By Felix Tsourakis, IN-VR Oil & Gas

As part of the preparations of the 7th Balkans Petroleum Summit, Felix Tsourakis from IN-VR Oil & Gas, had the pleasure of interviewing George Kovacic, President of Croscorp International. George Kovacic is an Energy Expert, and the Chairman of the 7th Balkans Petroleum Summit. George has a successful track record of delivering results for well-known International Oil Companies (IOCs), drilling, seismic and oilfield service contractors and government agencies via his consulting company, Croscorp International Ltd.

George Kovacic, President of Croscorp International and chairman of the 7th Balkans Petroleum Summit

In this interview we discuss Croscorp's work in the Balkans, the region's potential, and delve into George Kovacic's take on the Summit and the region's growth. 

You are very active in the Balkans region. What have you achieved and how has that helped Croscorp International develop into one of the most influential firms in the region?

As a consultant, I rank my achievements by delivering my clients’ goals. My favorite achievements are those in which I have helped my clients achieve first-mover advantage by either being the first to obtain a permit or license or the first to provide a service. Personally I am particularly proud of having worked on all sides of the table, including for IOCs and drilling and oilfield service providers as well as for Ministries and agencies. This allows me to bring a unique skill set and perspective that enables me to provide solutions for my clients.

When I first began working in the region, I recognized that some countries required regulatory and fiscal adjustments to attract IOC investment. I then worked tirelessly to help facilitate these adjustments as well as access to data. This work has played a key role in attracting investors. In the process I gained the trust of decision makers and established an extensive network that includes Ministers and C-Level executives throughout the region as well as other stakeholders. 

In the past four Balkans Petroleum Summits you have been very vocal about the importance of the Balkan Peninsula. What makes this region special?

The region has it all and in the heart of Europe. From prolific offshore basins with producing oil and gas fields that despite decades of production still contain highly underexplored and largely virgin acreage to onshore areas that have oil seeps and outcroppings but remain a virgin province even though they show strong analogies with similar but producing areas not far away.  

An offshore example is the Croatian Adriatic. The Croatian offshore has had ongoing natural gas production for decades. Bordering Italian waters continue to have much larger production, including oil, yet nearby Croatian waters remain highly underexplored.   

An onshore example is the Federation of Bosnia and Herzegovina.  That entity is blessed with seeps and acreage that has strong analogies with similar producing Pannonian acreage in Croatia, Hungary and Romania yet has remained unexplored.  The entity’s Dinaride fold and thrust belt acreage has analogues similar to producing fields in the Italian Apennines. The recently announced Federation of Bosnia and Herzegovina bid round will allow IOCs to have direct access, for the first time, to both the entity’s Pannonian and Dinaride acreage.  

Even more exciting is that much of this acreage has been off-limits to IOCs and only now or in the near future will be available to IOCs.  How can one not be excited? 

As one of the most informed professionals in the region, which Balkan countries would you say are the ones that will make waves in the oil and gas industry? What opportunities will this create? 

Throughout the region I see the waves coming from the offshore. Substantial offshore discoveries have been made in Romania. Over the next several years, Greece and Montenegro are embarking on major offshore exploration efforts that will transform the region. Wood Mackenzie has selected the upcoming ENI and Novatek well in offshore Montenegro as one of their global ‘wells to watch’. The arrival of ExxonMobil, Total and Repsol into the region and their focus on the offshore is already generating waves both with other IOCs and with regional countries that have offshore acreage. I predict Albanian and Croatian offshore acreage will become the next hot spots as geology knows no man-made borders and the citizens of those countries will demand the energy security and other benefits that hydrocarbon E&P provides.

The regions onshore will keep on delivering.  Recent onshore developments include Shell’s discovery in Albania and Vermilion’s discovery in Croatia.

The opportunities that will be created will be endless. I predict that offshore oil and gas production will be a major economic driver and together with its economic spillover effects become the regions’ main economic driver. For example, a secure and less expensive natural gas feedstock will both stimulate the development of modern fertilizer facilities as well as hothouses which in turn will help make regional agriculture competitive on a global basis. The region is already blessed with a favourable climate, massive water reserves and substantial fertile soil.   

With the addition of local natural gas feedstock, the region could well displace the Netherlands as Europe’s main food exporter. A recent Deloitte study estimates that offshore Romanian oil and gas projects will create tens of thousands of high paying technical jobs and contribute over 7 billion USD annually to the Romanian economy. I predict the economic impact and opportunities will be larger than outlined in the Deloitte study and will be multiplied many times throughout the region. Ultimately, the economic and social benefits brought forward by hydrocarbon E&P will transform Southeast Europe.

How can Croscorp International assist oil and gas companies that want to enter the Balkans? What makes you one of the most highly-recommended consultancy firms for companies active in the region?

My market entry assistance is multifaceted. In the preliminary stages, I help clients evaluate the region or a particular market and determine if the market meets the client’s investment threshold. This includes provision of market intelligence as well as an above-ground-risk analysis covering political, regulatory, environmental and security risks as well as an overview of key issues, stakeholders, regulators and regional influencers.   

The intelligence includes a thorough briefing on the fiscal regime, hydrocarbon act and other regulations relevant to E&P with a particular focus on potential grey areas.   

I help my clients gain access to all available data including from agencies, geological institutes, universities, research organizations and multi-client options. Plans for upcoming license rounds are outlined as are options for out-of-round applications such as an Expression of Interest. Farm-in opportunities are provided.   

At this point, should a client decide to bid for acreage or a service/product contract, I advise on bid preparation and recommend local experts.    

Once an award is obtained, I assist with negotiations as well as Government and Public Relations and stakeholder management.  

Solutions can be comprehensive, ranging from facilitating access to legacy data to providing regulatory solutions. As needed, I have independently undertaken pro bono efforts recognizing that these are a necessary step to ensure success for my current and future clients as well as local stakeholders. For example, one of my pro bono efforts included helping ensure Croatia’s 1st PSAs received cabinet approval prior to dissolution of Parliament. Recently, I have had pro bono efforts in three regional countries. 

One of my ongoing initiatives that is critical for IOCs looking to obtain acreage in the region, is to facilitate bid groups and partnerships. Such partnerships minimize risk and encourage newcomers to enter the region. I have a growing list of IOCs that are looking to form regional bid groups or partnerships and request IOCs that could be interested to contact me.  

Meanwhile, Expressions of Interest, at times an overlooked method to obtain acreage, are possible in some regional markets. For example, I am looking to facilitate Expressions of Interest for IOCs looking to obtaining onshore or offshore acreage in both Greece and Albania and request IOCs that could be interested to contact me. A similar open door provision provided for in Croatia’s new hydrocarbon act means that once the country’s Ministry publishes an open area, IOCs will be able to submit proposals twice annually for offshore Croatian acreage.

If an oil and gas company would like to find out more about the Balkans, discover new opportunities and potentially get involved in the region, where would you say it is the best place to start and meet all the ministries? 

That is an easy question. The Balkans Petroleum Summit has consistently been able to gather the largest number of decision makers from the regional ministries and agencies. It is the one must attend annual event for any IOC, drilling and oilfield service provider or anyone else looking to enter into the region.

You successfully chaired the 6th Balkans Petroleum Summit. What are the key outtakes of the summit for you?  How is it helping the region develop?  

Many key outtakes were identified. I will focus on the need for cooperation and education. Often challenges and investor roadblocks that exist in the region are due to border disputes and countries that are at odds with one another. That has also allowed foreign parties, such as ENGOs, to identify contentious issues and in the absence of a coordinated regional response use these issues to their advantage and to the detriment of the region and the industry. Cooperation is key. For example, tankers that import oil into the Adriatic present a substantially greater spill risk than offshore oil drilling and production. First and most important, the potential of an oil spill from drilling and production in the Adriatic is substantially limited due to the heavier oil and existing hydrostatic pressures. 

Under these conditions, a spill is extremely unlikely. Furthermore, offshore E&P operations are zero discharge meaning there is no release into the sea. Importation of oil by tanker, on the other hand, carries significant risk. Oil import tankers carry 100,000s of barrels of oil. Spills do happen and tankers can sink with the potential of significant oil release into the sea. Furthermore, risks are posed merely from the presence of tankers, even if they do not have an accident.  

Satellite imagery has identified many slicks in the Adriatic, with some larger than 100 km². Studies suspect that the source of these slicks are tankers that import oil into the Adriatic and conduct illegal discharges or tank washing. Local Ministries, IOCs, drilling and oilfield services contractors need to cooperate to educate the public of the risks posed by importation of oil as well as the benefits of regional offshore production. Education efforts can highlight numerous success stories throughout the region, such as Energean’s oil production in Greece’s Gulf of Kavala, where tourism, fisheries and oil production are coexisting and mutually benefiting each other.  

The Balkans Petroleum Summit provides a critical platform for facilitating open discussion of key issues among regional decision makers. One of its most important features, however, is perhaps the simplest – that of providing regional decision makers with an opportunity to meet one another in a congenial atmosphere. For example, at the 6th Summit I was able to introduce two key decision makers from neighboring countries which initiated important discussions. The Summit is the best regional event that provides such a venue on an annual basis.

Who are you looking forward to meeting in the 7th Balkans Petroleum Summit?  

I understand that the next Summit will have a roundtable session for regional ministries and agencies to discuss cooperation and key regional issues.  I anticipate that the Summit will once again gather the largest number of decision makers from the regional ministries and agencies. I expect that continued strong representation from the governmental decision makers will mean that a growing number of IOCs that have acreage in the region or plan to target the region will attend which will in turn bring strong representation from drilling and oilfield service contractors.  Ultimately I am looking forward to meeting everyone. 

Meet George Kovacic and discover first-hand how to best enter the Balkans Hydrocarbons Market on 24-25 October 2019, by joining the 7th Balkans Petroleum Summit. The summit takes place in Hotel Maestral, Budva Montenegro. Register here.

KeyFacts Energy Industry Directory: IN-VR Oil & Gas