New Norway(s) - What Can Greece Learn?

Norwegian Norway gas

Hundred years ago, Norway was said to be one of the poorest countries in Europe, gaining its current rank thanks to the gas and oil manna from the 70s on. That was wrong. Norway already placed itself in the 60s -70s as one of the richest countries of the western Europe, along with Germany, France, UK.

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Since 1967, a sovereign wealth fund, filled up with extra money from this industry, wisely invested, brought Norway to become one of the most advanced countries in the world in terms of human development index (actually the second, right after Switzerland).

In 1990, Norway held the 7th position, the 5th in 1995, and since 2000, they fiercely compete with the Helvetes for the first place. In 2022, Israel, Greece and Cyprus placed themselves between the 22th and the 33rd position.

Turkey is 48th, Romania reaches the level of Russia, 52th. Georgia and Bulgaria close the 70th rank. Armenia 85th. Egypt almost 100th.

Norway owes its leap upward to the oil and gas industry, fully exploited since the 1973 crisis, under different forms, but even more from the sovereign wealth fund that counts now for a little less than 1 $200 billions.

This country of 5.5 million inhabitants, built up one of the best societies in the world, with one of the best infrastructures, universities, and social system, after fruitful investments in less than three decades.

With the actual energy crisis that the EU faces, due to the War in Ukraine, the search for answers became rapidly vital. Trustable, effective, and geographically close partners need to be found, but remain rare in this world.

The numerous gas fields found in the eastern Mediterranean sea, for already a couple of years, would tick all the boxes.

The countries concerned are Israel, Cyprus, Lebanon and Egypt. Very recently, due to the energy potential of the area, Greece and Turkey launched a seismic survey prospect in Aegean sea, raising huge tension.

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In order to avoid any Exclusive Zone exploitation issues, exploration drilling has started for a couple of months south from Crete and Peloponnese. Maybe Greece will soon join the club of gas export countries.

From now on, either the quoted countries already start to or will exploit and export some gas.

The main fields with proven gas reserves are the following:

  • Off Cyprus, Aphrodite, Glaucus and Calypso drillings, gathering all together 15 trillions cubic feet proved reserves
  • Aphrodite = 3.6 trillions cubic feet = 3 600 000 000 000 cubic feet
  • Glaucus = 5 000 000 000 000 cubic feet
  • Calypso = 6 000 000 000 000 cubic feet

all in all, about 15 000 000 000 000 cubic feet proved reserves

3 trillions (3 000 000 000 000) cubic metre.

And of Israel, the double of that, with 30 trillions cubic feet proven reserves, already in exploitation.

  • Tamar = 10 000 000 000 000 cubic feet.
  • Leviathan = 20 000 000 000 000 cubic feet.

All in all, about 30 000 000 000 000 cubic feet proven reserves.

Let’s do some math now… even very approximately.

Before the covid and the war in Ukraine, Gas spot price did fluctuate around $3 per MMBtu (million British thermal Unit).

Knowing that 1,000 cubic feet of gas gives 1MMBtu, and as Cyprus sits on roughly 15 billions MMBtu, it would represent about $45 billion.

For Israel, the treasure reaches $90 billion.

Knowing the potential of exploitation, Greece, with rather fair optimism can also expect to get a good bite of the cake.

The link with Norway becomes clear.

Egypt should also get a huge amount of money from gas exploitation, but the 100 million inhabitants need so much investment that the overall jackpot will be, at best, fully used to upgrade the infrastructure and the social system of the country (hospitals, schools...).

Lebanon, almost ruined, will perhaps get back to a normal economical situation.

For Cyprus, Israel and Greece, the situation differs a lot, with realistic ambitious perspectives.

Cyprus gathers a little more than 1 million inhabitants, Israel, as much as Greece, about 10 million inhabitants.

Per capita, the gas jackpot means $45,000 in Cyprus, and $90,000 in Israel from Gas manna.

Each person, newborn or elderly from Nicosia or Tel Aviv, could virtually claim thousands of dollars packages over the decades to come.

These amounts should not be taken as very rigorous, but more as a rough estimation. The company exploiting the fields will get their parts, a huge one. The rest of manna from gas does not go directly in people’s pockets, but in the state fund through taxes.

From this point on, Israel, Cyprus and very likely Greece, not so populated and with a similar state of development will face strategic choices. Roads, hospitals, universities, schools, etc… could be better, but are already existing, and in decent state.

For sure, some part of this financial surplus will be allocated to reduce the debt of the country, and carry on necessary investments such as improving the social system and infrastructure.

What about the rest? Norway has started with $23 billion in 1998 (about $5200/Capita) their actual wealth fund (The Government Pension Fund Global), was worth before the covid crisis $1.4 billions.

Regardless of inflation, and constant $ value over the years, such investment in sovereign funds allowed Norway, and other countries with such financial tools, to become independent, and thus much more respected on the international scene.

The perspective of Cyprus and Israel, potentially from Greece, is only if the drilling investigation off Crete and Peloponnese gives positive expectations and should already be foreseeable.

Israel holds for $500 million assets in his Israeli Citizens Fund. The Greek one, HCAP, has €100 millions investment capabilities. The Cypriot sovereign wealth fund, named National Investment Fund, exists since 2019, when gas discovery and exploitation opened up huge financial perspectives. It only waits for its first euros to come.

As these countries are roughly the size of Norway, the effects of the Sovereign Wealth Fund investments should be noticeable in a small time range.

The public should be aware of the involved amounts, the perspectives, and the potential windfall of manna from gas exploitation. The wealth funds from Israel and Cyprus could become within the next few years a huge actor in the local economy, and even on the international scene.

Citizens should know and think about this asset, and democratically raise their voice and their wishes in order to use this gas manna as wisely as possible.

Author: Regis Robert DANIELIAN is a French-Armenian physicist graduated from Sorbonne University. He is a Network State citizen and a project manager at the Network State Energy Infrastructures department.

Guest Contributor

This piece was written for Greek City Times by a Guest Contributor