Greek Oil & Gas - Second offshore licencing round - key dates and considerations

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Summary: The Greek government has now launched its new offshore oil & gas licensing round focusing on Western Greece and South Crete, covering approximately 200,000 square kilometres divided into twenty blocks. Details of the proposals were provided to industry representatives at a pre-launch event held in London in July. In this article, oil & gas lawyers Adam Dann and David Cook highlight key dates and considerations for the forthcoming round and share their experiences advising Hellenic Petroleum on the first Greek licensing round.

The Greek government has now launched its new offshore oil & gas licensing round focusing on Western Greece and South Crete, covering approximately 200,000 square kilometres divided into twenty blocks. Details of the proposals were provided to industry representatives at a pre-launch event held in London in July. In this article, oil & gas lawyers Adam Dann and David Cook highlight key dates and considerations for the forthcoming round and share their experiences advising Hellenic Petroleum on the first Greek licensing round.


The second licensing round is to be conducted under the statutory legal framework introduced under Greek Law 2289/1995 as subsequently updated under Law 4001/2011. The updated legal framework provides for: (i) the adaptation of best international practices; (ii) a transparent and investment friendly legal framework; and (iii) the introduction of Hellenic Hydrocarbons Resources Management S.A to operate as the competent authority in connection with the Greek government’s hydrocarbon resources.

Licensing Regime

As with the previous licensing round, the Greek government has proposed to enter into lease arrangements with successful applicants.

  • The lease agreements are expected to be split into exploration and exploitation phases and structured as follows:the exploration phase for an offshore licence is expected to be 8 years, with the possibility to extend this by a maximum of a further 8 years in two intervals with lessees obliged to relinquish certain parts of the contract area at these intervals; and the subsequent exploitation phase is expected to be for 25 years with the right to extend by up to 10 years in two 5 year intervals.
  • The contract area during the exploitation phase is expected to cover 100 square kilometres with an option to extend this to 200 square kilometres (subject to necessary approvals).

Government revenues are expected to be obtained through a combination of royalty arrangements (either cash or in-kind and increasing proportionately with calculated profits) and special reduced rates of taxation being 20% income tax and 5% regional tax. The current general income tax rate of 40% is expected to be amended in the near future but no firm date has yet been provided.

As with the first licensing round, applicants will have the opportunity to bid on the payment of surface fees payable annually in respect of the contract area together with the payment of bonuses upon signature and subsequent production milestones.

Key Tender Information

  • The application deadline for bids is six months from the date of the OJEU notice (26 August 2014) with a target to execute lease agreements within a further six months.
  • Bids will be welcomed for individual blocks and may be made by individual entities or consortia.
  • Each application will require the payment of an application fee and a bid guarantee and the bid itself must be unconditional and valid for 180 days following the application deadline.
  • Each applicant (including each consortium member in the case of joint applications) will be required to purchase certain 2D and other seismic data in connection with the relevant blocks.
  • Bids will be evaluated on the basis of applicants’ financial and technical capability (with a particular focus on deep water technical capability and strict environmental regulatory compliance) and the quality and timeframes of proposed work programmes.

BLP’s experience in Greece

BLP acted on behalf of Hellenic Petroleum in connection with its first round joint bid with Edison International and Petroceltic for the offshore acreage known as Patraikos Gulf (West) in May 2014. This was one of two concessions awarded in the first offshore licensing round.

As with many hydrocarbon concession arrangements, there were differing negotiating positions between the parties. The Greek government sought to maximize both revenues and the level of commitment from the consortium members while the consortium members sought to align the lease arrangements in a manner that, as closely as practicable, structured their investment in the project through an unincorporated joint venture structure in line with common practice in other jurisdictions. With the effective co-operation of the consortium members and input from both Greek and English advisers, the consortium was successful in negotiating satisfactory lease and joint operating agreements which addressed the concerns of each of the consortium members and the Greek government.

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