ATHENS – Looking to its own natural resources as another way to get out from under a crushing economic crisis and reduce energy dependence, Greece and the country’s only oil and gas operator, Energean, have signed an agreement to look for hydrocarbons in several regions.
The deal will let Energean drill onshore near the northeastern city of Ioannina in what is seen as a small resource but what officials said was a critical step to finding potential reserves near the border with Albania, which found a bonanza of oil underground not far from the Greek border.
The Greek government is keen to cut its reliance on energy imports, hike state revenues and attract international investment as it sees a slow recovery from a seven-year recession and dependence on international bailouts that came with harsh austerity measures creating record unemployment and deep poverty.
“We are creating a new sector of the economy, one that will create jobs, particularly for the country’s younger workers,” Greece’s Energy Minister Yannis Maniatis said at the signing ceremony. There are hopes the yield could eventually reach as much as 4.38 billion euros ($6 billion).
The prospectors will invest 700 million euros ($956 million) to extract an estimated six billion cubic meters of gas in Ioannina, with around 250-305 million barrels of oil under the Gulf of Patrikaos and off the Katakolo coast.
Greece has also seen Cyprus rush to explore oil and gas reserves off its coast with some early indication that it could bring riches to a country also suffering an economic crisis.
Looking everywhere for cash and investments, Greece has been updating laws and gathering seismic data after letting the potential underground hydrocarbon reserves lay dormant for some 15 years, ignoring its value.
In Ioannina, Energean will team up with Canada’s Petra Petroleum, in a reserve estimated to deliver some 100 million barrels of oil. Depending on the success of the venture, the Greek company expects to invest €500 million ($686.8 million) in Ioannina, said Energean Chairman and Chief Executive Officer Mathios Rigas.
“What makes us think that there is oil or natural gas in the area? Looking around us to the north of our border in Albania, there is the Patos Marinza reserve, which has five billion barrels. Recently, Shell also announced a new discovery (in Albania) of 200 million barrels and, as we all know, geology knows no borders” said Rigas.
In the second concession agreement won by Energean, it will work with Trajan Oil at Katakolo, in the eastern Peloponnese. The third concession agreement signed is for an offshore area near the western city of Patras and went to Hellenic Petroleum, Edison and Dublin-based Petroceltic.
International investors are starting to pay attention to the hopes that Greece could produce quantifiable amounts of oil, especially as it’s been unexplored.
Last year, U.S. fund Third Point invested $100 million in Energean in one of the few foreign investments to take place in Greece which has bee struggling to attract international companies as it tries to get out from under a crisis largely created by governments hiring hundreds of thousands of needless workers in return for votes and spending wildly for decades.
BP also recently agreed to buy all of Energean’s oil in a move seen by some as being a strategic step by the oil giant ahead of its possible further expansion in the region, the Wall Street Journal reported.
Currently, Energean pumps some 2,500 barrels a day from its two oil fields off Kavala in northern Greece, a miniscule amount. There was no explanation at a signing ceremony on May 14 why Greece has sat on its hands instead of looking underground and offshore for potential energy riches.
The consortiums have committed to total investments in research amounting to 60 million euros, which – depending on the findings – could reach up to 800 million, Kathimerini reported.
The first drillings in the surveying will start off the coast of Katakolo in the western Peloponnese within two years, with retrievable reserves estimated at 5 million barrels.
Within three years there will be up to three drillings near Ioannina and in the Patraikos Gulf, western Greece, with total retrievable reserves at 300 million barrels (100 million and 200 million respectively).
The contracts were signed during a ceremony at the Energy Ministry in Athens attended by Deputy Prime Minister Evangelos Venizelos, Maniatis, his British counterpart Edward Davey, and Canadian Ambassador to Greece Robert Peck.
Maniatis said Italy’s energy major Enel is also interested in other areas of western Greece, saying that he is expecting the recommendations of the responsible committee imminently. He also spoke of the major round of concessions of regions for surveying that concern the Ionian Sea and the area south of Crete, expected to start next month.