to eight years, divided into three phases with separate work programs. In the event of a commercial discovery, the production lease will be for twenty five years plus two five-year extensions. 

In the Ionian Sea and more specifically in ‘Ionian’ block, located in the southwest of Corfu island, the consortium of Repsol Exploration S.A. (50%, operator) and Hellenic Petroleum S.A. (50%) has submitted an offer for the offshore block.

This offer is currently in evaluation phase and it is expected to be concluded in the next few months. 

Hellenic Petroleum S.A. has managed through a number of contracts that came out and were won by different consortiums to build up extensive experience in terms of exploration of geological strata that pertain to the Greek morphology. They have developed techniques that with the minimum cost allow to take data, mainly from the regional 2012 PGS seismic survey, and result in the identification of potential exploration targets in the subsurface. 

The growth plan of HELPE in terms of trying to explore the greater East Med basin, is currently hampered by two things. One is the fact that its investment budget is effectively as much as a company can amass – this is an investment budget of more than 1 billion Euros for the next five years, and I think it’s been already two years in terms of the planning phases. And it would be a stretch to add to that investment plan more expansive ideas.   

The second thing is that currently we are in the process of privatization of HELPE and both the investment plans and the strategic plans of the company will be under review of the new owners, as soon as the privatization process finishes in the next few months. 

Moving on to our second subject, which is the role of the Greek company Energean Oil & Gas, which is working with the Israeli government in the Israeli market to explore and help with the production of Israeli gas.

Energean Israel is the Operator of the Karish and Tanin leases, which were awarded to the company due to the High Court decision that forced the Israeli government to open up the market to more players in order to avoid monopolies. It has a 100% working interest in those fields. The Karish and Tanin fields are world class assets with 2.4 trillion cubic feet (tcf) of natural gas and about 33 million barrels of light hydrocarbon liquids.

Energean has made the Final Investment Decision for the development project in March 2018, after having signed twelve Gas Sales and Purchase Agreements for 4.2 billion cubic meters (bcm) in total annually and securing financing for the project. It managed to secure the sale of the gas and the financing for the project and made the final investment decision to go ahead with the investment in those two fields.

The Karish main field will be the first asset to be developed in the Karish and Tanin blocks by the Group. Because it is the largest discovery, it is expected to provide the highest yield of liquid per volume and is the closest discovery to shore. So it has all the advantages to be the first one to start the development.

The assets required to develop these fields will be installed and commissioned by early 2021. The second source of gas supply which will be provided by Energean will be operational sometime in 2021 or early 2022.

The gas produced by both those fields is intended to supply the rapidly growing domestic Israeli market.

There is a huge demand driver for gas because there is a population growth in Israel, an increasing standard of living, a greater use of water desalination, the electrification of the railway system, an increased use of air conditioning, the adoption of electric vehicles and the increased adoption of CNG for transportation – all these drive demands for gas from the Israeli market and Energean is well-poised to help fill that demand together with the main sources that are already in place.

In December 2017 Energean was successfully awarded five new offshore exploration licenses within the Israeli Exclusive Economic Zone (EEZ). These are blocks 12,21,22,23 and 31, which are located near the currently producing Tamar gas field as well as the Karish and Tanin gas fields. Energean will start moving towards the development of those fields.

All those five licenses are located in the proven “Tamar” sand play fairway and are considered highly prospective for gas. Additional deeper exploration potential has also been identified with the possibility of thermogenic oil.

The next phases will be 3D seismic acquisition and reprocessing of existing datasets. And there is going to be a 3-year exploration phase to try to ascertain if there are any potential fields that could be developed.

Energean as well is willing to acquire and operate the Gaza Marine field. But this acquisition will be conditional on the resolution of the ownership disputes between the State of Israel and the Palestinian Authority. This could help, politically as well, to ease tensions between the different Palestinian authorities and between the Israelis and the Palestinians.

The East Med region has been attracting more and more significant interest on the global stage from Exxon, TOTAL, Repsol, Edison. We all know the developments in Cyprus, Egypt, Lebanon, Jordan. Their gas reserves and potential for future discoveries could assist Europe diversify its energy supply. Trade war rhetoric and risks, a late cycle energy price increase, and the proliferation of political uncertainty, instability and hostility in a number of oil and gas producing or transiting countries make both Greek, Cypriot, Egyptian and Israeli reserves a pragmatic alternative for the European energy supply. The countries in this region are part of an ever-changing geopolitical landscape, while at the same time a lot of infrastructure needs to be in place in order to maximize the potential of the region.


See: Greece: An Emerging Energy Player in the East Mediterranean

See: Recent Hydrocarbon Developments in Cyprus

See: Hydrocarbon Developments in the Eastern Med

See: Energy Videos

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