Legal & Fiscal Terms

Legal terms

Since 2011 the Greek E & P underwent significant restructuring. The 1995 hydrocarbons law (Law 2289) that adopted the EU directive 94/22/EC, was reviewed (Law 4001) offering a new framework of an investment friendly platform and establishing a state authority, the Hellenic Hydrocarbons Resources Management S.A. (HHRM).

The Hellenic Republic grants E&P rights for block areas by tender procedures under the form of License Rounds, Open Door Invitations or Accepted Individual Initiative. Tender announcements are published in the Government Gazette and in the Official Journal of the European Union. The deadline for offer submission cannot be less than 90 days from the day of the last publication.

Exploration stage is 7 years for onshore areas and 8 years for offshore ones. It is divided into phases (usually three), each one linked to a separate work program with the opportunity either to enter the succeeding phase or to withdraw from further commitments at the end of each phase. Extension possibility may be approved up to 50% of the initial period under specific terms and written consent of the Lessor, described in the Agreement. Any further extension (max to the original stage duration) requires the resolution of the Council of Ministers. Termination or surrender of the lease agreement where the minimum work program is not fulfilled is subject to compensation equivalent to the minimum expenditure obligation.

HSEQ

Greece is committed to all relevant international protocols, agreements and EU legislation, actively encouraging best oil practices. Recently Greece adopted the 2013/30/EC Off Shore Safety Directive (Greek Law 4409/2016). The protection of the commercial and tourist activities and of the environmental heritage are goals to positively involve the local communities.

In accordance with the EU Directive 2001/42/EC, a Strategic Environmental Assessment (SEA) report is required for each area of interest, describing and evaluating the likely significant effects on the environment while implementing hydrocarbon exploration and exploitation activities. Licensees are bound to follow and comply with the results and recommendations of SEA.

Fiscal terms

The exploitation stage, upon declaration of commerciality, is 25 years long with optional 5 + 5 year extensions. The adopted concession scheme is royalty and tax based lease agreement. Royalties on production are linked to the ratio R/C where R is cumulative revenue and C is cumulative costs. Royalty is deductible for the purposes of assessing income tax. The corporate tax rate is 20% and the regional tax is 5%, applied without any additional ordinary or extraordinary contribution or duty in favor of the State or other third party.