Government of Greece to Launch New Licensing Round and Announces Proposal for Significant Tax Cut to Encourage Hydrocarbon Investment

by King & Spalding

In early July, the Minister of Energy Environment & Climate Change of the Hellenic Republic and the Greek Ambassador in London hosted the official pre-launch event for a new offshore oil and gas bidding round at the Hellenic Centre in London. The new round will offer twenty blocks located to the south of Crete and in the Ionian Sea, covering a combined area of over 200,000 square kilometers.

The government of Greece seeks landmark agreements for the award of the first new oil and gas exploration leases in the country for nearly 20 years. The investment initiated by those agreements may have a value of around €700 million, depending on the success of the resulting exploration campaigns. The government hopes that this latest licensing round announced at July's pre-launch event in London will encourage further investment in Greece's hydrocarbons sector.

In 2011, the government of Greece initiated steps to encourage revitalization of its E&P sector by implementing Law 4001/2011, the objective of which was to improve the existing legal framework for E&P set down by Law 2289/1995. The new law provided for: (i) the adoption of best international practices and experiences; (ii) development of a transparent, competitive and investment friendly legal framework; and (iii) the establishment of "Hellenic Hydrocarbons Resources Management S.A." (HHRM), empowered as the competent authority to exercise the rights of the Hellenic Republic to exploit hydrocarbon resources within Greece and on its continental shelf.

The oil and gas regime in Greece is a licence-based structure, with licensees entering into lease agreements with the newly formed HHRM. The lease, based on the published model form, provides licensees ("lessees") with exploration rights in the contract area over an 8-year period, which period may be subject to extension. The exploration period is divided into three phases, each of which is linked to a specific work program. At the end of each exploration phase, the lessee must relinquish between 20% and 50% of the original contract area. Upon a declaration of commerciality, the lease advances into the exploitation phase. From that date, the lessee has exploitation rights over a 25-year period, with the possibility of two extension periods of five years each. The country operates a standard tax and royalty based fiscal regime, including royalties payable on "super-profits" through an R-Factor mechanism.

In a further move to encourage interest in the new licensing round and investment in the Greek petroleum industry, the government has announced plans to reduce the tax rate for companies engaging in oil and gas exploration in the country from 40% to 25%. A 20% income tax would apply with an additional 5% regional tax levied. As yet, no date has been set for implementation of the tax-cut. The Government has taken this step to reduce the tax burden on oil and gas companies and incentivize them to participate in exploitation of the country's hydrocarbon resources. The objective is to increase investment in its oil and gas industry with a view to reducing the nation's reliance on imported fuel.

Greece will formally invite investors to submit bids for the new round in September by posting a call for tenders in the European Union gazette. Bids are expected within the following six months. Interested parties will be able to submit single or multiple bids for the offered blocks and may also apply individually or as part of a joint venture or consortium so as to encourage interest from smaller investors, as well as the major IOCs.

The Greek government is hoping that the new tax measures, a transparent bid process and the political and legal stability of Greece, combined with recent discoveries in Italy and Albania with which Greece shares a geological history, will provide an attractive profile for investment in its oil and gas sector.

Susanna Marshall
+44 20 7551 7576
View Profile »

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© King & Spalding | Attorney Advertising

Written by:

King & Spalding

King & Spalding on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.