One of the key promises of the previous Greek government –to usher in a new energy era for Greece by exploiting the country’s “vast” “hydrocarbons” deposits- remained unfulfilled. Mythical riches had been envisioned, a potential panacea for Greece’s staggering debt and other economic woes. A frenzied euphoria had prevailed with oft-repeated and ever-expanding estimates of the size and quality of the resources (but their confirmations always pending), and extravagant talk about foreign investors’ interest, abetted by obviously not-disinterested outsiders such as Deutsche Bank, and featuring carefully choreographed forays by the Prime Minister and his Minister of Energy with retinues of officials and consultants to petro dollars and venture capital centers, from the Persian Gulf to New York, in search of the elusive investments that were always just around the corner.
Greece was not alone in the pursuit of such a dream. Other Mediterranean countries –including Cyprus, Israel, Italy- claimed immense “proven” deposits in their exclusive economic zones (EEZ), and were issuing licenses for exploration with a frivolity epitomized by Berlusconi’s license to drill in a formation with an underwater active volcano (Empedocle, in coastal Sicily). And several countries in Central and Eastern Europe, having similar aspirations, were also eager to issue drilling licenses. Germany, on the other hand, has been resisting this trend, and instead has opted to abandon nuclear energy in favor of renewables, and has installed a huge solar capacity in a climate distinctly less favorable than that of Greece.
The aspirations for easy riches were based to a large extent on the promise of two new technologies –deep-water drilling and hydraulic fragmentation known popularly as “fracking”- that had been developed mostly in the US and aggressively employed in North America. These energy-intensive, very expensive and environmentally destructive technologies were touted as being capable of moving countries from energy paucity to energy independence, in the same way that they were making the US a post peak-oil major producer and Canada an important energy exporter.
These quixotic expectations were especially rampant while the price of oil hovered above $100 a barrel, but when in the summer of 2014 oil and gas prices started sliding, the frenzy of claims subsided significantly, and plans for “energy independence” and easy wealth were scaled back and even abandoned. Total, the French energy giant, has recently withdrawn from its significant involvement in developing the Cyprus finds because of its “inability to locate viable drilling targets”; Chevron, the American energy giant that has led efforts to apply the American technologies throughout Europe, has withdrawn from Poland and Lithuania, and is scaling back its activities in Ukraine and neighboring countries; and the aggressive drilling even in the US and Canada, at oil shale formations and tar sands deposits respectively, is being curtailed not only because it is proving unprofitable but also because affected communities are resisting the environmental havoc (pollution of aquifers, seismic activity) that these operations are inflicting on them.
The collapse of the price of oil has impacted not only resources–rich countries but also countries with huge reserves of petro dollars, and large integrated international companies with deep pockets. It has been estimated that major fossil energy producing countries need the price of oil to be between $71-$132 dollars per barrel for them to be able to balance their budgets. (Currently the price is hovering around 50 dollars per barrel.) The economies of Russia, Iran, and Venezuela are among the most vulnerable to skidding prices, while Saudi Arabia’s is the most resilient presumably capable of coping with the low prices for longer periods. American and Canadian drillers also need prices above $80 to maintain their oil shale and tar sands operations. Drillers in Canada and the US are now scaling back or closing down fracking operations, thus creating significant threats to the banks that had made huge loans for these operations.
Geopolitical factors -LNG (liquified natural gas) from US fracking operations potentially replacing Russian gas supply to Europe; BRICS countries (Brazil, Russia, India, China, South Africa) trading oil and gas in a currency other than dollars; various hoped-for or effected “regime changes” in Africa and the Middle East- are further complicating the energy picture. If resource-rich countries are vulnerable to the vicissitudes of huge price fluctuations and high stakes geopolitics, small players like Greece are not likely to do very well in such an environment, and it would be to their great benefit if they could escape being entangled.
Greece’s “hydrocarbons” (mentioned by Herodotus!) that the previous government was so eager to develop were investigated in 1860 in the Ionian Sea near Zakynthos. In the 1960’s, efforts to locate domestic “hydrocarbons” were expanded significantly, the most striking success being the Prinos field, now in decline and supplying less than one percent of the country’s needs. The recent clamor for aggressive drilling is based on the use of the new technologies, and has focused again on the Ionian Sea, as well as western continental Greece, and south of Crete.
The hype for the expected riches produced some puzzling arguments for going forward (e.g., existence south of Crete of geologic formations similar to Venezuela’s), while ignoring or downplaying compelling negatives (potential environmental catastrophes such as the 2010 BP Deepwater Horizon disaster in the Gulf of Mexico which would be disastrous for a closed system such as the Mediterranean, and would surely destroy the quality of life and tourism of the uniquely beautiful Greek islands and coastline; and the fact that fracking operations by necessity would be more expensive, considering that European compared to North American shale formations in general have greater pliability and plasticity and therefore require more aggressive treatments.)
Pursuing the siren song of “hydrocarbons” for a few years of questionable profits risks ecological catastrophe, and in the end Greece would still be in hock, with mortgaged national resources and sovereignty, ever the suppliant with hat-in–hand begging for the release of the next tranche, as has been the norm of the recent past.
There is an alternate way -embracing renewables. Greece should eschew the “hydrocarbons” path and opt for bold, truly innovative approaches to meet her energy needs and lead the way to a sustainable prosperity and true energy independence. She can accomplish this by using her own inexhaustible and free resources (sunshine and favorable winds) and adopting conservation policies for an energy efficient economy (notsubsidizing gas guzzlers even in the name of importing “clean cars” or tax credits for luxury cars). Additional benefits of this approach would be providing opportunities for Greek universities and entrepreneurs; becoming a model for other energy-starved and poor countries; and doing a favor to our threatened planet by curtailing greenhouse gas emissions.