As much of the Eastern Mediterranean searches for ways to capitalize on the region’s new-found energy potential, Greece moved to kick-start its dormant energy exploration effort last week with the approval of three exploration licenses, each awarded to consortiums led by domestic firms.
The licenses include both on and offshore efforts, with two awarded to consortiums led by Greece’s Energean Oil and Gas. The Ioannina block will pair Energean with Canada’s Petra Petroleum, while the Katakolon will link the firm with Trajan Oil, according to a company release. The third license was awarded to a consortium of Hellenic Petroleum, Edison and Petroceltic for an offshore block in the Gulf of Patras.
A welcome step after years of regulatory delays, the licenses will still need to be ratified by the Greek Parliament, which could see a shake-up in coming weeks should local elections continue work against incumbents.
This week, Greece held the first of two rounds of local elections, with results showing support for the far-left Syriza party in key areas of the country. Although the elections will not directly influence the make-up of the Greek parliament, which is currently led by the two-party coalition of the New Democracy and Pasok parties, they could work against the existing leadership and the policies of Prime Minister Antonis Samaras.
In terms of the country’s efforts to revive its energy exploration program, this could mean an eventual challenge to the ratification process should the existing coalition fracture under pressure from Syriza.
While the far-left party has avoided making any specific comments regarding the licenses, they have previously spoken out in favor of nationalizing the country’s natural resources with the intent of using energy revenue to “create a fund that would guarantee the viability of Greece’s social security system.” While this does not mean a ban on new exploration in the Greece, the threat of nationalization will make it difficult to appeal to foreign investors already wary of the country’s financial landscape.
Despite the possibility of political challenges to the licenses, Energean CEO Mathias Rigas remains confident that the projects will be ratified without too much trouble. Speaking on Monday from Athens, Rigas highlighted that the signing event had been well attended by national and international political figures, including the Greek Vice President and ambassadors from Canada and the United Kingdom, sending a strong message of support for a return of Greek hydrocarbon efforts.
“At the moment, we have not witnessed any major issues with anyone in the parliament,” Rigas said.
“Everyone recognizes that natural resources have to be explored and this is something that is beyond this government and supported by all political parties. As long as the government has a majority there, we don’t foresee any problems.”
Still, Rigas cautioned against over-selling the idea of Greece’s hydrocarbon potential, including comments from the current political leadership. In December, Prime Minister Samaras told a gathering of political and business leaders that Greece could be home to 4.7 trillion cubic meters of gas could one day provide up to 25 percent of European demand. If they could manage to combine this with already active efforts by Cyprus and Israel, this amount could climb to 50 percent and not just for the short term, but for the next 30 years. This type of talk, Rigas explained, was understandable given the recent energy boom in the Eastern Mediterranean, but needed to be backed up by real, proven data.
“Five years ago, if people talked about natural gas in Cyprus or Israel, no one would have believed them,” Rigas said. “But you have to be patient and cautious, especially in a place like Greece where potential has not been proven – you have to use numbers, its what I’ve always said.”
Regardless of what the government promised, which has recently included a proposed 150 billion euros in energy-related revenue over the next thirty years, Rigas concluded, Energean’s approach would remain the same.
“We are consistent with our view that the only way to prove potential is to drill – everything else is assumptions and projections.”
Link to source: http://www.forbes.com/sites/christophercoats/2014/05/22/greece-rekindles-search-for-oil-and-gas-but-political-hurdles-remain/
The licenses include both on and offshore efforts, with two awarded to consortiums led by Greece’s Energean Oil and Gas. The Ioannina block will pair Energean with Canada’s Petra Petroleum, while the Katakolon will link the firm with Trajan Oil, according to a company release. The third license was awarded to a consortium of Hellenic Petroleum, Edison and Petroceltic for an offshore block in the Gulf of Patras.
A welcome step after years of regulatory delays, the licenses will still need to be ratified by the Greek Parliament, which could see a shake-up in coming weeks should local elections continue work against incumbents.
This week, Greece held the first of two rounds of local elections, with results showing support for the far-left Syriza party in key areas of the country. Although the elections will not directly influence the make-up of the Greek parliament, which is currently led by the two-party coalition of the New Democracy and Pasok parties, they could work against the existing leadership and the policies of Prime Minister Antonis Samaras.
In terms of the country’s efforts to revive its energy exploration program, this could mean an eventual challenge to the ratification process should the existing coalition fracture under pressure from Syriza.
While the far-left party has avoided making any specific comments regarding the licenses, they have previously spoken out in favor of nationalizing the country’s natural resources with the intent of using energy revenue to “create a fund that would guarantee the viability of Greece’s social security system.” While this does not mean a ban on new exploration in the Greece, the threat of nationalization will make it difficult to appeal to foreign investors already wary of the country’s financial landscape.
Despite the possibility of political challenges to the licenses, Energean CEO Mathias Rigas remains confident that the projects will be ratified without too much trouble. Speaking on Monday from Athens, Rigas highlighted that the signing event had been well attended by national and international political figures, including the Greek Vice President and ambassadors from Canada and the United Kingdom, sending a strong message of support for a return of Greek hydrocarbon efforts.
“At the moment, we have not witnessed any major issues with anyone in the parliament,” Rigas said.
“Everyone recognizes that natural resources have to be explored and this is something that is beyond this government and supported by all political parties. As long as the government has a majority there, we don’t foresee any problems.”
Still, Rigas cautioned against over-selling the idea of Greece’s hydrocarbon potential, including comments from the current political leadership. In December, Prime Minister Samaras told a gathering of political and business leaders that Greece could be home to 4.7 trillion cubic meters of gas could one day provide up to 25 percent of European demand. If they could manage to combine this with already active efforts by Cyprus and Israel, this amount could climb to 50 percent and not just for the short term, but for the next 30 years. This type of talk, Rigas explained, was understandable given the recent energy boom in the Eastern Mediterranean, but needed to be backed up by real, proven data.
“Five years ago, if people talked about natural gas in Cyprus or Israel, no one would have believed them,” Rigas said. “But you have to be patient and cautious, especially in a place like Greece where potential has not been proven – you have to use numbers, its what I’ve always said.”
Regardless of what the government promised, which has recently included a proposed 150 billion euros in energy-related revenue over the next thirty years, Rigas concluded, Energean’s approach would remain the same.
“We are consistent with our view that the only way to prove potential is to drill – everything else is assumptions and projections.”
Link to source: http://www.forbes.com/sites/christophercoats/2014/05/22/greece-rekindles-search-for-oil-and-gas-but-political-hurdles-remain/
