Greece to offer oil and gas companies tax cuts to develop offshore

Greece has made several fruitless attempts over the years to find big reserves of oil or natural gas as it bids to reduce fuel import bill which ran to $21.2bn, some 8.6% of its GDP in 2013.

Encouraged by gas finds offshore from nearby Israel and Cyprus, though these may not be as large as first thought, Greece is so determined to raise interest among oil and gas majors and Maniatis offered a carrot unheard of in Greece in recent years… a cut in tax.

The minister revealed 1 July that Athens is planning to cut tax rates for oil and gas companies. He did not say when the tax would come into force, but did say the plan is for oil and gas explorers to pay 25% tax, slashed from the current 40%. Further, to curry favour with regional communities he said 5% of the tax will be distributed locally.

Maniatis, heading a group of government oil and gas experts, told an introductory conference organised by his Environment, Energy & Climate Change ministry and the Greek ambassador to the UK, the tax measures were being introduced "in order to incentivise our investors to invest in the future of Greece".

He said some 20 blocks covering a combined area of more than 200,000 sq km in the Ionian Sea and south of Crete would go under the hammer. He and his team of Greek officials met with representatives from oil companies including BP, Shell, Total and ExxonMobil and Greece's Energean Oil & Gas.

The minister presented a plan, code-named “Greece MegaProject”, and invited major oil companies to conduct offshore test drillings. The tender process is to be officially published before the end of this month. '”Greece MegaProject” is the result of seismic tests completed in Greece by Oslo-based Petroleum Geo-Services, earlier this year.

The Energy ministry says PGS's findings are "encouraging", but Energean Oil & Gas, backed by ship owner Prime Marine Management and Greece's only domestic oil producer, doubts large deposits will be found. “We will evaluate all available data regarding the 20 offshore blocks which will be included in Greece’s new concession round,” said Mathios Rigas, ceo of Energean.

‘MegaProject" is not Greece's only plan to develop oil and gas reserves. Last month the government granted concessions to explore and exploit possible hydrocarbon deposits in three separate on- and offshore areas to groups including Hellenic Petroleum, Energean, Italy's Edison and Ireland's Petroceltic, while Maniatis has separately approved another request by Italian energy major Enel to search for hydrocarbons in another three onshore blocs in the Adriatic.

On June 26, Energean announced the estimate on retrievable oil reserves beneath the Bay of Kavala in the northern Aegean where it is working has been revised to 30m barrels, up from 27m barrels last year following a report by independent consultant ERC Equipoise of the UK and submitted to Energean. The consultant stressed there is considerable scope for extra output through the conduct of new drillings, the utilisation of lost oil quantities, improving the operation of existing wells as well as making better use of techniques such as exerting pressure on the reserves using water and gas.

"Production from the Gulf of Kavala will continue for at least a further 15 years," said Rigas. Energean and its predecessors have produced about 113m barrels of oil in the region over the past 33 years.

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Greece to offer oil and gas companies tax cuts to develop offshore fields