Risks and conditions for the Energy Strategy of Greece
Risk, be it financial, political or military, is and has been inherent within the oil industries' activities. The oil majors have learnt this the hard way through numerous cases where they experienced these risks materialising, eliminating the value of their investments in the process. Nevertheless, as in most industries, the risks are justified by the benefits and in the case of big oil & gas, experience shows that the benefits are high.
Greece being in the midst of an economic crisis, is in the very positive position of having good prospects for a substantial amount of natural gas reserves in its onshore and offshore area. Being a member of the European Union, which seeks to diversity its natural gas dependence away from Russia, Greece has a lot to gain from this development, especially if it manages to coordinate with Cyprus, whose oil reserves have now been certified, in a setting a common energy strategy..
One of the most likely alternatives, with large benefits for the country is the channelling of these potential energy reserves through the recently agreed TAP (Trans Adriatic Pipeline) pipeline, which crosses the territory of Greece and Albania reaching across the Adriatic Sea in Italy, and which is expected to carry 10 billion cubic meters per year to European markets. Such additional use of the pipeline could greatly increase the already large profits which are expected from its primary use as a mean of transporting natural gas from the Caspian Sea to Europe.
In a similar level, the final decision of the government of Cyprus, concerning the construction of either a liquefaction plant or a pipeline, will have a further positive effect for Greece. In the case of the construction of a liquefaction plant, Greece will be able to further utilize the LNG unit at Revithoussa, while in the second case the benefits will be even greater as the country will be able to meet its domestic demand and then export to the rest Europe through Italy, via its connection to the TAP pipeline. Further benefits will occur through the potential development of an underground gas storage unit in the 'South Kavala' gas filed which is currently peeing planned, and is in very close proximity to the agreed pipeline TAP.
Despite these developments, the South-eastern Mediterranean remains an area characterised by high levels of risk. The geopolitical interests are in direct correlation with the continuous conflict of the countries around the Mediterranean basin, which means that the various risks that are included in this project remain high. The Greek state must ensure the creation of a safe environment, which will guarantee the necessary stability to attract oil & gas exploration companies. Despite the initial positive messages and optimistic estimates of potential oil reserves, in the next few years everything will depend on the extent that Greece will establish the environment of an energy producer country, ready to take on board the responsibilities associated with promoting energy investments from large private companies.
Amid these significant developments, the 'Greek Energy Forum' has been established, which is a network of Greek professionals working in London and the wider Europe in the field of energy. The forums has been created in order to capitalize on the multi-faceted experience in energy issues, in order to further assist the process of making the country a strategic energy player within the wider Mediterranean.
Albeit there have been already some notable efforts from the Greek government, it is very important that these efforts will be intensified. Despite the major deposits which have been discovered in the Mediterranean basin, large quantities have also been discovered in several African countries (e.g. Mozambique, Ghana etc.). At the same time, the fact that these deposits belong to Greece and Cyprus, two member states of the EU, further increase their strategic importance, as these can help improving independence and the energy security of the European Union. It is necessary that institutional and strategic actions will have to be taken in order to avoid the creation of another case of " resource curse " (resource curse), where the producer country tends to have less economic growth and worse outcomes than countries with fewer natural resources, as it has happened in many other cases in the past (e.g. Angola, Nigeria, Libya, Venezuela, etc.).
*Dr. Konstantinos Tsanis (Bloomberg Energy Finance), Dr. Angelos Gkanoutas-Leventis (CITYPERC, City University London) and Dr. Kostas Andriosopoulos (Director, Research Centre for Energy Management).
The authors are among the founding members of the Greek Energy Forum (www.greekenegyforum.com). The opinions expressed in the article are personal and do not reflect the views of the entire Forum or the companies that employ them.