February 26, 2018
First of all, thank you for having me with you. This is a great treat. The energy sector tends to be very male dominated. It’s all these guys who start out on oil rigs, in gas fields. I didn’t know your organization existed until I was asked to speak to it. Of course I know some of you. Katerina, running TAP, by far the most important single project in this sector. Folks from, I see folks from Prometheus, I mean obviously you are everywhere in this sector, but I think it’s wonderful that you’ve got an organization to pull your perspectives together.
I shouldn’t be doing these remarks, actually. I wish I had Kate here, my deputy whom many of you know. If I knew, first of all, how many of you there were in this field I would have thought of it differently.
What I hope we can do is have sort of an informal dialogue about these issues. You’ve all heard speeches and I’ve got a speech here but I’m not going to read it to you. Let me just make a couple of quick points and then maybe we can take the conversation in whatever direction is the most interest and utility to you.
First of all, I should emphasize, energy issues for a very long time have been fundamental to U.S. foreign policy in Europe. The agenda of building European energy security is central to our agenda of helping to construct a Europe whole, free and at peace. That’s been the case going back, really, to the end of the Cold War, the collapse of the Iron Curtain. Cases can vary dramatically, of course, and in my previous ambassadorial assignment where, if you look at all the challenges that Ukraine has faced over the years, the root of those challenges was its completely distorted energy sector. I forget the statistics now, because I’ve been out of it for so long, but I think if I’m remembering correctly, when I got to Ukraine they were spending something like seven percent of GDP on energy subsidies, and most of those subsidies were going, because of the distortion of the gas prices, were going to the big oligarchs. So it became a self-propelling machine. The oligarchs spent their political energies trying to preserve their subsidies, which they then used to make illicit profits, which they used to buy more politicians. And it had a deeply, deeply unhealthy impact on the society and the economy.
I’m absolutely convinced if you look at Ukraine since the revolution, the single most important change that has happened in that country is moving to full cost recovery for gas. It completely transformed the way the politics unfolded. And of course they have gone from 100 percent dependence on Gazprom, which was perfectly happy to be part of this distortion process, to zero percent dependence on Gazprom, and relying on reverse flow and gas that comes through Poland, through Slovakia, and other European partners.
Greece is in a different situation, of course. You’re fortunate, you’re farther away from Russia. You’re a longstanding member of the European Union. But as we look at Europe today, and in particular as we look at the European energy security agenda, one of the major tasks that we see for the years ahead is to help to build resilience in energy supplies across Europe, and that’s particularly important in what we in Washington call the Balkan Energy Island — not Greece, but the countries immediately to your north which are 100 percent dependent on Gazprom still, starting with Bulgaria and Serbia and the big markets there.
And this is why TAP is so important. If you look at the European energy picture today there are two big pieces of infrastructure that people are talking about. First, of course, is Nord Stream 2 which the United States continues to strongly oppose, along with our Polish allies, our Baltic allies, many others, because we view it as unnecessary from a physics standpoint and from a political standpoint, something that would reinforce or increase dependence on Russian gas.
The other big piece of Russian infrastructure is the Southern Gas Corridor, of which TAP is the critical piece. The first new energy infrastructure built in Europe specifically to carry non-Russian gas.
TAP is, of course, also the single largest foreign investment in Greece since the crisis began. I had the opportunity last summer to go up north of Thessaloniki and see the construction process, and I have to say as somebody who has been working around gas politics and energy security issues for a long time, but in a very abstract, foreign policy, “let’s talk about this” way, it was incredibly impressive to see the construction project, just a lot of stuff: the size of the equipment, the extent of the project, the intensity of the efforts — and not just the engineers or the archeologists, and TAP is one of the largest employers of archeologists in Greece today because they’re doing a lot of digging and they’re very conscious of that, but also the audacity of the project, stretching across all of these different countries.
It was interesting to me also to visit last summer because a few months before that I had been in Istanbul for a big energy conference, and one of the questions that I got from very serious energy sector observers and commentators was oh, this TAP thing’s never going to happen, is it? It’s not real. You see it and say well, they put a couple of billion dollars into the ground, so I’m pretty sure that it’s actually going to be real.
TAP is critically important, but it’s only one piece of a larger story of Greece’s transformation into a European energy hub. As Prime Minister Tsipras likes to point out, pretty much every major piece of energy infrastructure that is contemplated for Europe, to bring diversity of supply, will flow in or through Greece. So TAP is an important piece of that. But the expansion of Revithoussa is also an important piece of that.
Again, one of the fun things you get to do as American Ambassador is see a lot of stuff. So I went out to Revithoussa and walked through the new storage tanks out there. Again, it’s just really big. Anything that is constructed that costs tens of millions of dollars is pretty much by definition impressive.
So you’ve got the expansion of Revithoussa. You’ve got the proposed regassification unit, the FSRU in Alexandroupoli, which I’m convinced is going to happen. I know from Energy Minister Stathakis the Greek government is very committed to it. The private sector partners here in Greece, including Copelouzos and others are very committed to it.
Bulgaria is the hardest piece of it. Closing the deal with the Bulgarians, because the project only makes sense if it’s part of this north/south corridor.
I think one of the things that’s impressed me, and I’ve had this conversation with Prime Minister Tsipras and obviously with Minister Stathakis and many others in the government. There’s a clear recognition of the catalytic role that Greece can play as this new energy infrastructure comes on-line and helping to build resilience.
TAP, of course, eventually goes to the Italian market, which is one of the big gas consumers in this part of the world. But importantly, you also have SNAM as one of the two parties strongly focused on the opportunities around the privatization of DESFA and which they are pursuing, and which SNAM pursues not just because they’re interested in the Greek market, but because they’re very interested in this wider network of relationships through the Western Balkans, all the way up to Ukraine.
So it’s a very exciting time to be looking at these issues of energy security in Europe. It remains a very high priority for the United States government. President Trump emphasized this point when he was in Poland last fall. Without naming Russia the way I do, he was very clear that the United States will never use our energy as a weapon to intimidate other countries.
It’s very clear that the global energy market is in the process of a fundamental reorganization driven first and foremost by the United States emergence as a major energy exporter. I remember talking to some of the Obama administration officials about these issues as I was making the transition from Ukraine to Greece, and one of the points they all made was if you looked back at that point seven years ago at the beginning of the Obama administration, there was not a single person in the U.S. government that predicted that the United States was going to become an energy exporter. And because this has been driven in the U.S. by the shale gas revolution, and the shale gas revolution in the U.S. was not about Chevron or Exxon-Mobil or BP or Shell or the big companies we all know, it was about all these guys like in the movies. You know, small wildcat companies in Pennsylvania and Texas and elsewhere that developed the technology and then were able to move very very fast on locking in sources of supply.
You’re now seeing this also move into the area of oil, so that the United States is starting to become not just a gas exporter, but oil exporter. The very fact that in the United States we have regassification facilities which were originally built to accommodate LNG imports to the United States which have been reengineered to support LNG exports, tells you first of all that there’s a lot of money, billions of dollars, that is going into this industry in the United States. And that money is premised on the understanding that there’s a fundamental change in terms of how the U.S. economy is organized on these issues.
That’s going to affect global markets as gas becomes more and more a globally traded commodity, becomes impossible for any one country to use gas as a weapon to threaten to turn it off.
I lived in Vienna in the summers of 2008 and 2009, and I still vividly remember, as you probably all do too, but I vividly remember the radio alerts and people talking about some grandma in some rural area who had died because she didn’t have a heated home, and it was a real issue. And it was very clear in that case that Russia was doing this in order to send a message. But it also was a reminder to everyone in Europe of the importance of energy security as part of the broader agenda for national security and economic competence.
The interesting thing about Greece in this area also is that it’s not just about gas, although gas is important for all of you who are working in that sector. But Greece has enormous potential in the renewables area. I’m very excited about the fact that we have GE Wind as one of the American companies now coming back into Greece looking for opportunities to grow the wind power market here.
Solar is not an area where U.S. companies play a big role in Greece, but there’s obviously enormous potential and it’s a question of how we both build the economic model around that and also identify the economic opportunities. It’s very clear over the long term, again, that there’s this transformation that’s being driven by technology, and there’s a climate reason why we have to move to more sustainable models over the long term: very exciting things that will be driven by the private sector, things like electricity storage, which is a big problem, of course, with wind and solar. First of all, they tend to come at the same time of the day as the wind is up at the same time that the sun is out. Then you have the valleys, and you have to have some reliable base load capacity. Nobody’s been able to solve that problem at the macro level, but I’m 100 percent confident that we’re going to find the solution. It’s probably not going to come from governments.
We also had the news over the weekend about Tesla opening a little engineering facility here. Look at what Elon Musk is doing. Everybody, if you didn’t already, should spend three minutes watching the video of the Falcon heavy rocket from a couple of weeks ago if you want to see how amazing this company is. Its ability to do something that, when I was growing up, only governments could contemplate, and then to do so more economically but also with things like rocket recovery, which nobody in the United States was even thinking about until SpaceX came along and said, you know, we think the technology is now at a place where we don’t have to throw these rockets away.
And I think energy storage batteries are going to be the same, and it’s going to be driven by Tesla and others moving to electric vehicles. It’s amazing to me to hear the number of large companies saying, I think BMW, Volvo, a couple have already said, that they expect within a decade not to be producing gasoline automobiles anymore, that 100 percent of their production will be electric. That’s going to make fundamental changes to our economy.
Last two issues. One, I would be remiss if I didn’t mention U.S. LNG exports to Greece. We’re very excited about the announcement the Prime Minister made when he was in the U.S. in October that Greece wants to become the third EU member state to begin importing U.S. LNG. We are not going to compete with Russia any time soon. Our companies believe they can compete, for instance, with what you’re getting from Algeria. And it just builds redundancy and it builds options.
That’s, again going back to my Ukraine story, the fundamental thing that changed there was not going to zero percent Gazprom gas. All you have to do is develop options, and then all of a sudden you have a completely different relationship with your monopoly suppliers. So we see this as important to Greek energy security. It’s obviously a priority for the United States because we become an energy exporter that gives us options.
Then lastly, just to say, and here I’ll wind up, and I apologize if there was something in these remarks I didn’t get around to. I would just say to all of you, you know, we’re at a very good point in terms of the U.S.-Greece relationship. We had a senior delegation of members of the U.S. Senate here over the weekend. They met on Saturday with Prime Minister Tsipras. One of them was from Louisiana, a big energy state in the United States, and energy issues were very much part of that conversation. But the broader agenda in those conversations was how do we continue to develop this relationship? For the U.S. government, having a strong relationship with Greece is of fundamental national security importance. This vision, this idea of Greece as a pillar of stability in the wider neighborhood is very real.
The energy politics that I talked about are a perfect example of that. The way in which Greece, because of its strategic geography is able to build a wider dynamic of security in the wider region.
As you saw from the Prime Minister’s press release, he made no secret about his concerns, about the situation in Turkey and the challenges that that creates. But the larger dynamic was a U.S. message about our appreciation for the role that Greece plays in the wider neighborhood. Our satisfaction that Greece appears finally to be emerging from this eight-year period of economic crisis. Our commitment as a government to work with the Greek government, to help to ensure that that process of recovery is sustained.
I would just say, and here I’ll stop talking so we can have questions. When I’m asked by American investors what are the sectors that offer prospects and what should we be looking at? Energy is obviously one of them. There are others. Tourism is 25 percent of your GDP. Shipping logistics, a sector that Greece has traditionally excelled in.
But I think one of the really interesting parts of the story is how energy has emerged or is emerging as an important part of the larger Greek economic story.
So it’s an exciting time I think for all of you to be in this sector as well. And as I said, we in the U.S. government are committed to being good partners.
So thank you for giving me the opportunity. You have some questions.
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