Still No Answer on Chevron in Lithuania Though Decision Seems Imminent
Amid the abundant news on the Lithuanian government’s supposed decision to give Chevron the green light to take on shale gas exploration in the country, the Lithuanian Environment Minister, Valentinas Mazuronis, shrugs off, saying, “I want to reiterate that such a decision has not been passed yet. What happened last week is that ruling coalition’s political council has decided to renew the competition and eyes Chevron as the most potential winner. That’s it. It is quite surprising that some of the respected media picks up something a Twitter tweet and circulates it as the official news.”
The Minister says not the government, but the special commission designed to carry out the shale gas competition will announce winner of the tender on September 16, 2013.
“And that is not the end to securing the license for shale gas exploration and drilling. If the commission picks ups Chevron, then the government will have to approve the competition results. Besides, the American company will have to obtain favorable conclusions of mandatory environmental impact assessment (EIA). But at this stage, the Chevron prospects seem quite good,” the minister told Natural Gas Europe.
His support for shale gas exploration in the Lithuania starkly clashes with the views of the chairman of the Order and Justice Party, Rolanda Paksas, who has spoken out vociferously against the undertaking.
Mazuronis is also an influential member of the party.
But now, with the hurriedly renewed competition, few doubt that Chevron will be announced as winner of the tender.
“The political council’s message is far reaching: Chevron must be cleared of all the hurdles along the way and be allowed to start the exploration works,” Pranas Zeimys, an influential Conservative PM told Natural Gas Europe.
Several factors are to be taken into account for hastening the once-delayed competition.
First, Zeimys says, the lingering fears that Chevron may get fed up with the procrastination to announce winner and pull off of the competition.
“That would considerably undermine Lithuania’s striving for energy diversification and security,” the MP said.
Second, the shale gas card is important in the negotiations over gas prices with Gazprom.
Third, the contagious example of Poland where shale gas mining has taken off to an impressive start.
And finally, the government doesn’t want to irk the American government that has repeatedly expressed its support for Lithuania’s bid for more diversified energy sources and security.
Zeimys says the only hurdle to prevent Chevron from starting the exploration could be a negative EIA, but this is unlikely.
“It does not sound very serious when the minister (Mazuronis) cautions the fate of the Chevron pursuit lies on the EIA which most plausibly will be carried out by the Environment ministry whose minister is known as a staunch Chevron supporter,” Zeimys told.
As a matter of fact, until now local municipality councils are in charge of giving, or not, EIAs, but the ruling Social Democrats have proposed an amendment which in cases of “a strategic importance” would strip the municipalities off the right as the ministry would be responsible for it.
The Social-Democrat PM, Algirdas Butkevicius, has previously said that Chevron must accord with the local communities over shale gas exploration and drilling, but now the villagers in the Taurage-Silute region where the works are planned have lost the support.
This happened after the belligerent communities’ representatives showed up for a meeting with Chevron representatives and the government officials sporting cam recorders and demonstratively walked out after being asked to leave the devices behind the door.
Since the incident the prime minister has taken a harsher stance against the villagers.
“The communities were given the chance, but they did not use it,” Butkevicius concluded.
If Chevron is announced winner of the tender, the exploration contract is expecteed to be signed by the end of the year.
“It depends how quickly Chevron will act. I believe they can start drilling at fastest in half a year since the licence is issued,“ Mazuronis said.
Chevron is the only bidder to explore and mine unconventional hydrocarbons in the Silute-Taurage region in western Lithuania.
The US company will be required to agree to invest ca $30.56 million in exploration in exchange for a seven-year permit.
The procurement for the shale gas deposit estimated by Lithuanian experts to be of some 80 billion cubic metres was announced in June, 2012 by the former right-and-center government headed by Andrius Kubilius.
He praised Chevron‘s arrival in Lithuania in October, 2012, calling it a company „that is not afraid to step into Gazprom‘s realm (of influence).”
However, by the time the shale gas procurement was closed last January, the incumbent prime minister Butkevicius had been sworn in as the head of the leftist government and quickly promised a more balanced stance when it comes dealing with Moscow.
In the course, following the parliamentary Environmental Protection Committee‘s call for a moratorium on shale gas exploration and an ongoing investigation into Chevron‘s local unit over contracts signed with local landowners, the Environment ministry on February 27 put off the confirmation of Chevron as winner of the tender, citing protests against fracking.
Amid the massive criticism that things are moving forward to slowly, the Lithuanian president Dalia Grybauskaite, who is widely seen as an active supporter of former prime minister Kubilius‘ Conservatives, weighed in last June, chastising the Social Democrat government for lackadaisical efforts in securing country’s energy security and energy source diversification.
That was the head-of-state’s response to the EU urge to expedite shale gas extraction in the country in order to be in a better position in the negotiations with Gazprom.
PM Butkevicius in fact has wavered several times on the issue over the last year, consistently moving back and forth the expected deal signing with Chevron.
“Many politicians still have some serious doubts over the shale gas exploration bid and the prime minister is not an exception. There are still some important unanswered questions as far as the scope of the resources and the industrial drilling’s impact on environment are concerned, but the momentum has now considerably swayed to the favor of the exploration and Chevron,” Kestutis Girnius, a prominent Lithuanian political analyst with the roots in the US, told Natural Gas Europe.
“I really would not like someone to think Lithuania and its authorities are deliberately creating impediments striving to derail an investor’s plan. The reason is quite simple: shale gas extracting, the same like gold mining, has not been regulated in the country until recently. Now the time has come to do that,” Jurgis Razma, a prominent Conservative PM, suggested to Natural Gas Europe.
After the government’s decision in July to put off the shale gas competition until the autumn, Chevron itself asked for a delay to the process.
It was reported that the American company was increasingly concerned over the new environmental legislation and the plans to hike royalties payments.
For example, before, environment impact assessment for unconventional fuel exploration was not necessary. Now it is a must.
The stakes are high and so are the concerns about environment and apprehensions that Russia may be behind the efforts to derail Chevron plans.
“Look, a Lithuanian company (JSC Minija) was awarded a shale gas exploration contract yet in 2007, and there have not a feeblest buzz in the public. But once the name of Chevron popped up the whole thing got stirred up. There is a little doubt that certain structures behind Gazprom try what they can to thwart the Chevron plans,” ,” Jurgis Razma, a prominent Conservative PM, told Natural Gas Europe. “Chevron means an alternative energy source, and, sure, Gazprom understands it.”
The Baltic Basin in northern Poland, which also extends to western Lithuania, is deemed the most prospective shale gas region in Europe, the US Energy Information Administration (EIA) said in June.
The EIA believes the basin‘s Lithuanian strip holds some 0.3 billion barrels of technically recoverable shale oil and 11.3 billion cubic meters of hale gas, which is less than estimated by local experts.
Amid the pro and cons, some high-profile lawmakers, like the aforementioned MP Zeimys admits to have changed view on shale gas exploration in the country.
“In the beginning I was not very fond of the idea. But, look, almost every well in the countryside is more or less polluted with some organic substances. To believe that the exploration and mining some three kilometers underneath will worsen the water quality in the well several kilometers apart from the drilling site, would be too much,” the parliamentarian said.
Meanwhile, the communities in the Taurage-Silute region protesting against the foreseen exploration have taken their grievances to Greenpeace and Scandinavian capitals.
“If water in our water objects gets contaminated, it means misbalance of the whole eco system in the Baltic region will ensue…Greenpeace is a powerful organization and we expect it will heed our pleas for help as an international issue,” a Zygaiciai community representative who spoke on the condition of anonymity told Natural Gas Europe.
Meanwhile, Chevron has responded to the Natural Gas Europe correspondent’s enquiry for information by sending in the statement signed by Sally Jones, EEME External Communications Advisor of Chevron Europe, Eurasia and Middle East division.
“We are committed to continue working closely with the Lithuanian government and to cooperating with the residents of Lithuania where we plan to conduct operations. Chevron‘s world-wide experience enables our company to explore and produce energy resources in a reliable, safe and environmentally responsible manner, using proven technologies and global best practices.“
The words may have bent the Lithuanian policy makers on Chevron side, but not the public.