- The words ‘Hellas’ and ‘Greece’ refer to the same country and will be used interchangeably throughout this article. The official name of the state is the Hellenic Republic.
- Hellas has oil reserves of 10 million barrels, producing 8,750 barrels per day (bbl/d). Its oil industry is dominated by state-owned Hellenic Petroleum (HP), which conducts oil exploration, imports crude oil and other products, and operates three large refineries. HP is partially privatised, with the state holding 60.1 per cent, although the government announced its intention to sell another 30 per cent of HP. See www.eia.doe.gov/emeu/cabs/greece.html.
- Hellenic oil production comes from the Prinos area in the Aegean sea, off the coast of Kavala in northern Greece. The Prinos fields have been re-operated since 1996 by a Greek-US-Canadian consortium (NAPC). A new oilfield was found in the adjacent area of Thasos by Kavala Oil, with production expected to be 7,000–7,500 bbl/d. E Papadaki, ‘The Greek Oil Industry’, at www.acci.gr/trade/No16/56–59.pdf.
- Law No 2289 (1995) on Search, Exploration and Exploitation of Hydrocarbons (1995 Petroleum Law), reprinted in 43 Code NB (1995, in Greek), 248.
- 34 ILM (1995), 360. See generally, T Wälde (ed.), The Energy Charter Treaty: An East- West Gateway for Investment and Trade (Kluwer Law International, 1996).
- The total investment amount for these exploration projects will reach 30 billion drachmas. See Papadaki, supra n 3, at 58.
- HP is developing a 143-mile pipeline to carry crude oil from the northern city port of Thessaloniki to HP's refinery in the Former Yugoslav Republic of Macedonia.
- It should be noted that EC Commission Directive 98/30 has permitted Hellas to deviate from relevant EC directives concerning the liberalisation of the natural gas market, until the end of 2006, on account of its status as an emerging market.
- The state may transfer its rights under Article 2(1) of the 1995 Petroleum Law (ie the right to explore, search for and exploit hydrocarbons) to HP, in accordance with Article 11 of the Law.
- Article 2(1), 1995 Petroleum Law.
- Article 6(3), ibid.
- The application of imminent domain in favour of contractors is further guaranteed in Article 12(1)-(5) of the 1995 Petroleum Law, to land with subterranean and groundwaters, private or public forests, where the land is indispensable for the contractor's operations in exploring and extracting the mineral.
- Ibid.
- Article 954 of the Civil Code (CC) emphasises that the owner of the land is automatically owner of the land's components (ie soil, rocks, etc). However, the right of the owner, as described in Article 954 CC, does not extend to minerals, irrespective of whether these are on the surface of the land or deep in its subsoil (Article 3, Law No 210/1973 on promulgation of a Mineral Code). The practical implication of this observation from the contractor's point of view is that: (a) even if the land super-adjacent to the hydrocarbon deposits remains in the ownership of its Civil Code landowner, the latter does not have a right to search for or extract the mineral; and (b) where ownership of the land is assumed by the state, the contractor may use any or all of the land's components, since the contractor substitutes the state in its ownership rights, in accordance with Article 6(3) of the 1995 Petroleum Law.
- See Article 2(1), 1995 Petroleum Law.
- N Livanis, Courses on Mineral Law (Sakkoulas Publications, 1987, in Greek), pp 28–29.
- Article 7(12) and (13).
- Article 7(12), ibid.
- Ibid. See also Article 2(3), Presidential Decree No 127 (1996), infra n 39, which specifies that where it is agreed that the concession will be paid in kind, the state obtains ownership of an amount equal to the totality predicted for the relevant trimester, while the concessionaire obtains any remaining amount of hydrocarbons. The concessionaire is under an obligation to submit a report to the state within ten days from the end of each calendar trimester, which must present productivity during the last trimester. The state may demand the concession in monetary value, but it must notify the concessionaire in writing for this purpose at least 90 days before the start of each calendar year.
- As laid down in Article 9(2)(a)-(i), 1995 Petroleum Law.
- Article 12(23), ibid.
- Article 10(1), ibid.
- Ibid.
- Article 2(10), 1995 Petroleum Law.
- Article 2(14), ibid. The Minister signs the aforementioned contracts as an agent of the state, and represents the state in all its relevant contractual dealings with the contractors, in accordance with Article 12(29), ibid.
- Article 2(37), ibid.
- Production-sharing agreements had been utilised before the introduction of the 1995 Petroleum Law, most notable of which was that signed in 1975 between the Hellenic state and Oceanic Exploration Company of Greece, Hellenic Oil Company Inc, Wintershall Aktiengesellschaft and White Shield Greece Oil Corporation. The agreement was ratified by Parliament through Law No 98/1975.
- Decision No Δ1/T/23500 (1995).
- Article 2(5) and (6), 1995 Petroleum Law. A bid is not necessary, however, under para 7, if the field is permanently available, has been abandoned by its previous concessionaire, or has already been the subject of a contract that did not materialise.
- Article 2(22), ibid. The plan must be approved by the state, in accordance with para 23 of Article 2.
- Article 2(24), ibid.
- Article 2(25), ibid.
- Article 2(24), ibid
- Article 2(27), ibid.
- Ibid.
- Article 2(25), ibid.
- Article 2(26), ibid.
- In practice, this means that the concessionaire will lose the right of co-ownership of the extracted hydrocarbons, as granted in Article 7(12), ibid.
- Article 2(1)(a), Decree No 127 (1996) (1996 Concessions Decree).
- Article 2(1)(b), ibid.
- Article 2(2)(a)(l)-(7). Again, the state may offer its objections, whereby in case of disagreement between the parties, they may refer their dispute to the aforementioned third expert bodies, whose advice must be premised on good oilfield practice, in accordance with subpara (7), ibid.
- Article 5(1), ibid.
- Article 5(2), ibid.
- Ibid.
- Article 6(1), ibid.
- Article 6(2), ibid.
- Article 7(A)(a). ibid.
- Ibid.
- Article 7(A)(b).
- Ibid. The same rules apply in general with regard to the price of natural gas, natural petrol and other hydrocarbons and their byproducts. Article 7(B), ibid.
- Article 9, ibid.
- Article 10(6) and (7), ibid.
- Article 8, 1996 Concessions Decree.
- Article 5(8), 1995 Petroleum Law. In special circumstances, mainly where the operations are cumbersome due to the terrain, the time limit for exploitation may be extended in accordance with para 13.
- Article 2(38) of the 1995 Petroleum Law makes it clear that production-sharing agreements relating to hydrocarbons are lex specialis, with the implication that neither similar Civil Code contract types nor legislation concerning the execution of public works are applicable.
- Article 2(30)-(32), ibid.
- In accordance with Article 8(5), ibid, which provides that amortisation charts may anticipate a percentage of amortisation based on the value of the amortised assets, including that relating to first installation and exploration, or an agreed maximum sum of amortisations determined on the basis of a percentage from the annual production.
- Article 2(35)(a)-(b), ibid.
- Article 2(35)(b), ibid.Article 14 of the 1975 production-sharing agreement between the state and Oceanic Exploration Company et al, supra n 27, stipulated that the contractor was entitled: (a) to retain up to 70 per cent of the production each year and for a period of five years for ‘cost- oil’ purposes, and an amount of up to 40 per cent after the five years; (b) after deduction of ‘cost-oil’, the state would take a share from the net production of between 65 and 80 per cent; and (c) what remains after the state's cut from the net production goes to the contractor, which is subject to a single income tax of 50 per cent (in accordance with Article 15 of the contract). The contract provided that upon discovery of a commercially viable deposit the contractor was granted an exploitation licence for a period of 26 years, which could further be renewed for ten years if the state agreed and the contractor had by that time completed his or her obligations in good faith.
- Article 2(34), 1995 Petroleum Law.
- Article 2(36), ibid.
- Article 6(6), ibid.
- Article 4(1), ibid.
- Article 4(2), ibid.
- Article 4(3), ibid. This is done for reasons of national security, as stipulated in para 2.
- A parent company under Article 1(9), ibid, is one which is directly or indirectly controlled by the contractor. The concept of ‘control’ under the Law is defined as possessing at least 30 per cent of the share that is entitled to voting rights, or where the contractor has the capacity to appoint the company's board of directors. For the purposes of Article 7(5) of the Law, ie conceding contractual rights to a parent company, ‘control’ presupposes possession of more than 50 per cent of its shares.
- Article 7(4), ibid. The consent may be granted with the initial contract between the state (or its agent) and the contractor, as provided for in para 8.
- Article 7(5), ibid.
- Article 7(6), ibid.
- Article 1(4), ibid.
- Article 5(1), ibid.
- Article 5(3), ibid.
- Article 5(2), ibid.
- Article 5(11), ibid.
- Article 5(7) and (8), ibid.
- Article 5(5), ibid.
- Article 5(6), ibid.
- Article 5(6), ibid, and Article 4(1), 1996 Concessions Decree.
- Article 4(2), 1996 Concessions Decree.
- Article 8(1), 1995 Petroleum Law.
- Expenses incurred during the exploitation phase in one field may be calculated as expenses incurred in another field already operated by the contractor, up to a limit of 50 per cent. Article 8(4), ibid.
- Article 9(2), ibid.
- Article 9(5), ibid.
- Article 8(2), ibid.
- Article 9(13),ibid.
- 1965 Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 57 UNTS 159. See M Hirsch, The Arbitration Mechanism of the International Center for the Settlement of Investment Disputes (Martinus Nijhoff, 1993).
- Article 26(1)-(3), ECT.
- However, Article 2(16), 1995 Petroleum Law provides that rights of exploration and exploitation accruing from agreements are not susceptible to seizure, although the minerals extracted may be; moreover, under Article 6(6), bis, objects imported to Hellas for the purposes of the operations may be taken out of the country again, under certain terms. This does not apply with regard to petroleum sharing agreements.
- Articles 13 and 21(5) ECT.
- Article 10(2) and (3).
- Article 10(1), ECT.
- Generally, the concept of a stabilisation clause is that ‘the host country shall not introduce legislative or other measures that would seriously endanger the return on the investment. Thus, the host state “freezes” somewhat the legislative and administrative framework that existed when the investment was made (stabilisation clause). Later changes in the law or administrative procedures may only be effective if they do not interfere with the investment or the return on the investment’: H Houtte, The Law of International Trade (Sweet & Maxwell, 1995), P 230. See particularly, T Wälde, G Ndi, ‘Stabilising International Investment Commitments: International Law versus Contract Interpretation’ (1996) 31 Texas International Law Journal 215.
- For a thorough analysis of the case, see P M Bemitsas, The Prinos Case: The International Implications of the Nationalisation of Companies (Sakkoulas, 1987, in Greek).
Journal of Energy & Natural Resources Law
Volume 20, 2002 - Issue 2