Former US Ambassador Mark Gitenstein on Shale Gas in Romania
Interview with Mark Gitenstein, former US Ambassador to Romania and special counsel in the Government & Global Trade practice in Mayer Brown's Washington DC office.
“If I were a Romanian I would like to know first whether there are significant shale reserves.”
What is your opinion on the controversy in Romania over shale gas exploitation?
I am not surprised with it. It is very similar to what we have seen in the U.S. It is legitimate for citizens, especially local citizens, to have concerns about the environmental impact. However, I believe it is also incumbent upon the Romanian government and the energy companies to make the case that those concerns can be mitigated. I am convinced that they can be and I know that the government and the companies are making that case.
I do think its important to point out that this is purely an exploratory stage for shale. If I were a Romanian I would like to know first whether there are significant shale reserves. It would seem to be shortsighted to not even want to find out. If there are significant reserves it could result in an energy revolution in Romania like we have had in the US. Average Americans pay a fraction of what you do for gas. On the other hand if there are not commercial reserves than you need not grapple with these questions.
How would shale gas exploitation impact economic development in Romania?
I dealt with that above. It could have a direct impact on Romanian consumers but could also help Romania return to its historic role as an energy hub of Central and Eastern Europe. It will continue to attract significant foreign and domestic investment in manufacturing dependent on cheap energy. It could also make Romania a significant energy exporter.
What do major American majors interested in shale gas exploitation represent for the Romanian economy?
I am not familiar with the actual numbers in terms of their impact on the economy but it seems obvious that if Chevron is treated in a transparent and fair matter that other US and western energy companies will enter this market. It is important that Chevron and the government do a good job in convincing Romanians that this is a safe technology which they are doing. By the same token it is important that the government develop a fair compensation scheme for local residents on whose land shale production will take place. I gather they are working on this as well.
Are these companies, such as Chevron, major investors or do you see them as businessmen looking for an opportunity?
I have worked with Chevron over the years and it has an excellent reputation as a responsible energy producer in Romania and elsewhere. I view the shale issue in a much broader context than just shale. It is very important that Romania have a compelling and well thought out overall energy strategy for the country. That strategy has to lay out a long term step by step approach on how to better use Romanian energy assets for ALL Romanians not simply the elite. These assets belong to Romanians not just the “smart guys”. But that strategy has to make the case for how outside investors including Chevron can enter the Romanian market and monetize those assets in a way that benefits average Romanians. So shale is only one part of that strategy, which will include hydro, wind, nuclear, off shore gas and other energy sources. The strategy must also address energy efficiency.
This is an issue we spend much time talking about on the property fund board, of which I am a member. We are large investors in many of these same assets. We spend a lot of time talking to other investors interested in helping to modernize those assets for the benefit of investors and Romanians. This will require not simply a good plan for each of these state owned enterprises but also a modern equity market with a 21st century financial regulatory system that make Romania a safe and predictable place to invest.
This is the only way that Romania can return to its historic role as the energy hub of Europe. Shale is only one part of that story.
How does the controversy created by supporters and adversaries of shale gas exploitation in Romania compare to the US when the first bores were built there?
As I mentioned earlier its quite similar. The one big difference is as I just suggested, President Obama at the beginning of his mandate adopted a comprehensive “all of the above” strategy for the US and the energy companies and other experts have done a very good job of building the case for this approach. That is why the US has again attained such a preeminent role in energy production. As President Obama pointed out in his State of the Union address, for the first time in 20 years the US produces more oil at home than it imports.
Silviu Molnar & Gabriel Petrescu