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.