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ATHENS – In the 1970s, an unlikely company played a key role in opening up Greece’s oil and gas industry. That company was Toronto’s Denison Mines, then better known as a uranium miner but one with ambitions to put the Eastern Mediterranean on the energy map.
It worked for a while. Offshore rigs in the Prinos field, in the brilliant blue northern Aegean Sea, pumped away until the late 1990s, when the oil price collapsed. The Denison-led consortium handed the entire project to the Greek government and walked away.
For the next two decades, pretty much nothing happened in the Greek oil and gas sector even though the country’s energy bill was soaring.
That all changed in 2009, when a new Greek explorer, Energean Oil & Gas, prodded the old field back to life. Today, it is Greece’s only oil producer and, with the help of a small Canadian company, Petra Petroleum, is leading the charge to prove that Greece can meet a good chunk of its energy needs.
“Any discoveries of oil and gas would be a huge benefit to the local market,” said Energean chief executive officer Mathios Rigas, a former investment banker and private equity fund manager. “We will never find out unless we drill wells.” Foreign investors are starting to pay attention.
Last year, Third Point, the U.S. hedge fund that made a big profit on trading distressed Greek sovereign bonds in 2012, when the country was on the verge of bolting from the euro zone, invested $100-million (U.S.) in Energean for a 45-per-cent stake. Energean is contemplating an initial public offering, but not before next year.
Loaded up with capital, Energean is expanding its northern Aegean operations, where it produces about 1,850 barrels a day, and has picked up stakes in two offshore Israeli fields. In the Aegean, a $200-million investment program for new wells and two new production platforms should boost production to 5,000 to 6,000 barrels a day by 2016.
But that’s not the exciting story. Energean new exploration areas in the west of Greece, by the Adriatic Sea, hold the most potential to transform the company from a minor oil and gas company into a fairly significant player. An arc extending north from southwestern Greece, through Albania, Montenegro and Croatia, is emerging as the Mediterranean’s new oil frontier and attracting some big industry names, including Chevron and Shell.
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