Greece launches hydrocarbon production as part of green agenda

Igoumenitsa Greece – For the past two years, the residents of Greece‘s northwest province of Epirus have been tripping up on short wooden stakes planted about a foot high in the ground. They stand in rows that continue interminably through villages, over meadows and mountains, blue ribbons fluttering from their tops. 

Few Epirots are aware that these stakes do not mark any future road, overhead cable or utility pipe. 

They are grid markers that allow engineers to evenly space hundreds of controlled, underground explosions that will send shock waves into Epirus’ subsurface, creating three-dimensional maps of its rock formations.

Engineers believe those formations will suggest the presence of oil and natural gas. 

Epirus is perhaps the last place on Earth where one would expect to find hydrocarbon exploration.

It is a pastoral landscape of tilted meadows, gorges so deep and vast that birds born in them never need to fly elsewhere, lakes that reflect the sky as clear as mercury, and savage, snow-topped mountains that drop into an azure Ionian sea. 

This is a still-pristine world many Epirots do not want to be sullied.

“Humanity will one day face shortages of drinkable water, and we have some of Europe’s finest water here,” said Vasilis Dimitriou, an activist with Greenpeace. 

He questions the wisdom of driving concrete pipes through the water table to extract oil that may lie beneath it. 

“If there is a fracture and oil seeps into the water table, the area is ruined.”

Dimitriou says there was no consultation with residents when the government sold 11 exploration concessions that stretch down the entire length of Greece’s west coast, on and off shore.

These were auctioned at the height of Greece’s economic crisis, in 2010-13, and the last of them are now being ratified by parliament.

The results are now gradually coming into evidence. 

Helicopters are airlifting drills to remote locations to bore to a depth of about 30 metres for seismic charges to be laid. 

Protests are so frequent that local government officials refuse to talk to journalists about the exploration concession to Greece’s Energean and Spain’s Repsol, which were also unavailable for comment.

But these inconveniences are nothing compared with what may come. 

The port of Igoumenitsa fought a legal rearguard action to stop dozens of crude oil storage tanks from being constructed at the mouth of a forested fjord that leads to the passenger port.

“It’s the first bit of land a tourist sees entering Igoumenitsa,” said Dimitriou, who has a stake in the tourism industry – he is starting a kayaking company.

According to a recent audit by Greece’s Association of Tourism Enterprises, the hospitality industry may indirectly account for as much as 30 percent of the Greek economy. 

There are also specific problems affecting biodiversity. The waters off Greece’s west coast are the Mediterranean’s deepest – the so-called Hellenic Trench.

Environmental groups say this is a key feeding and spawning ground for vulnerable populations of sperm whales, dolphins, monk seals and other marine mammals.

They say controlled explosions used to conduct seismic imaging and the drilling of exploratory wells could disorient and even kill these animals. 

“WWF Greece is here to make sure that oil drilling does not start,” said the environmental organisation’s anti-hydrocarbon campaign coordinator, Dimitris Ibrahim. 

“It’s not only an ill-conceived experiment for the marine environment and nature in general. It’s very dangerous for our climate, for our local communities and for our national economy.” 

Hellenic Petroleum, currently Greece’s biggest hydrocarbons company, said it has spent millions mapping cetaceans’ migratory patterns and its vessels will stop operating within proximity of one. 

Visions of the economy 

With per capita gross domestic product (GDP) of 11,870 euros ($13,006), Epirus is one of Europe’s 20 poorest regions. 

Its main industry is state services and administration. But it is not entirely a newcomer to the high-pressure private economy. 

Ten years ago, Epirus was connected to the outside world through the Egnatia motorway, a six-billion euro, 670-kilometre (416-mile) engineering spectacle of bridges and tunnels that runs across northern Greece. 

The recreation of an ancient road that yoked Asia Minor to imperial Rome, Egnatia has been wildly successful in modern times. An estimated 150,000 trucks a year ply the motorway from Turkey to Italy and beyond via three Adriatic ferry routes. 

This has given renewed importance to Igoumenitsa, which is the road’s terminal port, and the local chamber of commerce sees the region’s future prosperity in terms that have little to do with hydrocarbons.

“There are two large infrastructure works that interest us – the marina and the logistics centre in Kapsaka,” said Alekos Paschos, president of the Igoumenitsa Chamber of Commerce. 

The chamber is looking for investors to build a 340-yacht marina inside Igoumenitsa’s fjord to cater to Italian and other European pleasure boats. Docking fees would provide the city with a steady revenue stream, and the chamber believes it would create hundreds of secondary jobs in hotels and restaurants.

The chamber conceived the logistics centre to work hand-in-hand with the Egnatia motorway, and it would include a vast assembly and trans-shipment area. 

“If these are done, the unemployment problem in the area is solved for many years,” says Paschos. “The logistics centre could employ 4,000 people. Igoumenitsa has a population of 30,000 so you can imagine that we’d be looking for more workers to come here.” 

In contrast, Paschos says, oil extraction would only employ about 120 people in the Igoumenitsa area.

The hydrocarbon vision 

Greece currently imports three-quarters of its total energy needs, including 99 percent of the oil and gas it consumes. These hydrocarbon imports alone cost it 12-15 billion euros a year and make it one of Europe‘s most energy-insecure countries. 

“The income we make on Monday from tourism we spend on Tuesday to buy crude oil and natural gas,” said Yiannis Bassias, head of Hellenic Hydrocarbon Resources Management, the state authority responsible for farming out concessions. 

Those oil and gas imports are increasing for environmental reasons. Greece’s three-month-old conservative government promises to end the use of lignite coal for power generation altogether by 2028 – 10 years earlier than Germany – and plans to start shutting down some of the older lignite-fired power stations immediately. 

That pledge requires increased use of imported gas as well as renewables, and Prime Minister Kyriakos Mitsotakis has invited the private sector to contribute. 

On October 2, he inaugurated the construction of what will be Europe’s largest combined cycle gas turbine power station in central Greece. “This investment … means we can produce new wealth, cheap energy and still live in a beautiful natural environment that is hospitable to all,” Mitsotakis said of the 826MW plant. 

Bassias sees gas as being the fuel of the foreseeable future. “Gas will be king for the next 40 years globally. That is what industry will use, that’s how we will generate electricity. It’s gas that’s important,” he said.

If mother nature has gifted Greece with resources which we can extract from the subsurface without damaging the environment, why not do so?

by Yiannis Grigoriou, CEO of Hellenic Petroleum

But the prospectors in western Greece are also eager to exploit oil. 

“We believe there is oil at the quantities that at some point might influence the whole Greek economy,” said Yiannis Grigoriou, CEO of Hellenic Petroleum, which plans to begin extracting 140 million barrels of oil in the Gulf of Patra early next year. 

“In the future the royalties that the Greek state will have from that oilfield will be 200-250 million euros per year,” said Grigoriou. 

These royalties could be repeated 10 to 15 times over if other areas of exploration bear fruit, and Grigoriou says the government plans to create a national pension fund, inspired by the example of Norway‘s Statoil. 

Greece’s pension system is technically bankrupt, and the government is paying for about two-thirds of pensions. At roughly 18 billion euros ($20bn) a year, it is Greece’s single biggest budget expenditure, larger than defence, health and education combined. 

And then there is the prospect of jobs. After an eight-year recession, Greece’s unemployment rate still stands at 17 percent – by far the highest in the European Union. 

“Every position in exploration … is supported by another four positions in the entire industry,” said energy analyst Mihalis Myrianthis. “You have refining, you have trading, you have storing, you have transporting. It’s an entire industry that will put in motion if we start producing oil or gas.” 

Former Minister of Environment and Energy Yiannis Maniatis went even further at a recent hydrocarbons conference in Athens. 

“In the entire Mediterranean region there are oilrigs and pipelines in need of maintenance and repair. Greece has shipyards and engineers. Why shouldn’t Greece develop an industry in doing this maintenance?” he said. 

Igoumenitsa’s Dimitriou wonders why, in an age of climate change, all this money and ingenuity is not being invested in renewable energy instead. 

“It would be much better for energy production to take place in cities, where the energy is consumed. Walls, roofs, even window panes could become energy generators,” Dimitriou said. 

The ruling New Democracy party says Greece is not opting for hydrocarbons at the expense of the environment. It has an ambitious plan to create 14,000 megawatts of renewable electricity generating capacity from renewables by 2030. That is more than double Greece’s entire current electricity consumption.

But the consensus in the hydrocarbon community is that renewables cannot yet drive heavy industry or cover electricity baseloads because of limited storage capacity. 

“Our civilisation is currently based on oil and natural gas,” said Grigoriou. “All the scenarios the European Union has are that until 2030 or 2050 it will remain the same. We will change the energy mix going to natural gas and renewables, but this will be done naturally.” 

Whether the capitalist economy can sustain business opportunities and jobs while lowering carbon emissions remains to be proven. The most demonstrably effective weapon against climate change in Greece so far has been recession.

Greek emissions fell by a third to 91 million tonnes of CO2 equivalent a year in 2010-16, as Greece’s economy contracted by a quarter. But it is now growing again by about two percent a year. 

New Democracy maintains that its new policy emphasis on renewables and gas at the expense of lignite will bring Greece in line with its commitments to the Paris Climate Accord of 2015, and go beyond that. 

“If mother nature has gifted Greece with resources which we can extract from the subsurface without damaging the environment,” said Grigoriou, “why not do so?”