1. New licencing rounds

Following the revision of the special law governing upstream oil and gas activities in Greece in 2011 (i.e. Law 2289/1995) and the conduct of non-exclusive seismic surveys offshore Western Greece and south of Crete in 2012 – 2013, the Greek oil and gas sector has been set in motion again after a long period of very limited activity since the mid-90s.

In this context two international licensing rounds have been in progress since summer 2014 for the granting of exploration and exploitation rights in twenty offshore1 and three onshore blocks2 in the aforementioned areas.

2. State rights and roles

Hydrocarbons prospecting, exploration and exploitation rights in onshore and offshore areas, over which the Greek State has sovereignty or sovereign rights, are vested solely with the Greek State and they are exercised in accordance with Law 2289/1995 (or the Hydrocarbons Law) which was adopted in transposition of the relevant EU Directive 94/22/EC.

Since 2011 the management of these rights on behalf of the Greek State has been typically assigned to the newly established but still understaffed Hellenic Hydrocarbons Resources Management Company S.A. (HHRM). Hence the HHRM’s role is currently largely performed by the supervising Minister of Reconstruction of Production, Environment and Energy (Minister) and the competent directorates of the same ministry.

Greece has not yet typically delimited its continental shelf and exclusive economic zone (EEZ), where sovereign rights are exercised. However, its sovereignty extends to six nautical miles from its land territory (including islands) and internal waters (i.e. territorial sea), and it reserves the right to extend its territorial sea up to twelve nautical miles (according to Article 3 of the 1982 United Nations Convention on the Law of the Sea (UNCLOS)). In any event a five-7hundred metres safety zone is established by the Hydrocarbons Law around offshore oil and gas installations which is deemed national territory.

3. Granting rights to investors


Hydrocarbons prospecting rights in a defined area by any appropriate method, other than drilling, are granted through a Prospecting Licence for a term of eighteen months and they may be non-exclusive. The awarding process may be initiated either by HHRM or after application by any interested party.

Exploration and exploitation

Exclusive rights to hydrocarbons exploration and exploitation in specific areas are granted to private investors either through a Lease Agreement or through a Production Sharing Agreement (PSA) with the HHRM acting on behalf of the Greek State.

It is noted that the Greek State currently favours the Lease Agreement (the material terms of which are set by Presidential Decree 127/1996) and therefore this briefing refers mostly to this type of agreement on the basis of the Model Lease Agreement put forward by the Ministry.

However, the recently elected new Government does not exclude the PSA option and it is currently considering some more active State participation in exploration and exploitation activities. Of course this would require the revision of the Hydrocarbons Law and HHRM’s role to this effect.

Awarding procedures for hydrocarbons exploration and exploitation rights comprise of:

  • An invitation to interested investors to tender through an international licensing round; or
  • An application by interested investors, which, if accepted, is followed by an invitation to tender; or
  • An open invitation (‘open door’) for expression of interest by interested investors by the end of each calendar semester in specified areas.

Any invitation to tender is published in both the Gazette of the Government and the Official Journal of the European Union with a minimum bidding period of ninety days from the latter publication.

The invitation to tender must define the areas of interest and must elaborate on the participation and selection criteria, as well as on the biddable items (e.g. minimum exploration works, royalties, capital depreciation, and signature and production bonus).

The selection of the successful bidder to execute the Lease Agreement or the PSA may be vetoed by the Minister and the execution of such concession agreements with HHRM is subject to the Minister’s approval, otherwise they are null and void. In practice though such agreements are ratified by special laws passed by the Hellenic Parliament for increased transparency and enhanced investment protection.

4. Exploration stage

The exploration stage cannot exceed 7 years for onshore areas and 8 years for offshore areas. However, time extensions are possible under specific terms and conditions. The exploration stage is divided into more (2 or 3) phases, but the concessionaire must first complete the respective minimum exploration works and expenditures before continuing to the next phase.


During the exploration stage the concessionaire may surrender the entire contract area or parts thereof against consideration payable to the HHRM.  At the end of each exploration phase the concessionaire is obliged to relinquish parts of the initial contract area ranging between twenty and fifty per cent thereof, other than any area(s) which became exploitation area(s) in the meantime. Clean-up activities, removal of installations, environmental restoration and health and safety protection measures (including insurances) must be completed within six months in any case.

5. Exploitation stage

The exploitation stage commences upon notice to the HHRM of a commercially exploitable deposit, accompanied by the necessary data and evaluation material. The duration of this stage is twenty five years per exploitation area and may be extended for up to two 5-year periods (when the initial term is demonstrated not to be adequate for the purpose), subject to renegotiation and execution of a new concession agreement. Exploitation areas must be as rectangular as possible and, in principle, cannot exceed one hundred square kilometres.

Concessionaire must conduct petroleum operations in accordance with the development and production programme. It is obliged and entitled to produce and market hydrocarbons and their by-products for its own benefit, either in their crude state or following processing, but it is not entitled to undertake any refining activities.


At the end of an exploitation stage there are usual decommissioning and environmental restoration obligations for the concessionaire. The relevant costs are supposed to be funded through a special reserve to be raised by the concessionaire throughout exploitation. Decommissioning is supervised by a joint committee and may only be suspended, with the consent of the Minister, for as long as petroleum operations continue in the same contract or in another contract area of the same concessionaire.

6. Payments

The concessionaire is obliged to pay to the HHRM or the Greek State, as the case may be, the applicable:

  • royalties, either in cash or in kind, which are calculated by reference to the relevant R-Factor (i.e. cumulative revenues / cumulative costs) and are imposed on a sliding scale (with a lower limit of 4 per cent of the hydrocarbons produced) quarterly;
  • taxes, and in particular a special income tax at a rate of twenty per cent and a regional tax at a rate of five per cent (exclusively);
  • surface fees, typically provided for in the Model Lease Agreement; and
  • signature and production bonus.

7. Rights of foreign investors (non-EU nationals)

Non-EU nationals (whether natural or legal persons) may be also granted hydrocarbons prospecting, exploration and exploitation rights as long as the principle of reciprocity with the country of origin applies. However, the Ministerial Council may refuse the granting or the transfer of such rights to to any entity which is effectively controlled by a third country or third country nationals on grounds of national security. Likewise, change of control of the concessionaire from EU to non-EU controlling countries or nationals (either directly or indirectly) is not allowed without the prior consent of the Ministerial Council at the risk of forfeiting the concession.

Farm-ins and farm-outs

Similarly, transfers of parts or entire concessions to third parties or affiliates (including transfers resulting in change of control) are subject to the prior consent of the HHRM and approval by the Minister provided that the transferee meets the tender participation criteria (e.g. financial and technical capabilities, and prior experience) notwithstanding any grounds of national security for the refusal of this consent.

8. Dispute resolution

The Lease Agreement is governed by Greek Law and the dispute resolution mechanism thereunder provides for: (a) final and binding expert determination on technical matters, unless appealed to arbitration on points of law; and (b) arbitration in Athens pursuant to ICC Rules of Arbitration for all other disputes or claims between the parties, including failure to appoint an expert, by exclusion of the jurisdiction of the Greek courts.


Arbitral awards can be enforced in Greece by virtue of and pursuant to Greek civil procedures law, while Greece has also entered into a number of bilateral treaties which include provisions on enforcement of arbitral awards and is a signatory to and has ratified both the New York Convention on the recognition and enforcement of foreign arbitral awards, as well as the Convention on the Settlement of Investment Disputes (ICSID Convention).

9. Environmental protection

Hydrocarbons exploration drilling and exploitation are classified as projects that may have significant impact on the natural environment. Therefore an environmental impact assessment (EIA) is required, on the basis of an environmental impact study (EIS), in order for an environmental terms approval (ETA) to be granted by the Minister before constructing the relevant installations and commencing any such operations, notwithstanding any Strategic Environmental Assessment (SEA) that may be previously conducted by the State for broader areas of interest. Prospecting and exploration (other than drilling) enjoy a simpler environmental licensing regime.

Environmental liability

Notwithstanding the concessionaire’s environmental liability towards the State regarding the prevention and remedying of environmental damage, by virtue of Lease Agreement the HHRM also has a strong say on preventative and remedial measures, including ordering a pause in petroleum operations, if deemed necessary.

However, a financial guarantee (either a bank one or an all-risk insurance contract) is also required from the concessionaire, in order for the State to secure the availability of funds, at any given time, for the rehabilitation of the environment.

10. Labour mobility

Greece may be in short supply of the experienced and specialised personnel necessary for petroleum operations, but concessionaires may freely employ EU citizens in general and non-EU citizens for petroleum operations requiring special expertise. Visas, residence and work permits are relatively easy to obtain for them and their families, unless there are reasons pertaining to national security or public order.