Hydrocarbons are back in play: Chevron explores, Exxon Mobil drills in the spring

The American “secret” of the Greek government about the Chevron’s interest in the potential natural gas deposits of Crete before the planet decides to turn the page and welcome to the White House the champion of the American slogan “drill, baby, drill” Donald Trump.

The semantics of the “coincidences” of the government announcement that the world’s second largest fossil fuel company is interested in Greek hydrocarbons -on the day of the inauguration of the new US president-, is perceived by energy and business circles in the country as a change in the green agenda, but primarily as a profound political message that the country is continuing the energy transition with more realistic goals, but also with the conviction that the role of gas needs to be reassessed for Europe’s energy autonomy up to 2050 (and beyond) with the two largest oil companies on the planet as allies.

With Greece already in place in ExxonMobil, which controls the two blocks west and southwest of Crete and is one step away from an investment decision to drill or not drill an exploratory well (in partnership with HelleniQ Energy, formerly HELPE) southwest of Crete, since last Monday Chevron’s entry is shaping new geopolitical correlations and putting Greece on the global map of big oil.

Unexplored areas

The unexplored areas of Crete and the Ionian Sea are believed to have come under the radar of the international operator at least two years ago (perhaps even further back), with reports suggesting that their visits to Athens have been regular, having even signed a memorandum of understanding with HelleniQ Energy to buy a stake in the promised concessions in Crete and the Ionian Sea. This plan, however, did not materialize.

Instead, the Americans preferred to choose for themselves which marine land to explore, submitting a request for an expression of interest months ago to the Ministry of Environmental Protection and the Hellenic Hydrocarbon and Energy Resources Management Company (Hellenic Hydrocarbon and Energy Resources Management Company (HHERC) which was accepted. Chevron’s entry into Greece shuffles the deck of cards for hydrocarbon exploration and production that the prime minister opened amid the energy crisis back on the table, even putting new land concessions on the table, with what this may even mean for attracting new investment interest.

At the same time, the government is granting a second smaller block on the northern side of Chevron’s target (the A2) to HelleniQ Energy. The latter, which is the continuation of the Public Petroleum Enterprise (PPO) claiming a now more substantial role in the upstream sector, is located next to the big US company in the south of Peloponnese. Plot A2, which features on the map that includes the area southwest of the Peloponnese to the west of Crete, was given to the former ELP in exchange for parts of an area of land granted to them and returned for environmental conditions (National Marine Park).

The fact that the two companies appear to be very close to the marine hydrocarbon plots is not something that can go unnoticed, given the line of communication they have long cultivated, and the wider synergies that transatlantic penetration into the hydrocarbons of Crete may cause.

The geopolitical role

Experienced executives in the domestic fossil fuel market link Chevron’s interest in the Greek upstream market to a wider geopolitical game being played in the region, and to indications of serious natural gas deposits. “These companies have a fund like a state budget, they are in many countries and when they do business development it’s like a foreign ministry,” says a well-informed source explaining the specifics, and the games being played around the fossil fuel sphere.

But what motivated the big oil company’s interest in Crete? Dinos Nikolaou, an oil geologist, a former executive of ELP and Energean, with 50 years of experience in the industry and knowledge of the region and its peculiarities (great depths of the sea with complex tectonic conditions), believes that the only advantage the new area has is that it borders the northern border of ExxonMobil’s blocks. This means that if the US company hits a target with promising deposits, it will have taken up a strategic position in a strategic part of the Greek EEZ. As it says, the southern part of ExxonMobil’s concession is adjacent to the middle line of the Libyan-Greek continental shelf.

“It is as if I have a demarcated continental shelf with a company operating in the area and I have established these boundaries as the area is within the midline of Crete – Libya,” the market executive says. This concession de facto delimits our EEZ and, as pointed out, it is as if it has become a kind of “usufruct” without anyone being able to move us! Something that reinforces the belief that the hydrocarbon game in these maritime areas is not only economic but also deeply geopolitical, as it sends primarily political messages beyond the energy dimension of mineral wealth.

Nicolaou argues that ExxonMobil and Chevron are moving autonomously, but stresses that there may be cooperation and information sharing between the powerful players in the industry, so the Americans’ descent to the west and southwest of Crete is not just a coincidence.

680 billion cubic meters

What will be the benefit for Greek consumers from the new round of concessions? For there to be a benefit we will have to find gas, government officials answer, and point to the fact that our country is home to two of the largest private companies on the planet that have started looking for hydrocarbons – and that is a fact of great importance in itself. “If you don’t drill to drill, you don’t know what’s underground. We are doing what is necessary to make the exploration a success and prove that it is economically viable,” Minister of Environment and Energy Theodoros Skylakakis said. This also confirms the view of industry executives that there is no gas if there is no drilling.

Conservative estimates of the size of potential deposits have been made in the most recent annual report of the EDEYEP. As stated in the 2023 report, the estimate of potential and probable reserves of the eight hydrocarbon exploration and production contracts in Greece (there have been six since the return of the blocks in Katakolon and Energean’s Ioannina respectively), where no exploratory drilling has yet been carried out, amount to 24 trillion cubic feet or 680 bcm (billion cubic meters) of gas. This projection makes our country self-sufficient in terms of supply for both present and future energy needs and for exports until the end of the decade.

This is also the road map of mining (commercial exploitation towards 2030), which is also proven by the account of ExxonMobil’s actions in Crete to date, as it took five years to carry out the basic surveys to acquire 2D and 3D measurements southwest of Crete. The route, say market executives, is not easy, there are many stages and there is always the factor of appeals to the Council of State, which in the case of ExxonMobil shook the timetable by three years and contributed – among other factors – to Energean’s withdrawal from Ioannina. The good news, in Skylakakis’ view, is that if gas is found, it will ensure – in addition to boosting state revenues from income tax and production dividends – access to cheap gas for many decades.

Chevron’s interest increases the area of the concession by 11,500 square kilometers, growing to 50,000 square kilometers the area occupied by the three contiguous plots (west, southwest of Crete, and south of the Peloponnese), which are attracting the attention of international operators and HelleniQ Energy. The Ministry of Environment and Energy estimates that every time a well is drilled there is a 10% chance of finding gas. “The key is to have a lot of plots in play, competition between big global companies, and money on the table to drill the wells. And that is something we have achieved as a country,” they say.

Critical March

The Greek government is awaiting a decision on ExxonMobil’s exploratory drilling southwest of Crete, which is set for March 2025. That’s when the deadline for it to declare whether it will proceed with seismic surveys for the western block, for which it has requested a 6-month extension. If, according to well-informed sources, it answers in the affirmative, then this will bode well for its decision to take the next investment step southwest of Crete, where the concession is more mature.

Otherwise, it will return to the block west of Crete, with the most likely indication that it will not proceed with drilling. However, even if the development is positive for ExxonMobil, the timing of exploratory drilling is not specified until 2026 to 2027, as many steps are required to move forward. Once the green light is given, the company will have to submit an Environmental Impact Assessment, which will go out to consultation and, barring any appeals, will take time to be approved. If drilling then takes place and there are deposits, confirmation drilling must be carried out to secure an operator’s licence, which secures an operator for 25 years.

Gas is being put down

Everything contributes to the view that the Greek hydrocarbon project, combined with the sweeping support of the oil giants after the Trump victory is entering a new era in Greece as well. Already the signals in Europe for the ripping up of the… The European Commission is already sending out signals for the ripping of the green sweater and the revision of the Green Deal targets.

In the past few days, in a letter from the European People’s Party (EPP), to which the president of the EU belongs. Ursula von der Leyen, Kyriakos Mitsotakis, and Christian Democrat leader Friedrich Murch, who has taken the lead for the German chancellorship, call for national governments to decide which technologies will achieve climate targets, but at the same time call for serious restrictions on the expansion of the emissions trading system.

This follows a letter from the prime minister to the president of the European Commission aimed at giving member states greater flexibility in meeting green transition targets and addressing energy costs, as well as Kyriakos Mitsotakis’ recent public statement in Athens in the presence of former Italian Prime Minister Enrico Letta. In the latter, Mitsotakis said that we must implement the green transition at a pace that does not destroy Europe’s competitiveness and does not hurt the less privileged, giving a vote of confidence to natural gas. From the same platform, he even appeared disappointed by the fact that even in the European Union they treat natural gas as something horrible. “While we all know that we will need it for the next 30, 40, maybe even 50 years.”

This is, in any case, a major shift in the government’s approach to the green energy agenda, the bar for which the prime minister himself set very high at the beginning of his first term in 2019, surprising the market from the podium of the United Nations when he announced the closure of DEE’s lignite plants. Despite leading Greek business leaders, who did not hesitate to question the ambitious goals of the energy transition, considering the costs unbearable for citizens and the Greek industry, which, due to lack of state support, is constantly seeing its competitiveness decline due to high costs and the imbalance of electricity prices between the North and South-East Europe.

The throttle down from the high speeds of the Green Deal has already been pointed out by leading market executives. It is no coincidence, say industry representatives, that although in 2019 the green transition was the Commission’s No. 1 priority, it is now not even in the top 10 guidelines of the new commission. Therefore, the announcement of Chevron’s investment interest and clear support for the country’s mining goals is only coincidental.

Delays

The Greek government appears determined to fast-track the process. Significantly, the Strategic Environmental Impact Study for the southern Peloponnese land has already been submitted to the Ministry of Environment, and a tender process has been launched to appoint a contractor by the end of the year. In doing so, the Ministry of Environment seeks to send a message to those who criticize the government’s backtracking on hydrocarbons that showed the way out to leading European hydrocarbon companies.

Source: pagenews.gr