The Black Sea region could replace Russia as Europe’s primary source of energy in the coming decades. Speaking on October 1 at the Atlantic Council’s Black Sea Energy and Economic Forum (BSEEF), Mehmet Uysal, the Chairman of Turkish Petroleum (TPAO) argued that while the greater Black Sea region is emerging as an important hub for energy transit, its undersea oil reserves hold enormous potential to supply Europe and world markets. Uysal spoke on the Forum’s Executive Roundtable, together with eight other senior energy executives from companies including ExxonMobil, Hunt Oil, Schlumberger and TNK-BP. Dinu Patriciu, Chairman of DP Holding, agreed with Uysal, adding that for European consumers, the Black Sea’s energy resources could replace those of Russia, on which a number of EU countries are currently dependent.
These statements, from two of the Black Sea region’s energy heavyweights, could not be more significant in shaping the future of transatlantic energy security, Western relations with Russia, and engagement of the countries of Eurasia. Were the Black Sea to transform into a resource-rich area, with the lucrative EU market on its doorstep, not only would Russia’s energy and foreign policy clout be greatly diminished, but one of the main drivers of Western interest in the Caspian and Central Asia could disappear. How might this happen?
Gas Hydrates as the Future of the Hydrocarbon Industry
Patriciu stressed that the Black Sea’s resource potential lies primarily in its huge stores of gas hydrates: water-based solids that contain natural gas. Asked whether the golden age of fossil fuels is over, Patriciu, the former Chairman of Rompetrol, replied that this was only true for traditional oil and gas resources. Gas hydrates, he pointed, out exist in numbers so abundant worldwide that their production could eventually eclipse that of traditional sources.
Patriciu’s vision is intoxicating, but we must keep in mind that the greatest obstacle to gas hydrate development is the cost-effectiveness of extraction technology. There are some pilot projects underway, but it remains to be seen whether the technology warrants large-scale investment. That said, once extracted, the solid form of gas hydrates means that they are easy and cheap to transport. Crucially, their transport does not require pipelines, and the geopolitical wrangling that surrounds them in the Black Sea-Caspian region.
The Golden Age of Energy Technology is Just Beginning
Glen Sansom, General Manager for Continental Europe at Schlumberger put it this way: traditional fossil fuel production may be on its way out, but the golden age of energy technology is just beginning. New technologies, not only to extract gas hydrates, but unconventional or “tight” gas are revolutionizing the global energy sector and the supply picture for crucial markets such as the EU. Technology may allow for a hydrogen-based energy sector in 100 years time, but in the interim, it is technological innovations in fossil fuels that will shape the future of world energy.
Sansom touched on what is likely the most exciting recent trend in global energy. The exploitation of unconventional gas resources has already transformed North American gas markets, from a future that looked dependent on imports of liquefied natural gas, to one comfortably sitting on domestic gas reserves for decades to come. Major unconventional gas reserves exist across the EU, and their development could herald the dawn of what might be called “EU energy independence”. The Black Sea may well replace Russia as the EU’s primary source of energy, but only if the EU itself doesn’t get there first.
Alexandros Petersen is Dinu Patriciu Fellow for Transatlantic Energy Security and Associate Director of the Eurasia Energy Center at the Atlantic Council.