Hellenic Petroleum has announced the agreement to sell its 20% participating interest in a Libyan oil and gas exploration license.
Hellenic Petroleum, together with Woodside (45%) and Repsol (35%), participates with a 20% stake in a consortium that was awarded an oil and gas license that allows for the exploration of 5 onshore blocks located in the Sirte basin and one block in the Murzuq basin.
Under the terms of the exploration and production sharing agreement, signed by the consortium and Libya's National Oil Corporation (NOC), the joint venture has also the option to negotiate the terms of the appraisal and development of an additional block, also situated in the Murzuq basin.
As part of the Group's restructuring of its Exploration and Production assets, Hellenic Petroleum evaluated all strategic options regarding its concessions in Libya.
Following an international tender for our 20% participating interest in the consortium, an agreement has been signed with the Franco-Belgian GDF Suez. The agreement has been approved by NOC and is subject to approval by the Libyan government.
The Company's exploration program indicated the presence of natural gas in the consortium's blocks, rather than oil as was initially expected. In addition, substantial capital expenditure is required for the commercial development of the natural gas deposits.
The consideration amounts to $151 million (euro 104 million), exceeding the Company's past exploration expenses in the area. Note that, the effective date of the agreement being January 1, 2008, the exploration expenses incurred by Hellenic Petroleum during this year (estimated at approximately $20 million) will ultimately be borne by the purchaser GDF Suez. In addition, the agreement provides for contingent payments in the event of further discoveries.
Hellenic Petroleum was advised in the transaction by Standard Chartered Bank.
According to John Costopoulos, Chief Executive Officer of Hellenic Petroleum, "This transaction is a further step in our strategy to reorganize our E&P activities so as to create value and boost competitiveness of the Group.
"Hellenic Petroleum will maintain its operations in Libya via its office in Tripoli and continue its exploration program in Egypt."
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