In a little over 12 years, Energean has grown from a relatively small company to one of the leading players in the energy sector in the Mediterranean, with major assets in both Israel and Greece. Having successfully issued an IPO on the London Stock Exchange that raised $465 million in 2018, the Company raised a further $260 million for the acquisition of Edison E&P in July 2019, which is set to expand Energean’s portfolio to eight countries in the region. In this interview, CEO, Mathios Rigas, discusses Energean’s competitive advantages over the bigger players in the market, its involvement in some of Europe’s most important gas pipeline projects and Greece’s potential to become a major energy hub
What have been Energean’s biggest successes and what have been the main challenges throughout its path to becoming one of the leading players in the energy sector?
The biggest success has been the fact that we started from a $1 million investment in 2007 when we bought the Prinos concession from the previous owners. And over the last 12 years, we have turned it into the largest independent oil & gas Company on the London Stock Exchange, with a big focus on the Mediterranean, a big focus on gas, and a very sustainable footprint. Also, we are an E&P company that was the first in the world to commit to being a net-zero emitter by 2050. So, the combination of business growth and our sustainable footprint has made us a leader in the energy scene in the Mediterranean.
Undoubtedly, the biggest challenge has been dealing with the various changes in government in Greece, as well as the various changes in geopolitical events happening in the region – because the Mediterranean, and more particularly the Eastern Mediterranean, is a challenging place to be. It is a very fragile area that you need to know how to navigate to succeed.
At the time when you started your operations outside of Greece, your flagship projects were offshore in Israel. A lot of people had questioned your ability at the time to deliver these kinds of projects as a smaller company. Can you take us through the journey of your Israeli projects and the success they’ve had up to today? What sets Energean apart from the bigger operators to gain trust for such important projects?
A lot of people believe that for a non-Israeli, Israel is a difficult market to penetrate and succeed in. It was a very similar question people asked me when I started Energean back in 2007: How can you do business in Greece if you’re not one of the big families that have a big influence on this country? How can you succeed in building a business in a big market like the energy market without being part of the so-called establishment?
In both cases, our persistence, commitment, and dedication to getting the business done, the fact that we are transparent, honest and know our strengths very well, allowed the decision-makers – in this case, the Israeli government – to entrust Energean to be the Company to break the monopoly in the country.
The anti-trust commissioner decided they wanted to break this monopoly, so they wanted to bring in competition. At the time we were a much smaller company than today. So, the Israeli government did take a risk. Our commitment to them (and this is the answer to your second question) was that Israel would be at the top of our agenda. In the case of Greece, the country has seen a lot of interest in the upstream sector; majors and big companies have arrived after the success story of Energean here. And my question is: are the blocks that these companies have in this country at the top of their agenda? Because if they’ re not, the projects will just stay on the shelf and we’ll never see anything happening.
A typical example is Cyprus. Big discoveries have been made, but no developments are happening at the moment. We went to Israel and within 14 months, we turned what was assumed to be a stranded gas field into a successful project, with 1.7 billion dollars of investment behind it, because of our dedication and commitment to the project. That is what differentiates us from others. We are smaller than the majors but we can raise funds and put projects together.
The acquisition of Edison E&P was a very important milestone for Energean. How does this impact your presence in the gas sector in the Mediterranean? And can you elaborate more on your role in the development of the gas sector in the region?
This is a transformational deal for us. Edison’s assets in the E&P sector are already in our focus area in the Mediterranean – with a presence in Italy, in Egypt, in Croatia, and with a couple of blocks in Greece also. With Edison E&P’s assets in our portfolio, we will be present in eight countries, with a portfolio that is 80% gas. Starting from Israel, moving to Cyprus, going to Greece and on to Italy in Europe, we are present in all the countries that will route the East Med pipeline and we have gas to feed to the pipeline. Therefore, we will play a big role because pipelines like the one that has been envisaged need gas volume to go through it.
We expect that we will discover more gas in Israel, Egypt and Greece. We are committed to drilling wells. I want to make clear that there has been a lot of discussion about the potential of countries including Greece. But you only know what you have once you drill the well. Everything else is speculation. But we believe the potential is there and that is why we are investing money.
Can you give your insight into how feasible these projects are and what commercial sense they can potentially make to Energean?
The East Med pipeline is extremely important and will create significant investment opportunities for German investors. The gas that has been found and will be found in the Eastern Mediterranean will find its way into the European gas market. So, we have vast quantities of gas that have already been discovered in the Mediterranean and we have a big market in Europe that consumes big quantities of gas. You need to link those, so the commercial sense behind the pipeline will come and has been proven through agreements like the one we signed with DEPA, the state owned gas supply company in Greece, which shows there is interest from both sellers and buyers of gas in Europe to utilize this pipeline.
I’m confident that this pipeline will not only bring governments together but will also give an export route to all the producers of gas in the Eastern Mediterranean. It is a pipeline that is challenging both technically and financially. But it was also challenging to start a project in Greece; it was challenging to start in Israel, it was challenging to do an IPO. However, we are built for these challenges.
It seems you have taken on a lot of challenges and risks. What is your perspective on taking such risks?
In an environment like Greece, taking a risk in the energy sector was, and still is today, a great opportunity. Greece and Israel are countries that need a lot of investment in the energy sector. There is a very ambitious plan in both countries to shut down coal-fired generation, which will create a huge demand for gas-powered generation. We all want to move to a world that will rely on renewable energy sources. But there is a transition in which we will need to go through gas-fired generation, and we hope to play a large role in that transition.
So, in both countries, there are huge opportunities in the energy and power sector that would lead us to supply the gas. And that is the reason why we took those risks, we saw those changes coming and I see more changes coming today with climate change and the pressure we’re all under to have a sustainable future for our children and our planet. And in this context, gas is going to play a major role. So for anybody that wants to invest in the energy sector: that’s what we represent. Those are the kind of calculated risks we like to take. We’re taking advantage of opportunities created by pressures outside the market.
How well positioned is Greece to become a major energy hub and to play a major role in the gas scene in Europe? And what is Energean’s role in this regard?
First of all, we need pipelines that will make Greece a hub. TAP is the first big step; East Med is another one that needs to happen. The second thing you need is to have storage facilities and we have been promoting the underground gas storage project in South Kavala for several years. You need LNG import terminals, so the FSRU project in Alexandroupolis is very important. But you also need to find your natural resources; otherwise, you just become a transit area.
Investment in exploration is extremely important in Western Greece and Southern Crete. We are playing a major role because we already have three licenses in Western Greece, and with the Edison E&P acquisition we’re taking over more licenses in Greece through their portfolio. I believe we also have to focus on finding hydrocarbons. Otherwise, Greece would just become an area that imports gas and burns it. You need multiple investments to turn a country like Greece into an energy hub.