Southeast European countries including Greece have missed an opportunity to encourage offshore exploration of oil and gas while prices were high, according to the nation’s largest explorer.
Undeveloped oil and gas potential in waters off Greece, Croatia and Montenegro will now have trouble attracting the interest of international oil companies after investors were discouraged by protracted bidding procedures and last-minute tender cancellations, said Mathios Rigas, chief executive officer of Energean Oil & Gas.
Oil has slumped about 50 percent in the past year due to a global supply surplus. While Exxon Mobil Corp., Total SA, OMV AG and Marathon Oil Corp. had initially shown interest in the Adriatic, investors’ appetite for the region has dipped along with the crude price, Rigas said.
“Bids cannot stay open forever, waiting for governments to make decisions,” Rigas said in an interview in Dubrovnik, Croatia. “If they had closed the bidding rounds when the oil price was $120, they would have a lot more interest than they do today. But it takes these countries two or three years to evaluate them and meanwhile the market conditions change.”
Croatia’s government, which hailed oil and gas exploration as its biggest economic project when it came to power four years ago, postponed signing production-sharing agreements with investors this week on concern it could hurt its chances in the upcoming election. With players like Marathon Oil exiting the scene, it is unclear when the agreements will be signed.
Greece attracted only three bids in July for 20 offshore blocks opened for exploration west of the mainland and south of the island of Crete. Montenegro started a process to award licenses for 13 offshore blocks last year.
“In the oil-price environment of $45 a barrel where they are living today, the big players are going back to their core areas and home countries, and they are leaving the frontier of new exploration,” said Rigas, whose company currently produces 2,000 barrels a day of oil and gas in Greece. “Who wants to be wasting three years going back and forth to a country?”