The Greek Comparative Advantage on the Energy Chessboard

June 4, 2015 | 00:00
The Greek Comparative Advantage on the Energy Chessboard
The Greek Comparative Advantage on the Energy Chessboard
The energy dependence of the EU member states from Russia is known to all the investors. According to Eurogas data, most East European and Baltic countries, cover about 100% of their needs with supplies from Russia. For Greece, specifically, this rate is equal to 56% (2013).

From the EU's strongest economies, only Austria and Germany have such a high imports percentage, amounting to 60% and 37% respectively. In the past few years, the EU desire to increase its energy security, is stronger than ever. For several years, serious procedures have been under way for the development of alternative energy corridors (South Corridor), establishing links with different energy exporting states (Egypt, Algeria, as well as Eastern African states, USA and Australia regarding LNG imports), as well as efforts of exploring and exploiting further reserves within the European geographical boundaries, either in conventional natural gas sources (United Kingdom, Croatia, Romania, Albania), or, more recently, in shale gas (United Kingdom, Poland).

At the same time, Russia is embarking on specific actions in order to exploit to the utmost its energy reserves: in May and November it 2014 signed mammoth agreements for supplying $500 billion worth natural gas, while in parallel strives to promote with the construction of Turkish Stream, which will be transferring gas through the Caspian Sea, the role of Turkey as an energy hub, a project on which the US side is already opposed.


At this point we have to mention that Turkey has the capacity to become one of the largest shale gas producers, with estimated reserves of 30 tcm. As a result of that, the largest (in market cap terms) US company has expressed its strong interest to provide know-how, alongside with investments, for the purpose of oil exploration and drilling. Amidst these delicate balances, the EU is searching for alliances with alternative providers. The first example would be Azerbaijan: with a large amount of reserves, having built a pro-Western profile in the recent years, but also with a relatively neutral stance towards Russia as well as Turkey, could become a key factor in the strengthening of EU energy security.

Turkmenistan, fourth in natural gas reserves globally, has recently gained potential as one more alternative provider. The fact that Russian Gazprom suddenly decided to reduce by 70% its imports from the country had a particularly negative impact to their bilateral relations, while simultaneously paved the way for establishing a dialogue between the EU and Turkmenistan.

Within this constantly changing environment of negotiations, new agreements and confrontations, the Greek government initiated some hesitant first steps in order to bring in the spotlight the country's energy reserves, aiming at two goals: on the one hand to increase the revenues from the exploitation of the sources, that could help to the improvement of the current economic situation and to enhance the geopolitical role of Greece within the EU, and on the other to render Greece as a direct interlocutor with Russia. Taking into consideration all these factors, any contacts and visits should be performed with a specific vision and strategy. Arguably, conducting multiple visits and referring to potential high profile agreements and down payments, is not the best tactic, especially when the Russian interest remains the same for the past five years and the Russian economy has been weakened as a result of the imposed economic sanctions.

A dynamic landscape

The importance and the interest of the natural resources of the country is clear. However, what some people may not be aware of is, as stated in the fundamental principles of economics and management, that the strategic advantage of an organization or a country, could become strategic disadvantage in a rather short period of time. Nevertheless, the time has come and soon we could judge the handling both in economic and - most importantly - on geostrategic level.

Dr Konstantinos Ilias Tsanis, among the founding members of the Greek Energy, works as a business development executive in energy companies and banks in the Middle East and Africa for Bloomberg LP. Simultaneously, he works as a visiting fellow in the University of Edinburgh and provides consulting services in M&As within the energy and utilities industry through Kaiser Associates.

This article is part of the knowledge partnership between European Energy Review and the Greek Energy Forum a group of energy professionals sharing common interest in the broader energy industry in Greece and South-eastern Europe.

Image: Chess in the park by David Kinney. CC-BY
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