Fifth plot on Chevron’s radar in Greece

With a plan for nine drillings in the best-case scenario over a decade, the national hydrocarbon research and development program is moving forward.

Chevron is already considering additional moves in the field, with market players who spoke to “N” pointing out that the US company, which has recently ensured its presence in the Greek seas South of the Peloponnese and South of Crete, is reportedly in discussions with HELLENiQ ENERGY, about the possibility of collaborating on another concession, known as “Area 10” or “block 10”, in the Kyparissia Gulf.

The specific plot is located north of “A2”, the latter being one of four concessions recently awarded to the Chevron-HELLENiQ ENERGY consortium for research and development, along with the “South Peloponnese”, “South Crete 1” and “South Crete 2” plots, increasing the country’s total active concessions to nine and more than doubling the area under exploration in Greek seas.

HELLENiQ ENERGY has already completed the three-dimensional seismic surveys since January 2023, without however having proceeded to the next step, which is the exploratory drilling, to determine the existence or not of an oil system, and one that is already exploitable, so that the commercial exploitation can follow.

HELLENiQ ENERGY’s expectations

The Greek company’s “hesitation” lies both in the lack of relevant know-how and in the nature of the plot, with the area being characterized by “great depths” and therefore higher risk, with less certainty that something positive will emerge.

On this basis, HELLENiQ ENERGY, with the practice followed in the case of “block 2”, with the entry of Exxon Mobil months ago, is looking forward to the arrival of a large oil company, which will have the “know-how” to respond on the field and at the same time will have the size and adequacy to assume the relevant risk of implementing an exploratory drilling that reaches a cost of up to 100 million euros, without necessarily serious chances of locating anything.

The uncertainty regarding the area arises largely from the lack of data, which in turn can only be obtained and confirmed by conducting exploratory drilling.

Chevron’s aspirations

On the other hand, Chevron’s interest, as the same sources pointed out, is considered “reasonable”, with the relevant companies preferring to operate in expanded maritime areas rather than in individual pieces, as in this case the “A2” plot, with its total area reaching 826 square kilometers, located south of the Peloponnese.

In such a case, the possibilities increase, as well as the flexibility in determining candidate targets for carrying out exploratory drilling, with the additional note that a petroleum system, if it exists, is not limited to the “administrative boundaries” of a plot but extends and characterizes a wider area.

In this light, the Chevron and Helleniq Energy consortium plans, as stated by the CEO of the Hellenic Hydrocarbon and Energy Resources Management Company, Aristofanis Stefatos, during the presentation of the contracts a few days ago, to “run” in the case of “A2” and proceed directly to the second phase, namely the performance of three-dimensional seismic surveys, “ignoring” the first phase, which concerns two-dimensional seismic surveys.

The three-dimensional (3D) marine geophysical recordings, covering an area of 2,400 sq. km. in “block 10”, were carried out in the period December 2022-January 2023 by the company PGS (Petroleum-Geoservices) with a number of companies – as reported by sources with knowledge of the matter – having examined the data, but so far no one has decided to purchase it and collaborate in the field with HELLENiQ ENERGY.

Partner and exploratory drilling go together

It is noted that the “Ionio” plot, also under the jurisdiction of HELLENIQ ENERGY, is in a similar phase, where a partner is also being sought to advance the maturation of the concession to the next stages. In any case, as market factors pointed out and the industry’s own practice confirms with the most emblematic example of “block 2”, the entry of a large company is the only way to open the process and start to talk about exploratory drilling.

Significant benefit for the Greek State

According to the structure of the agreements, the state will receive a 20% corporate tax, a 5% regional tax and production rights that scale from 4% to 15% depending on the volume. The total return to the Greek State is estimated at around 40% of the production value, a percentage that is considered internationally competitive.

In addition to future tax revenues, the contracts also bring immediate financial benefits. According to Stefatos, approximately 3.5 million euros in bonuses are secured, while concession fees can potentially reach 35 million euros over time. In addition, it receives up to 25 million euros in training fees to enhance expertise and education, as well as a first production bonus of 5.5 million euros, with additional escalating bonuses that can reach 49 million euros as production increases.

Particular emphasis was also placed on the minimum guaranteed investment program. The companies are committed to bank guarantees of 17.5 million euros for the first exploration phase, 24 million euros for the second and approximately 100 million euros for the drilling phase.