ATHENS – A consortium of US oil and gas giant ExxonMobil, French energy major Total, and Greece’s Hellenic Petroleum (HELPE) has been awarded a tender to explore for oil and gas off the island of Crete, Greece’s Energy and Environment Ministry said on July 3. Exxon and Total each have 40% in the consortium.

The Greek Parliament has to ratify the licenses before exploration work can begin, a prospect that the US’ Ambassador to Greece Geoffrey Pyatt told New Europe on July 3 the decision is “very good news.”

Hydrocarbons Company CEO Charles Ellinas agreed. “At last! Approval took a long time but it is really good news for Greece. IOCs (International Oil Companies) have already expressed a degree of exasperation with the slowness of the process of awarding licenses. Going forward Greece must speed up this process,” he told New Europe on July 4.

Ellinas noted that prospects for gas discoveries south and west of Crete in carbonate formations, similar to Egypt’s massive Zohr field, are good. “These areas are deep-water offshore with complex geology making them challenging to explore and develop, requiring international experience and financial capability, which this consortium provides,” he said.

The chairman of the Institute of Energy of South East Europe, Costis Stambolis, cited petroleum-engineering experts, noting that in south Crete there are very deep depths. “We’re talking about 3,500 metres below sea level,” he said, “which means another 2,000-3,000 metres below the seabed. We’re talking about 7,000 metres. This requires advancement in technology and I think this is very much in the petroleum companies’ centre of attention right now on how to proceed.”

“What’s going to happen south and southwest of Crete is purely at exploration stage at this level. We still have a long way to go,” Stambolis said.” And even if new oil or gas resources are found it will require a complete new strategy to extract these hydrocarbon reserves and bring them to international markets.”

Constantinos Filis, director of research at Institute of International Relations, reminded that Total is currently exploring off Cyprus.

“As for Total’s involvement, I foresee a further engagement on behalf of France in securing its wider strategic – and not only on the energy field -interests in the region, which can fit into Greece’s agenda of finding permanent partners based on mutual interests in order to confront more effectively any security challenge deriving from Turkey’s assertiveness,” Filis told New Europe in Athens on July 5.

Asked if the decision to award the tender to the consortium to explore off Crete makes plans to construct the EastMed gas pipeline more viable, Filis said, “For the time being, I do not see any connection between any future finds south of Crete and the East Med pipeline, because in that case Greece can feed the European market on its own. At the same time, the prospect of exploring hydrocarbons from the Greek soil might give a further boost to the East Med project as an extra source.”

For his part, Ellinas noted that the proximity of these Greek blocks to Italy and Europe makes transporting any discovered hydrocarbons to European markets possible by pipeline and thus very competitive.

“Any new discoveries will not impact the EastMed gas pipeline and certainly will not make it more viable,” Ellinas said, adding that the competing East Med gas discoveries are not only more expensive to develop, but require liquefaction and transportation to markets, which make them quite expensive in the prevailing low gas price environment.

“The key is the involvement of both Total and ExxonMobil both in Cyprus and now Greece,” Ellinas said, adding that both companies have identified the East Med as an area with strong natural gas potential, which they plan to exploit. “With global energy in transition and oil on the way to peak demand, both companies are in the process of diversifying their portfolios with more emphasis on gas. The East Med offers them such an opportunity and they are seizing it,” Ellinas said.

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