“Our country’s energy deposits should not lead us to overestimations, nor make us complacent with regard to our financial problems,” said Ms Niki Tzavela, Member of the European Parliament and one of the most respected “voices” in Brussels on energy issues, in an interview with the Crisis Observatory. Ms. Tzavela, also known as “Ms Shale” among the European institutions, added that “the mining and exploitation process of any deposit will take several years not only to implement, but also to generate any profits.” At the same time, the MEP extensively referred to the geostrategic concerns of the Commission in case of DEPA (Public Gas Corporation of Greece) being sold to Gazprom. Notably, the interview was carried out before the unsuccessful attempt to privatize DEPA.
How would you assess the results of the recent European Summit on Energy?
First of all, the results of the EU Summit on Energy highlighted the strategic nature of indigenous energy deposits of the Union, along with a new dawn for Europe’s energy policy: an ambitious but, at the same time, more realistic policy. It is estimated that, by 2030, the imports of natural gas in Europe will rise to approximately 771 billion cubic meters, thus representing an 85% of consumption. Therefore, it becomes necessary not only to evaluate all potential energy deposits within the EU, but also to integrate both the European energy market and trans-European networks. So, during the Summit, the main options towards this direction were discussed.
In the Summit conclusions, the need to exploit “indigenous” energy sources is mentioned. What does this imply for Greece in practice?
The fact that this is the first time that the Summit conclusions include an explicit reference to the exploitation of indigenous energy sources of land and sea, both conventional and unconventional, is very significant – as announced by the Prime Minister as well. It directly benefits Greece and Cyprus, given the very strong indications of substantial energy deposits in the Greek continental shelf. Most importantly, however, the concerted effort in Brussels has started to consolidate the position that the energy sources of Greece and Cyprus in the Mediterranean are European above all, and that the contribution of the EU to their safe exploitation is part of its own interests.
A declared goal of Greece is to demarcate its E.E.Z. with the aim to exploit hydrocarbon deposits within its seas. What do you think should be the next steps towards this direction and how could Europe contribute?
Priority should be given to the deposits south of Crete and in the Ionian. At the moment, the greatest mobility is to be found there. The seismic surveys are complete and now we must move on to the stage of auctioning. It should be noted that these moves do not bring us in direct conflict with Turkey, unlike research in the Aegean, where Turkey has its well-known positions. Of course, Greece is always moving on the basis of international law – and international law is our ally.
On the Union’s side, the European Parliament points out, in its report on the Common Foreign and Security Policy of the EU, that Article 194 of the Treaty of Lisbon provides for the EU to take Europe-wide measures to ensure it energy supply. This means that energy deposits in the Greek and Cypriot E.E.Z. are protected by the EU, in case of a diplomatic issue with any third country. Under this article, we have seen dramatic interventions of the Commission, e.g. towards Russia when the energy supply of Europe is threatened or when it abuses its dominant position (such as in the cases of Ukraine, Lithuania and others).
The exploitation of shale gas is changing the global balance of power. What does this new reality mean for Europe?
Shale gas has undoubtedly brought about great changes in the world energy map. I will talk about the case of the U.S.A., where the extensive exploitation of shale gas has not only dramatically reduced energy imports and energy dependence of the country, but also led to a drastic reduction of energy costs for American citizens. I am aware that there are many differences with Europe, such as population density and land ownership and, as a result, shale gas may not entail as stunning results as it did in the U.S. However, at the global level and given the possibility of liquefied natural gas (LNG) exportation by the U.S., the most likely scenario is a convergence of global gas prices towards European standards and more competition in the gas market, along with the release of our long-term contracts, which are defined in accordance with the price of crude oil. As for the possible geopolitical developments of shale revolution, two scenarios seem possible:
- Energy cost in the U.S.A. and the EU will dramatically fall and, therefore, these countries will be able to compete with emerging economies (China, India, Russia, Brazil, Turkey, etc.), which most likely will continue to use conventional energy (oil, natural gas). At the political level, this is the first time that the West is able to distance itself from energy dependency on the Middle East/ North Africa (which explains the Arab Spring), but at the same time the West is also able to distance itself from the Arab-Israeli conflict, which sparked Islamic fundamentalism. Finally, the West and the EU in particular, are able to steer clear of conventional energy sources from Russia, whose economy would then suffer a major blow.
- The other scenario argues that the U.S. will free itself from energy dependency on countries of the Middle East. Nevertheless, the new data of the energy market presents new challenges for Western countries in the Arab world, because a potential international equilibrium price of natural gas will serve as a lever for reforms, e.g. in taxation. Let us not forget that, due to the high levels of natural gas production in countries like Bahrain and Saudi Arabia, taxation for the average citizen was low and these countries escaped the developments of the Arab Spring. Thus, the withdrawal of the U.S. and the western forces from the Middle East should not be taken for granted, as the western interests will require safeguarding these commercial corridors. We should also not forget that Saudi Arabia is a major player in terms of dealing with Iran. With these data, we are witnessing the creation of a new challenge in security issues.
Do you think that Greece has sufficient deposits of shale gas and hydrocarbons, so as to secure its energy independence at some point in the future? Or, maybe, it should turn its attention towards renewable energy sources, given its favorable climate?
We should not be viewing this issue as “either one, or the other.” We need a balanced energy mix. All forms of energy will be needed. The new approach that goes through Brussels is that every member-state will now produce energy according to its own capabilities. This is a more realistic and rational direction, since the approaches of the past made it difficult for many countries -especially in eastern Europe- to cope with the binding targets on renewable energy sources. For example, Poland possesses charcoal and shale. It has no serious potential of developing renewable energy from the sun. It has to take advantage of these sources and, thus, investments in renewable sources may be directed towards the countries of the South, such as Greece, which have infinite potential of exploiting them due to their climate. Overall, by utilizing all its energy potential without any preconceptions, Europe could become self-sufficient to a large extent, although in the long-run. Regarding the Greek deposits of shale, we are not sure about the exact quantities. The Institute of Geology and Mineral Research (IGME) recently announced, however, the existence of shale gas deposits in Epirus and Thrace.
Huge investments have been made in recent years in renewable energy, both in Greece and Europe. However, subsidies are being reduced and shale contributes to the creation of a new reality. Do you think that we have reached the “end of an era” for renewable sources? And what does this mean in turn for the environment?
Indeed, Europe has become a pioneer in energy production from R.E.S., in fact by setting binding targets on member-states to invest on renewable energy. But installation and use of renewable energy is too costly and too dependent on governmental funding and subsidies from taxes. In times of economic crisis, though, the price of this expensive energy enhances the conditions of “energy-poverty” in several countries of the EU, with developments in Bulgaria being the most recent example. As we have seen, the people forced the Borisov government to resign, because of reactions to uncontrollable energy prices. We have to be smarter when investing and allocating projects of renewable sources, which requires a European approach and a pan-European target for renewable sources. This is what was agreed for the R.E.S. in the recent report of the European Parliament, thus signaling a change of policy -i.e. instead of specific binding targets for each member-state- towards a pan-European target.
R.E.S. are important for the future energy mix of the EU but, especially at this time that people are suffering, we should not be dogmatic and exclude the use of new energy forms, always using the most advanced methods that are environmentally friendly, of course. After all, technology is our ally towards this direction. Therefore, it is obvious that shale is creating a new reality for the energy future of Europe – just like it did in the U.S.A. It will not take long before we see this in practice.
In the ongoing process of privatization of Greek energy monopolies (DEPA, DESFA, DEI), the government is attempting to obtain the highest possible revenue from the sale of public corporations. Do you agree with this reasoning, or should the geostrategic reality also be taken into consideration? What is the prevailing atmosphere in Brussels around this issue?
I agree that the privatization of energy monopolies would offer the Greek energy market more flexibility but, nevertheless, geostrategic factors should be taken into consideration as well. There is much discussion in Brussels with regard to the sale of DEPA: the European Commission, on the one hand, is pushing towards its immediate privatization, while at the same time it is skeptical as to its acquisition by the Russian Gazprom; this is due to fears of a possible monopoly, but also due to the geostrategic implications of such a development. Given that the EU wants to be independent of Russian energy, by allowing this acquisition we would give Russia greater access to the European market.
Do you think that the production of energy (R.E.S., offshore, shale) could lead our country out of the crisis? And if so, what steps should be made towards this direction?
Although I am very optimistic about the energy deposits of our country, I believe that we should not be misled towards overestimations and become excessively confident of having solved our economic problems. Unfortunately, the process of extraction and exploitation of any deposits we possess will take years before it is realized and generates any profits. Moreover, a new, rational and modern legislative framework for oil and gas should be created and applied, in order to secure the public interest. At present, we have to confirm the exact quantities of each deposit in our possession, so that we can later move on to agreements with companies that have the necessary expertise to exploit the subsurface, just like we did in Cyprus with positive results.
The European elections of 2013 will most likely be held in conditions of deep economic crisis. Are you afraid that rage will prevail in voting decisions? If so, what would be the consequences for Greece?
I think that there will be polarization, as this will be the first election after the national elections of 2012. There will be no “loose vote” this time. Europe is now responsible for the survival of its citizens. Perhaps, this will be the first “real” European elections, with substantive issues of purely European nature. As the debate on the EU has received new dimensions in Greece over the last three years, we will have the opportunity to discuss in more detail about our country’s position, its interests and the importance of our participation in the EU. In any case, I believe that in a year from now we will already be in the final phase of reforms, whereas people will start being optimistic for the course of the Greek economy.