BUSINESS

Positive indications emerge on oil reserves in Aegean

By Stelios Bouras - Kathimerini English Edition

Aegean Energy, the country's only operator of oil and gas production, may launch several new drilling operations in the northern Aegean Sea in coming months after exploration revealed signs of more undersea hydrocarbon reserves, it said yesterday. Aegean Energy Chairman Mathios Rigas told Kathimerini English Edition in an interview he is confident the company will tap more oil reserves off the coast of Kavala, in northeastern Greece, by the end of the first quarter of 2010 as the company ups current production levels. Aegean Energy, which employs 280 people, is developing three offshore fields - Prinos, Prinos North and Epsilon - about 18 kilometers offshore. It expects to increase production levels by 66 percent to 5,000 barrels per day (bpd) by the end of the year, up from 3,000 bpd, ahead of further possible expansion in 2010. Aegean Energy, which drills for hydrocarbons through its 95 percent-owned subsidiary Kavala Oil, is implementing a five-year $200 million investment plan, the biggest the sector has seen in Greece in more than 25 years. Rigas added that international companies are starting to take a closer look at oil and gas exploration in Greece, one of the few countries in the region with unexplored potential for hydrocarbon production. Aegean Energy has entered uncharted waters for the Greek economy by drilling for oil. What kind of production facilities do you have and what kind of oil volumes are we talking about? Our drilling program for 2009 includes three wells. There is the well in the Prinos North Field which was successfully completed at the end of July, one extended-reach well in the Epsilon Field being drilled at the moment and a sidetrack well in the Prinos Field, which is scheduled for year-end or early January 2010. We are confident Epsilon will start producing before year-end, bringing the company's daily production to between 4,500 and 5,000 bpd, from 3,000 bpd currently. Maximum production capacity stands at 30,000 bpd. How are your investment plans moving along? We have already invested more than $50 million for the first well and we are investing a further $30 million for Epsilon. We expect total production of 1.5 million bpd in 2010. However, we are planning more wells. Does your exploration point to more oil in the region? In March 2009, we conducted a large-scale seismic study, an operation which is the first phase of exploration, for new targets in oil and gas off Kavala. This study revealed some very interesting potential targets which our geologists are reviewing. The question is whether it is economically viable to produce these hydrocarbons. It is not just about finding oil, it is also about finding it in quantities and areas that make sense for it to be produced. Before the year ends we will be able to announce what our next exploration targets will be. Are you confident you will soon be drilling in more areas? Yes. We intend to extend the contract for the Ensco 85 jackup rig and use it for at least two more exploration and appraisal wells in the first quarter of next year. Oil prices are very volatile and crucial to your profitability and investments. At what level does it start being a concern for you? A price between $60 and $70 per barrel suggests a healthy level for everyone, oil companies like us can survive and make more investments. Our own business plan is based on a much lower oil price of $55 per barrel. How does Greece stand in comparison with its neighbors when it comes to oil and gas exploration? Greece is one of the few countries in the Mediterranean that hasn't been properly explored. Cyprus had a licensing round in 2009. Albania has been producing a lot of oil for many many years, while there is major activity in Turkey. Romania is one of the major oil producers offshore and onshore and Libya also has a lot of activity. The same goes for Tunisia and Egypt, while Italy is also very well explored. So if you look around us, everyone has substantial operations. This is the only spot where there is only one operator working and one field producing. How would you rate the interest in Greece from foreign oil companies right now? I think we will see a lot more interest going forward. Greece is now on the international gas and oil map. We are paving the way for international oil and gas companies to look at Greece again. People have started to ask what is going on in Greece. Once results start coming out, like we saw in summer with the successful completion of the well at Prinos North Field, then we will see increasing interest. sbouras@ekathimerini.com

Online