In the 1970s, an unlikely company played a key role in opening up Greece's oil and gas industry. That company was Toronto's Denison Mines, then better known as a uranium miner but one with ambitions to put the Eastern Mediterranean on the energy map.
It worked for a while. Offshore rigs in the Prinos field, in the brilliant blue northern Aegean Sea, pumped away until the late 1990s, when the oil price collapsed. The Denison-led consortium handed the entire project to the Greek government and walked away.
For the next two decades, pretty much nothing happened in the Greek oil and gas sector even though the country's energy bill was soaring.
That all changed in 2009, when a new Greek explorer, Energean Oil & Gas, prodded the old field back to life. Today, it is Greece's only oil producer and, with the help of a small Canadian company, Petra Petroleum, is leading the charge to prove that Greece can meet a good chunk of its energy needs.
"Any discoveries of oil and gas would be a huge benefit to the local market," said Energean chief executive officer Mathios Rigas, a former investment banker and private equity fund manager. "We will never find out unless we drill wells."
Foreign investors are starting to pay attention.
Last year, Third Point, the U.S. hedge fund that made a big profit on trading distressed Greek sovereign bonds in 2012, when the country was on the verge of bolting from the euro zone, invested $100-million (U.S.) in Energean for a 45-per-cent stake. Energean is contemplating an initial public offering, but not before next year.
Loaded up with capital, Energean is expanding its northern Aegean operations, where it produces about 1,850 barrels a day, and has picked up stakes in two offshore Israeli fields. In the Aegean, a $200-million investment program for new wells and two new production platforms should boost production to 5,000 to 6,000 barrels a day by 2016.
But that's not the exciting story. Energean new exploration areas in the west of Greece, by the Adriatic Sea, hold the most potential to transform the company from a minor oil and gas company into a fairly significant player. An arc extending north from southwestern Greece, through Albania, Montenegro and Croatia, is emerging as the Mediterranean's new oil frontier and attracting some big industry names, including Chevron and Shell.
Albania, home of Europe's biggest onshore oil field, is already on its way to becoming a big oil and gas producer. There, Toronto-listed Bankers Petroleum is at the development forefront with its heavy oil properties. At last count, the company's proven and probable reserves were 232-million barrels and production was 19,300 barrels a day.
It believes the Patos-Marinza field, where it operates, potentially holds more than 5 billion barrels.
Not far away, on the other side of the Adriatic, an oil boom is under way in southern Italy. In the Basilicata region (the arch in Italy's boot), Italian oil giant ENI and its French counterpart, Total, are working on projects that would double Italy's oil production to about 200,000 barrels a day. The region is thought to hold 1 billion barrels or more of oil, making it Europe's second-biggest onshore field (Europe's biggest field is under the North Sea, split between Britain and Norway).
In Western Greece, Energean recently won the right to explore the largely onshore Ioannina block and, farther south, the largely offshore Katakolon block. Energean's partner in Ioannina is little, Venture exchange-listed Petra Petroleum, with a 20-per-cent stake. Energean is happy to have Petra as part of its team because Petra's vice-president of operations, Christopher Brown, knows the eastern Adriatic area well. When he worked for Enterprise Oil (now part of Shell), he was responsible for the Ioannina block.
Energean plans to spend more than $60-million exploring the two blocks. While Mr. Rigas admits that no one has a clue how much oil the areas potentially contain, he is optimistic, noting the onshore "oil seeps" in western Greece and in Albania.
"This is a potentially big area opening up and we are well positioned to exploit it, " he says, to the point the company is considering the purchase of small energy companies that are active in the area.
A lot could still go wrong. Western Greece could prove to be an oil and gas dud, though the significant oil resources in neighbouring Albania and across the Adriatic in Italy suggest the region has at least some potential for discoveries.
Politics may play a bigger risk. Greece's far left Syriza party placed first in Greece in the May European parliamentary elections. It has talked about nationalizing Greece's national resources industry, though nationalization is not official party policy. If the energy industry were to come under state control, goodbye foreign investors.
But given the dire shape of the Greek economy, and its horrendous fuel bill – the country imports 99.5 per cent of its oil and gas needs – outright nationalization of the oil and gas projects seems unlikely and Energean doesn't count it as a risk. "We have a huge energy deficit that needs filling," Mr. Rigas says.