Denison, Greece sort out oil deal

The government of Greece plans to nationalize the oil and gas fields in the Aegean Sea held by an international consortium led by Denison Mines.

In March the government said it would draft a bill allowing it to buy a control block of shares in the North Aegean Petroleum Company (napc), an international consortium in which Denison has a 68.7% equity interest.

But after months of negotiations involving the government and consortium officials, those plans were withdrawn last week.

Under the terms of the agreement, the Greek government will relinquish its claim to acquire up to a 51% interest in the Prinos and South Kavala oil and gas fields which produce 26,500 bbl of oil and 4.9 million cu ft of natural gas daily.

“The agreement eliminates any uncertainty about the future of Denison’s oil and gas interests in Greece, and it ensures that any further development of oil and gas properties in the Aegean Sea will continue to be in the best interests of the Greek people,” said Denison Chairman Stephen Roman.

The properties are said to be worth $700 million(US).

However, if the agreement is ratified by the Greek parliament, it will require napc to receive government approval for any new exploration activity it wishes to undertake in Greek waters.

The Greek government will also assume an additional 5% interest in the non-producing development area surrounding the Prinos and South Kavala fields.

That would reduce Denison’s interest in the non-producing area to 58.4% from 61.9% and bring the government’s total interest in the development area to 15%. The consortium will continue to retain an 85% interest.

“The issue is now resolved and we look forward to a resumption of relations with the Greek government,” said Denison spokesman Ed Shiller.

Nevertheless, the agreement does not resolve a dispute involving Greece and Turkey over an exploration area 18 km east of Thasos in the north Aegean.

While the consortium has received permission to explore this area, it has put its drilling plans on hold until the two countries resolve their ownership dispute.

The Greek government holds a 25% interest in the disputed area while Denison’s interest stands at 51.6%.

During 1986, Denison produced 5,098,000 bbl of crude oil, 343,000 bbl of natural gas liquids, 986,000 million cu ft of natural gas and 80,000 tonnes of sulphur from its Greek operations. That represented over half of Denison’s total oil and gas production in 1986. The Toronto company also produces oil and gas in Spain, Canada and Egypt. Revenues from oil and gas represented about 40% of Denison’s total revenue which amounted to $412,285,000 in 1986.