Ambassador William C. Ramsay on European Gas and Geopolitics

Natural Gas Europe was pleased to have the recent opportunity of speaking with Ambassador William C. Ramsay, Director, Geopolitics of Energy of the Institut Francais des Relations Internationales (IFRI).

- Do you believe that the flow of gas from Shah Deniz 2 can be sufficient to cover the needs of an expanding EU gas consumption for the future?

It is marginal compared to the size and the potentials of the EU market but essential in terms of diversification policy, as it being envisioned by the EU. Obviously there are other European sources of gas such as shale gas, there are LNG sources and terminal projects that offer a lot of opportunities by various global locations, pipelines from North Africa and increase in gas shipments from this region. I also believe that Russia is a part of the equation and in general it has been proven a reliable supplier in the past, so as to be able to cover a part of the certainly increasing natural gas demand for the EU in the mid and long-term.

- Is Eastern Mediterranean gas a source for diversification for the EU? What could be the geopolitical impacts?

There is hope that there are going to be a contribution, but that depends on certain factor. First of all, the market availability of these gas quantities and most importantly if these findings are going to be used as  leverage for political issues.

For example, will they be a good reason for a resolution on the Cyprus issue?

There could be many scenarios for the time being that can shift the peripheral balance of powers in the region. Israel may decide to share its wealth by supplying its neighbors, thus normalizing relations with them, on the other hand it may decide to bolster its own energy security and acquire a harder stance. The role of other neighboring countries such as Turkey is important as well, in which direction they are willing to pursue their strategy. The basic point is that if these reserves are used for political leverage, they will certainly not assist in the diversification of the EU’s natural gas imports. I believe that natural gas could be an agent of peace, if it is used for commercial purposes, because it has the capability of becoming a network for energy and economic interdependence amongst nations and corporations, leading to greater growth for all and minimizing geopolitical upturns and conflicts that would become too expensive to be conducted.

It remains to be seen if that will be the case in the Eastern Mediterranean.

- What are the geopolitical implications of the Southern Corridor for the Caspian region, Russia, and the EU?  In particular do you estimate that potential political antagonisms may hinder the development of the energy projects?

Wherever there is gas there is usually a sort of geopolitical risk. Worldwide gas is being produced in regions with risky political climates. In the particular region on Caucasus, there is indeed a sort of a risk, although there is a strategy of counteracting against it, and that is by opening up similar gas sources in the nearby region, such as Iraqi Kurdistan reserves, into the EU. It is always better to have two risky supplies rather than one it’s the best strategy of decreasing risk and by far the easiest one to make, rather than trying to eliminate the primary causes of risk which are deeply rooted in historical and political antagonisms.

Diversity is the strongest tool in securing gas supplies. Pipelines are subject to geopolitical risks, since gas is locked in pipelines, thus making it a far more liable to political turmoil and conflicts than other energy commodities. For a long-term and secure supply of gas secondary and tertiary sources should be at hand for use once the primary source faces any issues like the ones being discusses.

-What about Shale gas? Is this the gas of the future for diversification purposes? 

Shale gas is a big phenomenon it came out of nowhere in 2006 and is 50% of the unconventional category of energy resources, globally nowadays. We have environmental hurdles to confront with, and there is public opposition for its exploration. On the other hand in EU there seems to be not a unified approach but it depends on country by country case. France and Bulgaria have already turned against shale gas exploration, whilst UK, Romania and especially Poland are in favor of it. Moreover we have to take into account that most probably China has significant amounts of shale gas, a fact that will certainly indicate shifts in global energy trade.

Shale gas is a new source of diversification and maybe even USA could become a net exporter, something that no one could have proposed even in recent times.

Further, in order to place shale gas into the equation, we have to closely monitor the level of the public acceptance of it, the level of technology being used and how it can develop further into the future, and it’s economic profitably.

One thing is for certain regarding shale gas. It will become a basic element in the global energy security equation and we have to pay close attention in the developments of it, for they will play a role in the long-term.