2. Petroleum Industry (oil & gas) is divided into three major sectors
 Upstream sector includes the searching for potential underground or underwater
crude oil and natural gas fields, drilling of exploratory wells, and subsequently
drilling and operating the wells that recover and bring the crude oil and/or raw
natural gas to the surface.
 Midstream sector involves the transportation (by pipeline, rail, barge, or truck),
storage, and wholesale marketing of crude or refined petroleum products.
Pipelines and other transport systems can be used to move crude oil from
production sites to refineries and deliver the various refined products to
downstream distributors.
 Downstream sector commonly refers to the refining of petroleum crude oil and
the processing and purifying of raw natural gas, as well as the marketing and
distribution of products derived from crude oil and natural gas.

3. Significant difference from the other two sectors
The Investments are:
 High Risk
 High Reward (IRR)
 Highly Capital Intensive
 Highly advanced technology

4.  After 1960 Governments offer exploration acreage through formal
bidding rounds, under fiscal terms and conditions established by law or
negotiated case by case.
 Fiscal system, means all the payment to government required under a
petroleum arrangement.
Important aspects of arrangement are: bonuses ,rentals, royalties, P. S.
arrangements, carried interest provision, corporate/special taxes.
 Government Take is the ΄’ Price ΄’ for the acreage
 Government Take is the total effect of the fiscal system on the cash-flows
of an oil field is a expressed as a percentage.
 The world average Government take is 64% varying between 25%-95%.
 In Europe ranges between 35%-65%
.

5.  Three types in the world in order to achieve the maximum Government Take
 1. Concessions Agreement (Royalty/Tax) grants the ownership of petroleum. Modern
concessions grants a fixed period (exploration 3-6 y. Exploitation 30-40y)and
government revenue is deprived mainly from Royalties( 11.5-14.5% ) and net income
taxes. This type is generally used by the non producing countries and new comer to
the oil industry and want to encourage foreign investment to develop their resources.
 Examples are U.S.A. Canada, Norway, UK, Brazil, Algeria, S. Africa,. Thailand,
Australia.

6.  2. Production Sharing Contracts (PSC’s): Government doesn’t grant
ownership, the contractors are provided with an amount of oil for the recovery of
their cost, as well as an amount that represent a share of the profit.
The government receive the remainder of the profit oil. Sometimes PSC’s have
also royalties and taxes.
Both government and contractor share the risk and reward from the operational
net profits.
PSC is generally used by countries very hostile to foreign companies and want to
participate more actively to E&P, refinery, marketing and distribution.
 Examples: Indonesia, Malaysia, Egypt, Gabon, Ivory coast, Syria, Yemen,,
Trinidad & Tobago, and recently Cyprus.
MODEL CONTRACTS 2

7.  3. Risk Service Contract: RSC’s: Service contract is one under which a private company
agrees to perform certain specified services for the government or a GOE in return for fixed
payment(pure service, Technical Service Agreement, which have money but lack of the
technical know-how) or probable profits(risk service).
 Examples: Mexico ,Iran, Iraq, Kuwait.
 The difference between service and PSC is nature of payment-Cash or Crude.
No inherent differences, in the level of Government Take revenues
that can be obtained through the 3 types of petroleum regime.
MODEL CONTRACTS 3

8.  Mega-trends, the price is determined by the market forces through:
• The supply of concession and contract areas by government.
• The demand for concessions and contract areas by IOC’s
 Micro-environment: Technical, Economic and Risk conditions.
 The maximum level of government take and government revenues, that
can be obtained is competitive with comparable other international
possibilities

9.  Pre-Concession (work preparation by government).
 Concession round & Prospecting period: (18–24 month) require
attractive terms, elements of the fiscal regime, fundamentals of petroleum
system for potential & prospectivity and political stability are mandatory.
 Exploration Phase: (3- 7 y.) a finite time for investment and discovery.
20% of total investment, understanding the petroleum system.
 Appraisal-development planning (1-2 y.) 60-70% of total investment.
 Project execution (2-4 y.) Time to production for recovery of exploration &
development investment as much as possible. Minimum amount for
government take.

10.  Production and Maintenance operations (25-30 y.) , golden phase of constant
government revenues. Government take at its highest. Marginal field prospectivity
should be the interest of the government in order to replace reserves and maintain
production levels .Otherwise the field go into the mature phase and the government
missed an investment opportunity to regain former levels of production with min
investments.
 Decommissioning and abandonment, no recovery from cash flow.
Each Period requires a special set of conditions to ensure
economic development, production and final abandonment

12.  Greece is the most unexplored area in the
Mediterranean
 Estimated as high Hydrocarbons potential
 Deep target - totally unexplored
 Dependency on imports: oil 99,9%-gas 100%
OIL & GAS EXPLORATION IN GREECE
Exploration Activity 1960–1988 in
shallow targets: resulted in the discovery
of the only producing offshore field in
Northern Greece 1973 (Prinos)
and two marginal fields :
Epanomi onshore gas field 1988 and
Katakolo offshore oil & gas field 1981

14. OFFSHORE PRODUCING FIELD IN NORTHERN GREECE
Prinos Offshore oil field (Oceanic/NAPC/Kavala OIL/ENERGEAN OIL
& GAS):
• Discovery: 1973
• First production: 1981
• Max prod. 1986: 30,000 b/d
• Total Reserves Produced:120 m.b
Prinos North:
• Discovery: 1994
• Recoverable Reserves 5 m.b
South Kavala offshore Gasfield:
• Discovery: 1973
• First production: 1981
• Max prod: 250,000 cm/d
• Total Reserves Prod.: 615 m.cm
• Depleted: 1994

15.  Completed successfully in 18 months – a Remarkable time
 1997: 4 Lease Agreements in Western Greece
 Ioannina (onshore)
 Aitoloakarnania (onshore)
 N.W. Peloponnese (onshore)
 Gulf of Patraikos (offshore)
Total Investment: $100 m.
(Exploration period)
Ooooooo

16. Block
Area
(Km2)
Company/
Joint Venture
Commitment
of Exploration
Phases
Minimum $
Commitment
Total
Exploration
Investment
Ioannina
Onshore
4,200
Enterprise oil 40%
Union Texas 28%
Mol 20%
DEP-EKY 12%
6 years 20 m.$ 20 m.$
Peloponnese
Onshore 2,025
Enterprise oil 40%
Union Texas 28%
Mol 20%
DEP-EKY 12%
4 years 17 m.$ 26 m.$
Aitolokarnania
Onshore
3,650
Triton Hellas 88%
DEP-EKY 12%
2 years 13.5 m.$ 35 m.$
Patraikos Gulf
Offshore
2,100
Triton Hellas 88%
DEP-EKY 12%
4 years 13.5 m.$ 26 m.$
Government take >60%

17. Main provissions
Type of Contracts :
• Royalty / Tax (Concessions Agreement)
• Production Sharing
Duration:
◦ Exploitation : 7 Years Onshore / 8 Years Offshore
◦ Production : 25 Years with extension for Gas and Deep water
Taxes: Income Tax fixed at 20% + 5% Local Tax.
Granting of Licenses by the State:
 Through international Tender by the Authorities (Licensing Round)
 Through International Tender following a submission of an application by an
entity
 Through Open Door Procedure
Law 2289/1995 as amended by the law 4001/2011

18. After 12 years freeze in E&P
activity, Greece conducted:
 An Open Door procedure in Western
Greece 2011 → STILL ONGOING!
 A Non-Exclusive 2D Seismic acquisition
offshore in Western Greece and South
of Crete (acquired by PGS), covering
~12.500 km → still in processing phase
 2011 establishment of H.H.R.M. S.A.*
Provided by the Law 4001/2011, but still
not operating !
PRESENT SITUATION IN GREECE
* Hellenic Hydrocarbon
Resources Management S.A.

20.  Government has to design fiscal regime in order to maximize the
value of revenues from oil and gas resources and at the same time to
be competitive in the International and Regional Context (Government
Take)
 Provide clear and detailed Terms in the Tender with a tight time-
schedule
 Provide a clear draft contract for potential investors to consider
 Create a climate for petroleum investment which would represent a
fair balance between the State and the International Companies

21.  Immediate selection of highly specialised experts in the sector in
order to regain the confidence and trust of the potential Investors
 Further delay will result in severe loss of the last opportunity in
achieving political stability, economic independency and energy
security
 Failing in Contributing in the regional supply chain will result in
geopolitical shrinkage and regional isolation
 Not acting promptly, will in time result in gradual deterioration of
the hydrocarbons potential

22.  The USA supports the E.U.’s effort to diversify Europe’s sources of energy and to
reduce dependence on Russia and Gulf. The export of part of the newly and future
discovered Gas reserves in the eastern Mediterranean to Europe, when they come
Onstream in sufficient quantity, would help achieve this goal.
 Apart from the potential of a new “South Corridor” of E.U. energy supply, the efficient
exploitation of Greek Hydrocarbons potential, Unifies, Integrates and makes the further
development of the whole region much more favorable in economic terms, providing
the sufficient quantity for the region.
 Greece - Cyprus - Israel axis is the only long term sustainable and E.U. friendly
force for development of energy exploitation in the whole region, with economic and
foreign policies aligned towards stability and interstate cooperation.
CONCLUSIONS