LOOKING AHEAD: Greece turns to oil and gas for financial salvation

• Published date: 01 November 2013
• DOI: http://doi.org/10.1111/oet.12113
• Date: 01 November 2013

LOOKING AHEAD

Greece turns to oil and gas for financial salvation

As part of its response to the country’s economic and

financial crisis, Greece is to promote the development of

oil and gas production. In the short term, any production

would reduce the country’s large and growing bill for

imports of oil and gas. Revenues from production would

also boost the government’s tax-take and possibly reduce

the need for future borrowing to fund the country’s

debt-ridden public sector.

Greece’s production of both oil and gas is minuscule

and its proven reserves are very small in world terms

(see Table Q), but the government is encouraged

by results from exploration elsewhere in the Eastern

Mediterranean, especially off nearby Cyprus. It is

proposed to offer more than a dozen blocks for

exploration between now and the end of 2014. The

main outside interest appears to be in the prospects for

natural gas, but there are also hopes of new oil finds.

Revival ahead?

Until the 1980s Greece was a minor producer of oil with

an output of just less than 30,000 bpd of oil, but by 2013,

production had fallen to about 2,000 bpd. Production

comes from the small Prinos and South Kavala fields in

the northern part of the Aegean Sea. In 2013, it awarded

exploration licenses for another offshore block named

Katakolo and an onshore block named Ioannina to a

number of small independent companies. Exploration is

also set to take place at Patraikos, which is near Katakolo.

None of these areas, however, are expected to produce

much in the way of oil. The main interest is expected

to lie in waters off western Greece and south of the

island of Crete: in the Ionian Sea and the Eastern

Mediterranean. A seismic survey of these areas began in

November 2012 and the full results should be available

in early 2014. If the results show the existence of suitable

structures, the next stage for Greece will be to establish

an exclusive economic zone offshore as the prelude to

a licensing round. However, this may not prove to be

straightforward because part of the seas off Greece is also

claimed by Turkey.

There is considerable optimism in Athens over the

possibility of large finds in the Eastern Mediterranean

following recent announcements of significant discov-

eries off the Levant, with particular interest focused on

Cyprus. There are also encouraging signs for the waters

off Lebanon and Israel [1].

Eastern promise

About 75.5 trillion cf gas reserves have been tentatively

identified in the seas to the east and south of Greece

Table Q

Greece: Oil & Gas Profile, 2013

OIL

Proven Reserves 10 mn bbl∗

(bpd)

Production 2,000

Consumption 300,000

Net Imports 298,000

NATURAL GAS

Proven Reserves 35 bn cf*

(

mn cfd)

Production †

Consumption 385

Net Imports 385

∗As of 1.1.13

†Negligible

Totals rounded

Source: (Reserves)

Oil & Gas Journal

(Other) Pearl Oil forecast

Table R

Eastern Mediterranean: Projected Gas Reserves, 2013

Country Reserves

(trillion cf)

Cyprus 25.0

Israel 25.0

Lebanon 15.0

Syria 8.5∗

Northern Cyprus 2.0

Total 75.5

∗Proven

Totals rounded

Source: Country/company data

(Syria)

Oil & Gas Journal

(see Table R) and the total could easily rise as further

exploration takes place. The reserves off Cyprus are

estimated at 25 trillion cf. Off Israel, one field alone,

the Leviathan, is projected to hold 19 trillion cf, and

Israel is already planning to become a net exporter of

gas. While these reserve numbers remain projections at

present, they do indicate considerable potential across

the region. Israel’s proven reserves have already risen

from 1 trillion cf in 2010 to over 9 trillion cf at

the beginning of 2013: potential reserves are even

higher.

Commercial gas discoveries are of particular interest

to Greece, which is trying to reduce both its imports

of gas and its dependence on Russia, which accounts

for about 55% of domestic Greek supply. There have

been various attempts to diversify sources of supply,

beginning in 2000 with the import of liquefied natural

©2013 John Wiley & Sons Ltd