Amid Ukraine-Russia crisis, Chevron Would Have Bolstered Lithuania's Enegy Security

In light of the Russian actions in Ukraine and potential ramifications, Chevron’s presence would have bolstered Lithuania’s energy security, says Eligijus Masiulis, a Lithuanian MP and chairman of the opposition Liberal Sajudis (Movement) Party.

“If Chevron had stayed and been allowed to take on the country’s shale gas exploration and extraction, Lithuania would have had a considerably stronger footing now,” Masiulis told Natural Gas Europe.

The American energy giant left the Baltic country citing the complexity of the country’s shale gas exploration and extraction legislation and the multiple legislative amendments to it.

Chevron has cut off its last cord with Lithuania last July by closing its office in the Lithuanian capital Vilnius and selling its stake in the Lithuania-based oil company LL Investicijos.

 “Chevron closed its Lithuanian office because the possibilities the country provides company are not more favorable than those offered by our global investment portfolio,” Cameron Van Ast, Chevron’s spokesman for the representation in Poland, was quoted as saying.

As the Lithuania shale gas bid had hinged mostly on the exuberant, staunch Chevron and shale gas exploration supporter, now former Environment minister Valentinas Mazuronis, who called Chevron pullout and the entire shale gas exploration history in Lithuania being the scrap of litmus showing the Lithuanians’ “bizarre” ability to absorb novelties, with him gone to work in the European Parliament, the shale gas prospects in Lithuania seems dimmer as his successor now is exhibiting tangible reservation on country’s shale gas bid.

Acknowledging that Chevron withdrawal, both internally and externally, hasn’t been 'a good thing' for Lithuania, Kestutis Treciokas, the current minister, cautioned that the state still needs to reassess “a spectrum of issues” stemming from it.

“…While in general I see Chevron pullout negatively, I nevertheless want first to know what lies underneath our feet…  I just don’t want to compete with my predecessor in the popularity he enjoyed, as I believe that we all have to know first what kind of resources we have in the depths of our soil, as well as when we will be able to drill and use it…But the safety has to be ensured, though the risks remain there… The modern technologies are progressive and provide many guarantees, and I reckon we should try the shale gas thing." The recently appointed minister wasn’t very pronounced on the hot issue in one of his first public appearances.

He also hinted that a repeated competition on Lithuanian shale gas exploration and mining could be seen as early as the first half of 2015.

“First of all, I reckon we have to do the exploration thing. But I believe extraction, the other part, needs a separate decision. If an investor comes and pockets a bulk of it while state is left with the crumbs and burdens, then it is not something we want. But if there is an obvious use (of this entire endeavor) to the state, the, certainly, we need to go after it,” the minister told.

But Masiulis, the MP, called the projected date “irresponsible” disregarding the murky political backdrop in which the Ukraine-Russia war puts Lithuania in.

“It’s new to me that date for a repeated tender has been moved until then. As soon as the autumn parliamentary session commences, our Liberal Movement faction will exert to have it slated earlier,” he told.

Accosted with his successor’s views on the shale bid, Mazuronis, the former Environment minister, told Natural Gas Europe   “…he believed and still believes that shale gas or oil shale, if any is found, is necessary and useful to Lithuania and its citizens as an alternative energy resource and extra source of revenues.”

“To all those out there preoccupied with the concerns over the safety of the bid, I’d say I’m convinced it can be done safely, and the conviction had been bolstered by my visit to the United States, where I got the first-hand look at how it is being done.  The good experience in Poland just reaffirms my convictions,” Mazuronis said. “Like you, I see certain signs now that there’s no particular hurry to announce a repeated tender yet. I believe it is happening both on the ministerial and parliamentary levels. Maybe the situation will change after the MPs will come back after the vacation to the chambers, but maybe it won’t…There are many difficulties looming around the hot issue, but they all can be overcome with the right political support and will,” he added.

Earlier, leaving the Ministry for a stint in Brussels, he had called the Chevron pullout history and the entire shale gas exploration history “a scrap of litmus” showing the Lithuanians’ “bizarre” ability to absorb novelties and sort out the wheat from the chaff.

“We should say it clearly: all of us here have lost this round (with Chevron). Part of us (lost) because of the lack of understanding and the conviction that they defend Lithuanian nature and local people’s health; part (lost) because of the greed, stemming from the belief that (with the Chevron arrival) it will start pouring money. Maybe a part has been enticed and cajoled by some forces having their own interests and plans, which have nothing to do with the Lithuanian wellbeing,” the former-minister-elected-EU-parliament-member reasoned. Calling the Chevron departure “a fragmentic loss”, he pepped up “everyone” to think of what has been done and what lies ahead.

Natural Gas Europe spoke to the new Environment Minister to clarify his stance on the shale has bid.

Your predecessor insisted that a repeated shale gas exploration and extraction tender will be organized this fall. Is this going to happen? What is the work the former minister has done to make it happen?

Former minister Mazuronis has initiated the whole shale gas legislative process from the core, and I had to take it over and continue it…Part of the legislative attunement procedures, required to have in the conformation with other institutions, has dragged on, but all the legislative acts are virtually about to reach the Government in the near future, and with its endorsement, they will go for approval to the Lithuanian parliament. Only after it passes the proposed amendments, it will be possible to speak of announcement of a repeated tender. Theoretically, it can still be scheduled for the fall, however much depends (whether this is possible) on the Parliament.

How did you then come up with a new date for the tender, which you said will be the first half of 2015? Why the delay?

I wouldn’t like to say that competition has been postponed, just for the reason that the date of the fall of 2014 hasn’t been strictly set by the Government. I reckon that Mazuronis had mentioned the timeframe as one of the possible and most optimistic. I am perhaps a little bit more cautious. It seems to me after having looked through the legislative acts, repeated competition announcement procedure and assessed the political situation that the most likely date for a new tender is the outset of 2015. The cautiousness should be also explained with the willingness not to repeat the previous mistakes and the resolve to have the issue profoundly discussed with local municipalities and communities, which opinions have to be taken into account.

What do you believe should be changed in the current shale gas legislation package?

The draft of the bill on oil and gas resources taxation, specifically, some proposed amendments to it, has raised many debates. It envisions that part of the collected tax should go to the municipality from which soil oil or gas is drilled. There had been many different proposals, but we settled with the bar of 10 percent. But it can be changed by the Parliament during the deliberations.

Among other things, the amended legislation foresees that the fracking fluids cannot be buried in the soil, but has to be treated.

Besides, the provisions aimed to have fracking fully transparent have been passed. For example, composition of fracking fluids will have to be known for the public, as well as the procedures regarding application of hydraulic fracturing and informing respective agencies and public about it.

The Ministry still mulls getting public representatives involved into checking shale mining sites. Aware of the concerns the public has we want the process to be clear to all.

Are you intending to initiate new shale gas exploration research, as far as the volume of shale gas or oil shale, for example, is concerned?

Lithuanian Geological Service has done the research part. The study has been done by qualified scientists whom I trust. I don’t see need for new researches, furthermore they’d put off further the date of a repeated shale gas exploration tender.

Are you in favor of fracking?

In fact, I’ve done quite some research on it on my own and I don’t see anything bad with the technology. A couple dozen of time hydraulic fracturing has been applied already while mining oil in Lithuania, and nothing bad happened. Our geologists are constantly following what is happening in the US, Poland and other countries.

For example, the US has been carrying out in that regard many multifaceted researches for the couple last dozen years, and though there many various notions, no one raises a question on the credibility of fracking. It has played out well over the years and it is being constantly improved. There’s just no other more industrious and reliable way to mine shale gas or oil shale. A bigger concern arises from the other technical aspects of it, I mean having reliable drill cementation technologies, proper treatment of used hydraulic fracturing chemical fluids and proper utilization, but not from the method itself.

Do you share the notion that former minister Mazuronis has assertively sped up the shale gas endeavor in Lithuania?

I do and I don’t, frankly. On one hand, Mazuronis was a staunch supporter of the whole shale gas issue in Lithuania. To the extent where some of his malevolent adversaries started suspecting him of having in the matter all kinds of own interests and questionable connections.

But I believe that the former minister has been convinced that in the case of a success with the shale gas, Lithuania could win big, I mean in foreign investments, tax collection, new job creation and, importantly, energy independence.

On the other hand, if Lithuania failed with its shale gas, it wouldn’t lose anything, just because a private investor, not state would invest into it exploration. If it were the case, the state still would have the taxes collected and have a clear situation on its shale gas reserves and future prospects. This is where I, as the minister, feel the obligation to ensure that environment protection goes first and then the economics.

Meanwhile, the Lithuanian Energy Institute (LEI) has issued this week announcement, saying that the country should explore its shale gas potential and possibilities of using it for energy production.

“We propose that, first of all, we find out how things stand regarding shale gas, that is, is there any gas at all and if there is, then how much, and then decide,” Arvydas Galinis, LEI chief research associate, told reporters after presenting the institute’s new study on the strategic development of the Lithuanian energy sector to Prime Minister Algirdas Butkevicius.