Greek Tragedy

After several years, several months, several weeks and several days of crisis, it looks like things are about to come to a head for Greece and its banks. It becomes easier to understand exactly what GREXIT may mean for the Greek people. What happens when the banks and the government completely run out of money?

Greece has some indigenous coal production (lignite) but no oil or gas to speak of which means that all oil and gas are imported (Figure 1). This is linked to a structural trade deficit that contributes to the country’s dependency on debt. If Greece runs out of Euros, will it be able to buy oil and gas on the international markets? Greece held 90 days of oil stocks in 2010 [2]. Once that is gone then the tourist industry may collapse?

Figure 1 The chart shows the difference between oil, gas and coal production and consumption figures providing a proxy for imports as reported by BP 2015 [1].

The improving state of energy balance (Figure 1) may appear to be a positive sign but it in fact reflects a steep fall in energy consumption (Figure 2) – a good thing? Well it would be good if the Greeks had suddenly become more efficient, but that is not the case. The decline in energy consumption is directly linked to austerity and depression that has now lasted for 8 years (Figure 3) – no wonder the Greek people want a change.

Figure 2 Energy production data for Greece as reported by BP 2015 [1]. Electricity production is based on indigenous coal (lignite), hydro, wind and gas imported from either Russia or Algeria. Crude oil is imported and refined in Greece [IEA 2] and is used mainly in the transport sector that is dominated by tourism. The decline in energy consumption is directly linked to economic decline (Figure 3).

Figure 3 Since the early 1990s, energy consumption and GDP are closely correlated in Greece. The per capita energy figures will be distorted by the large numbers of tourists that visit Greece each year. The World Bank reports 18 million visitors in 2013.

Figure 4 The only indigenous energy production in Greece worth speaking of is coal. The country has some hydro that may come in useful for balancing intermittent wind.

One of Greece’s many problems is that it is energy poor. Some indigenous coal augmented by hydro and new renewables (wind and solar)  takes care of 60% of the country’s electricity generation (Figures 4, 5). The other 40% comes from imported oil and gas. Should Greece run out of money the lights may go out.

Figure 5 Electricity generation vital statistics from the IEA [2].

Figure 6 Electricity generation mix from the IEA [2]. At the encouragement of the IEA, indigenous coal is being replaced by imported gas. It seems possible that European / OECD climate policy has contributed to Greece’s downfall.

The electricity statistics are lifted from an interesting IEA report on energy policy in Greece  [2]. The IEA is trying to encourage Greece to expand variable renewable electricity generation and recognises that Greece should have more flexible gas generating capacity to balance its grid. The IEA policy therefore is for Greece to reduce its dependence on cheap indigenous lignite and to replace this with expensive renewables and imported gas. With friends like the IEA, who needs enemies?

Figure 7 Greek energy consumption is dominated by oil that is used in the transport sector and in power generation. The latter probably represents oil / diesel fired generators on Greece’s many islands.

Greece is heavily dependent upon oil in its energy mix. For example oil is 36% of the total in Germany compared with 54% in Greece. Heavy dependency on expensive imported oil is naturally bad for any economy. So why does Greece not produce its own oil and gas?

Rumours abound of untold oil and gas riches, if only the Greeks could be bothered helping themselves to them.

If you’ve been watching Greece’s recent energy push lately, it’s been difficult not to get too excited about the country’s potential. From political commentators to [former] Prime Minister Antonis Samaras himself, the message has been enthusiastic and clear – Greece is home to billions of barrels of oil, trillions of cubic meters of gas and most importantly for a country saddled with the longest recession in modern history, billions in potential revenue. [Forbes 3].

As far as I am aware this is simple propaganda and hype designed to try and talk Greece out of recession.

Figure 8 A Fantasy map of gas fields off the Island of Crete [4]. As far as I am aware no seismic has been shot and no wells drilled. Oil and gas prospectivity in the Mediterranean lies along the N African coast. The African continent is being subducted beneath Eurasia. The overlying Eurasian continent, where Greece lies, is being heavily deformed by tectonic forces that provide very poor prospectivity for oil and gas.

Figure 9 The Alpine – Himalayan collision zone of which Greece is a part [5]. In Iran and Kurdistan significant oil deposits do lie within the Zagros fold belt and there is some oil in the southern Appenines of Italy. So one can never say never. But to claim that Greece has vast oil and gas deposits without drilling any wells and establishing a working petroleum system is pure fantasy.

A map like the one shown in Figure 8 is simply dreamt up by optimists. The Mediterranean Sea is formed by a subduction zone where N Africa is being pushed beneath Europe leading to the Alps, volcanic activity in Italy (active) and Greece (dormant). Most of the oil and gas deposits of the region lie in the leading edge of the African continent that has not yet been subducted. This includes the E Mediterranean gas fields off shore Israel / Palestine. Simply making up a story based on hope, drawing a few ovals on a map south of Crete and claiming billions of barrels reserves is not how oil and gas is formed or found.

Figure 10 Vital demographic and economic statistics for Greece from the IEA [2].

With a population of 11.3 million, Greece is a very small European country with below average income. The depression has seen unemployment soar to 27%, though it is now falling slowly.

Figure 11 This chart cross plots the data shown in Figure 3 and shows how energy is required to generate GDP. Greek per capita GDP peaked in 2007 and has declined to the present day. In a sense Greece is living in a post-peak world and we may get a sense of how dreadful things might become if the Greeks do not bow to the pressure of their creditors and are ejected from the Euro zone.

Per capita GDP peaked at €24,000 in 2007 and has since fallen 25% to €18,000. One can surmise that the incomes of many of those in work will not have fallen this amount and that falling per capita GDP reflects the rise in unemployment rate.

Figure 12 The preferred version of this chart used GDP PPP from the World Bank. But unfortunately they have changed their reporting format and the data tables I was using are no longer available. While Greece is poor in a European context it is still a wealthy country compared with many others around the world. Greece and Portugal currently have similar levels of per capita GDP and energy consumption. Portugal is not in the same mess because they have managed to keep their debt levels under control, only just (Figure 13).

Of course the main problem for Greece is its debt. Since 1970 the country has not run a trade surplus (Figure 13). Foreign tourists flock to Greece and rent imported cars that run on imported oil. The cumulative trade deficit in $US current is 494 billion.

Figure 13 Greece has a long-term structural trade deficit that links to its structural debt. If you spend more than you earn you must borrow to make up the difference. The deficit has been substantially reduced in recent years more through depression than through prudence. One can but anticipate that it would rise again with economic growth. This raises the question of whether it is possible for an economy like Greece to exist within the € zone?

With GDP of $254 billion and debt to GDP ratio of 164% the debt pile of $417 billion reflects the trade deficit over the decades. Tourism may provide employment and boost olive, yoghurt, tomato and ouzo sales, but the economic model seems fatally flawed when Airbus, Rolls Royce, Volkswagen and Total are the main benefactors of the industry.

Figure 14 Government debt levels of 10 selected European countries [7]. Greece and Italy have historically run debt at over 100% of GDP. An additional problem for Greece is that much of the debt is held by foreign banks and institutions. Japan, for example, has even higher debt levels than Greece, but much of this is borrowed from the Japanese people. The situation in the UK will be similar. I have heard talk that the Greek government may raid savers deposits. Surely a better tactic would be to issue bonds where those Greeks with money are obliged to buy.

Greece is not the only country with debt woes. But it should be clear why it is in crisis. Looking at the picture since 1995 there are three groups of countries (see Figure 14). Italy and Greece have always run with high debt : GDP, its just that in Greece this has got out of control with the collapse of GDP and depression. Four other European countries are at risk with debt : GDP at or over 100%. These are the UK, Portugal, Ireland and France. George Osborne intends to set a different course for the UK on 8th July. Bankrupt France wants to bail out Greece. Four of these countries have their finances well under control – Norway, Czech Republic, Germany and Spain.

A few years ago I heard a talk by Russel Napier. Greece was high on the agenda then. He explained how things used to work. Greece would hit an economic downturn. The Drachma would devalue making Greece the cheapest, sunny destination in Europe. Germans would flock there and give the Greeks Deutschmarks and in return they got a holiday and loads of ouzo to drink. Today the Germans simply give Euros to the Greeks and it seems they have grown tired of doing so.


[1] BP: Statistical Review of World Energy 2015
[2] IEA: Energy Policies of IEA Countries: Greece (large pdf)
[3] Forbes: How Real Is Greece’s Oil And Gas Future?
[4] Deepresource: Let Greece Pay With Oil
[5] AGU: Gerede segment of the North Anatolian Fault
[6] UN: UN: National Accounts Main Aggregates Database
[7] The World Bank

Other posts in the series

Egypt – energy, population and economy
Russian Power
Post-peak Algeria?
Libya – energy, population and economy
Turkey – on its way to a mature economy
Ukrainian Death Spiral
Does the UK Economy Run on Energy or Hot Air?
Portugal – renewables to the rescue?
Belarus grows while Ukraine withers
Goodluck Nigeria – a failed state?
Germany: energiewende kaput?
America energy independence
China – the coal monster
Brazil – Samba Energy


This entry was posted in Energy and tagged , , , , , , , , . Bookmark the permalink.

62 Responses to Greek Tragedy

  1. Sam Taylor says:


    It is a combination of interesting and horrifying to see what is happening to Greece. It’s turning into a full blown humanitarian tragedy out there, and in large part it is down to the horrifically bad design of the euro. With no mechanism for devaluation or internal fiscal transfers (as between states in the USA) this outcome was inevitable, and indeed Wynne Godley predicted it nearly perfectly over 20 years ago ( ). Indeed, when one analyses the eurozone with Godley’s sectoral balances approach, it quickly becomes apparent that the large surpluses being run by Germany are the truly destabilising force within the eurozone, and that even if Greece leaves they will continue to beggar their neighbors with mercantilism, until the entire eurozone collapses. It’s quite ironic that the pathological German fear of inflation, which is what’s driving their utterly mad policy, seems like it’s going to eventually tip the eurozone into debt deflation and possible collapse.

    Also, it is incorrect to compare the UK’s government debt with that of Greece. While it is true that eurozone nations such as Greece, France or Spain could all indeed go bankrupt, as the Euro essentially forces them to borrow in a foreign currency, the same is not true of the UK as we have our own currency and our own central bank, and hence control both our own monetary and fiscal policy, something which is not true with nations within the eurozone. Insolvency is, with the current system, simply not an option, unless for some bizarre reason the government actively chooses to default. Frances Coppola did a good article a few years ago in which she nicely explains why we are nothing like Greece ( ).

    • Euan Mearns says:

      Sam, thanks for insight and links. Economists have built a very complex system and subject that I always struggle to fully comprehend. So I follow some very simple rules. 1) If a government prints money this must automatically eventually devalue all that currency in proportion but this may offer competitive advantage in international trade; 2) borrowing money can be good for investment but is a mistake for sustenance (this is probably one of the big structural errors confronting Greece – huge debt, no means of creating wealth); 3) savings themselves can be a problem since these are the fruits of labour not re-invested into the system immediately; 4) energy creates wealth as we know it and using that energy at our disposal wisely and efficiently is wise. Greece does not leverage wealth from the energy it consumes.

      internal fiscal transfers (as between states in the USA) this outcome was inevitable

      This is interesting, can you elaborate. My gut feel is that the type of economy that Greece has cannot survive as is within the €. And yet the € zone likes to have an economy like Greece to hand. Missing from the thinking at present is the notion that the wealthy N must subsidise Greece now and for ever. It’s a small country and it won’t cost a lot.

      The cost of not doing so looks horrific for Greece and not much better for the rest of Europe. But the policy making is removed from the minds of intellectuals and placed in the hands of the proletariat.

      • Sam Taylor says:


        I must admit it’s only over the last few months that I’ve began to see that quite a lot of what I thought about governmental debt was completely wrong. It’s kind of helped me to understand why all the people who predicted hyperinflation after things like QE ended up so wrong.

        To answer your question a little more in depth, it is my understanding that in the US there are big surplus states (eg california and New york) and deficit states (say arkansas,). As things stand in the USA, the richer states help prop up the welfare bills of the poorer states through internal fiscal transfers. This helps avoid the poorer states going bankrupt all the time as would otherwise probably happen, and since the US is one nation with a common language and culture nobody in the richer states really minds that much.

        Unfortunately when the euro was being constructed the hope was that the monetary union first would lead to greater political and cultural union, but that certainly hasn’t happened. However if you have a monetary union without political and fiscal union, then you’re in trouble. This is because the Greeks can’t devalue the currency, as you mentioned, but still have all the other problems associated with being a peripheral country, which leads to the debt problems we’re seeing. Being able to devalue the currency is a useful sort of escape valve that they no longer have, and as such they rather need fiscal transfers, or else these debt issues are never going to go away. The other big issue within the eurozone is that monetary policy is always going to be tailored towards Germany, as it is by far the dominant economy. This means that interest rates were far too low for the fast growing peripheral economies economies (PIGS) around the start of the century, which led to the asset bubbles in Ireland and so on. This is covered nicely in this article ( ).

        All of which is to say that while energy is the fundamental currency of the universe and our lives, money and the monetary system is also powerful, as it sets down many of the rules about how people are able to behave and interact. Poorly designed monetary systems, such as the euro, can needlessly straitjacket the responses available to societies in the face of a crisis and as such can impose unnecessary suffering on the population.

        • oldfossil says:

          Thanks Sam for your clear analysis delivered in words that even I can understand! The concept of fiscal union as a necessary adjunct to monetary union had never occurred to me. Previously my understanding of euro distortions was limited to analyses by Tullet Prebon doing the rounds a couple of years ago which I ignored because their predictions of an UK economy collapse were contradicted by actual events.

        • oldfossil says:

          And by the way Sam if you want to know why QE didn’t cause hyperinflation, look at the stock market caps of countries that practiced it, and e voila, there’s your hyperinflation. The natural home of money is the market. House prices in the US and UK have jumped as well.

      • With no mechanism for devaluation or internal fiscal transfers (as between states in the USA) this outcome was inevitable ….

        There are no inter-state fiscal transfers per se in the USA. What happens is that the federal government gives a cut of the federal tax take back to each state – and a large cut too because it supplies the states with between ~20 and ~40% of their total revenues. The sharing formula is complex, but overall the feds give proportionately more to the poor states (Mississippi gets 44% of its revenues from the feds) than to the rich ones (North Dakota gets only 20%). This way all 50 states generally manage to keep their heads above water despite the occasional bout of financial mismanagement.

        As to whether the current outcome was inevitable, I don’t doubt that if the EU had had a revenue-sharing system like this in place there would now be no Greek crisis.

      • Euan Mearns says:

        Sam and Roger, Thanks, this explains how the federal US system works while Europe is failing. If Europe had federal taxes and a system of re-distribution, as well as a system of spending controls, Greece would not have this debt, and Germans would not be complaining about their money being given to Greece.

        You can’t have a single currency without a common fiscal base for it to stand on.

        The UK has a system of redistribution too, called the Barnet formula, where Scotland gets a higher per capita share of government money.

        • If the EU had a tax sharing system the Germans would still be giving money to Greece. They just wouldn’t be complaining about it, or at least not as loudly.

  2. Lars says:

    Greece`s prospects may look bad on paper, but I believe the country has some options after all.
    Euan has pointed out its economic failures and potentially bad energy situation, but several factors will possibly come into play in the foreseeable future that speak in Greece`s favour.

    I really doubt that the EU will let Greece go (leave the EU) and sink into a full blown depression. The country is simply too valuable as a strategic asset. Surely, it`s not valuable for its (lack of) natural resources, its pristine islands, its tourism industry (because we can go to Turkey instead for instance) or other things. But look at the map and its strategic location. The Balkan peninsula has always been important to Europe, it`s a fact, and Greece is situated at the southern tip. It`s the entry to Europe from the Middle East.
    The Greek connection to the island of Cyprus is also of great importance. These two brother peoples who share the same language are closely connected. If Greece leaves or is forced out of the EU, the risk is that Cyprus will follow. I bet the Cypriots also vividly remember the EU`s confiscation of money from some bank accounts recently. This country has been described by some as a gigantic “carrier”, and they who control Cyprus can control the Middle East potentially.

    Thus Greece can play different potential partners against each other in a geopolitical rivalry. If Greece is left alone you can bet Russia will fill the gap especially now that the old East-West tensions are alive again. Fair enough, the Russians have their own problems at the moment but Greece (and Cyprus) is too much of a strategic prize to let it go if given the chanse.
    And Russia would be in a good position to flood Greece with oil should a worst case scenario arise. They have traditionally had close ties with Greece, and the Syriza party in charge now are left wing radicals. Turning to Russia if necessary will be an easy option for them. Finally they also share the same Orthodox religion basically, a point perhaps more important than secular Westerners realise. The BRICs group of nations and their allies which are basically anti-Anglo and anti-EU will view Greece as a great prize and could easily offer help to Greece aside from Russian help also.

    I don`t think EU leaders don`t understand this, they are not stupid. It will be interesting to see what comes on the table in the time ahead.

    • Euan Mearns says:

      Lars, I think the danger here lies in the politics of 28 EU member states; their inability to tackle this issue decisively for several years; the palpable exasperation of the EU people; the drifting apart of European and Greek people’s views. Left to the people, the majority may say let Greece sink without understanding the consequences.

      But if they somehow miraculously say let them swim then the package needs to be a comprehensive one that actually solves the problem and does not kick it down the road a couple of months.

      I agree that Russia is waiting in the wings as a white knight. Obama sees that. Not sure that the collective mind of the 28 does since they don’t pay for defence against Russia.

      Greece needs a huge doze of investment in wealth creating industry, not more debt.

      • Lars says:

        Euan, we disagree on who sees what. I believe Obama is a moron (worst since Carter and even worse) and the EU 28 doesn`t matter that much. Almost all that matters in the EU is Germany, and I think they see what I have described because the Germans are no fools and they fought hard for Greece in WW2 after the Italians had been repelled.

        Apart from that I agree with you that Greece needs less debt and more wealth creation, but that goes for a lot of countries.

        On the energy side, I suppose Greece will give a damn about burning lignite when push comes to shove.

        • JerryC says:

          I wouldn’t say Obama is a moron, but he tends to be either indifferent to or openly hostile to traditional US foreign policy interests. So I wouldn’t assume that he is paying the slightest attention to the possibility of Greece abandoning NATO and cozying up to Russia.

        • Fred says:

          Lars, I think you will find that your far right viewpoint on reality doesn’t get much notice taken of it globally. Obama is seen as the BEST president since Carter – even though he hasn’t be bold enough in many key areas in turning back corporatism.

          In particular, it does seem that bankers and the finance ponzi scheme in general is the biggest existential threat to western civilisation that exists (much bigger than terrorism etc.) It acts a ‘not entirely sane’ conduit to deploy financial armies of destruction on whole countries. Greece is just the latest example of how their actions turn a drama into a crisis, all the while being protected by their vassal states.

          I suggest you stop looking at the military power blocs and positioning and rather look towards the financial power blocs and how they are moving. As far as they are concerned, whatever its geopolitical position, greece is a small provincial skirmish on the geofinancial stage.

          China on the other hand …

        • oldfossil says:

          The Greeks will have to abandon the obsolete socialist model of the planned economy and adopt the modern socialist model which coexists quite happily with capitalism, private enterprise, free markets, mobility of capital and labour, and unplanned innovation. But where are they going to get investors for high-tech high-volume production with that labour force?

  3. philsharris says:

    Ambrose Evans Pritchard (D. Telegraph) does a good summary of Greece since the big crash of 2008 when banks needed bailouts all across the Western World.

    He especially concentrates on the last few months. See his article from before the referendum: “Greek debt crisis is the Iraq War of finance” The EU has failed.

    Again before the referendum, but more recently a quote from Varoufakis (see AEP’s “Greece’s Yanis Varoufakis prepares for economic siege as companies issue private currencies”) “Luckily we have six months stocks of oil and four months stocks of pharmaceuticals,” he told The Telegraph.

    Spain & Portugal joined ‘Europe’ after the dictatorships (and after Portugal shed its African colonies), and similarly Greece could join after ‘the Colonels’. Eastern Med geopolitics had a lot to do with it – Greece is a heavily armed country and a former Defense Minister I understand is still in prison for taking bribes concerning a purchase of German-made submarines.

    These countries could modernise along lines of more prosperous countries by jumping into the petroleum era. (All the socio-economic indicators inflected at this juncture, from fertility rate to rural electrification. I was in Greece before the Colonels and it was a poor country where a significant part of the rural areas had significantly depopulated with men working in Germany and younger women in ‘domestic service’ in Italy.)

    It seems to me that until fairly recently ‘oil’, including imported oil was not a cost, but a boost for everything. We saw that happen in the 1950s onwards in UK. Even though we stopped using oil for electricity in the early 1970s, in some countries prosperity rose and they ‘modernised’ despite their electrification depending on oil. A different scenario now of course but there is not much sign that our ‘elites’ have got this point.


    • Euan Mearns says:

      Phil, there is no doubt that importing energy can be an enormous economic benefit where that energy is used to leverage wealth out of creating things more valuable. Japan, S Korea, Germany and Austria are all good examples. I suspect it is the way that the imported energy is used that is important.

      The IEA reported that Greece had 90 days of oil stocks back in 2010, I very much doubt they will have availed themselves of the opportunity to double that in the intervening period of record high prices.

      The integration of Spain, Portugal and Greece into a democratic, prosperous and peaceful Europe has been a fine achievement and one that should not be forgotten or tossed aside lightly – IMO

      • Willem Post says:


        Greece and Ukraine have at least three things in common, both have economies that are more than 50% off the books, and both are dysfunctional, and both have high debt levels.

        I think having debt is a sign of weakness, of having compromised one’s independence, although people on Wall Street want you to be deluded that it is good, and that borrowing is good, and that making monthly debt payments is good, and that being a financed slave is good, etc.

        Successful companies that invest well, execute well, usually has a very low debt to equity ratios, and high cash balances, such as Apple, etc.

        The same is true for countries, such as Germany, the Netherlands, etc.

        It was not long ago, the Greek taxi drivers went on a national strike, because the government, at the insistence of foreign bankers, finally required them to have meters. Prior to that they charged whatever they fancied, insisted on cash payment, and reported next to nothing as income!

      • philsharris says:

        You write:
        “The integration of Spain, Portugal and Greece into a democratic, prosperous and peaceful Europe has been a fine achievement and one that should not be forgotten or tossed aside lightly – IMO”

        i agree, and from what i read the majority in those countries, and in Italy, agree as well, which seems to be the ‘glue’ holding the Eurozone together; and possibly the same applies to the wider EU.

        You mention Japan. Despite still having enormous industries, growth has slowed over 20 years and net growth has been elusive since 2008.

        In UK, manufacturing is a fraction of its historical value to the economy, (and is now at 10% GDP), and our 75% ‘service’ economy now includes 9% ‘financial services & insurance’ and Real Estate at 9%. The Financial sector proved of dubious value 2007 – 2009, as elsewhere, and arguably appears to have been a net drag on the economy since then. Such indicators as ‘household real income’ appear to have not yet recovered to earlier levels.

        Things seem to have changed.

        PS Thanks for your IEA info from 2010. Varoufakis could well be mistaken or have ‘lied’ about Greece current oil stocks if they do not have the means to pay for any imports over the next 3 months.

  4. Javier says:

    What it is unsustainable will not be sustained indefinitely. The strategy initiated in the 80s by many OECD countries and latter imitated by others of over in-debt to finance prosperity is running its course and reaching its ultimate consequences. Greece is just the canary in the coal mine. We can find plenty of reasons on why Greece and try to forget that after Greece a lot of countries are lining up and that eventually the consequences will be devastating to the global economy and monetary system.

    Greece was not rescued in 2011. Their bank creditors were rescued as they were in Portugal, Ireland and Spain. Solving the present crisis with an agreement that Greece can accept o letting Greece fall and abandon the euro only changes things in the short term. In the long term we are living in borrowed time. After Greece other countries will have to face their own defaults and the system will not be able to cope.

  5. Graeme No.3 says:

    Greece can’t run with 160% debt, especially as it has a primary deficit, i.e. its budget is in deficit even before interest payments. The only hope within the Euro is for the debt to be halved i.e. about 150 billion write-off, and then it has to get its financial house in order.
    Given the previous behaviour and current attitude of most greeks that isn’t going to happen. Any respite won’t lead to economic recovery but more debt run up, until a further collapse. Their bureaucracy has written their own benefits for a generation. Any country where 2 murderers can continue getting their public service salary while they’re in jail is too far gone to recover.

    The EU had better write off the whole debt and boot Greece out. The result will be terrible for Greece. As you report they will need to buy oil to run their economy. They are also importers of most of their meat supplies, so the standard of living will plummet. I guess that mass production of chickens might partially alleviate the meat shortage but what else will they need to do? A sudden conversion to northern european standards of honesty and lower corruption would take at least 2 generations, even without not so secret sympathies from France, Italy and Portugal. It might be possible for the Euro to split into a northern and southern currencies, although there is little sign that the EU bureaucracy would dream of such a solution, so the breakup of the EU looks inevitable.
    And who will break it to the citizens of the rest of Europe that they’re going to pay 670 euros per head to settle the Greek debts? No wonder Merkel isn’t smiling.

    • Willem Post says:


      Ousting Greece from the euro zone would still allow the Greek people to migrate to other EU countries to work, and send money home, as many countries do, unless it would be ousted from the EU as well.

      In that case, it likely would not remain a member of NATO and Crete’s harbors would become available to BRICS’s navies and shipping, as well as oil and gas, etc, would become available form Russia.

      Turkey also is not a happy camper regarding the EU, and likely will move closer to
      Russia for more aspects of its international relations, as Russia has done with China.

      It looks like the EU/Brussels/US/NATO bloc has cooked its geo-political goose after several decades of short-sighted policies.

    • Euan Mearns says:

      I’ve been thinking that if Greece leaves / is thrown out that one of two courses may follow. The first is that it is a total calamity for Greece that lasts many years. This will appear horrific for other € members who subsequently do all they can to keep their house in order – I’m thinking Portugal, Ireland and Italy. The alternative is that after a couple of years of pain, that Greece begins to prosper. Other € countries may then look on with some envy.

  6. roger in florida says:

    Mr Mearns,
    The tragedy/farce that is playing out with Greece and the Troika is indeed pathetic. However the Greek path to recovery is fairly clear. As you point out there are no significant oil or gas deposits in Greece so they need to purchase that energy, for which they will need hard currency. They have to default and bow out of the Euro but remain in the EU, there is no real choice if it is real recovery they are seeking rather than bare survival. This means going back to a national currency. They need to go nuclear for their electricity generation and they need to do it urgently. Russia could provide both the short and long term remedies for that and, as Lars points out, Greece has many options, for Russia (and China) sea and air port facilities in Greece would be extremely valuable. Greece could then use its nuclear facilities to process coal into an acceptable vehicle fuel, that may be expensive but the costs would be in drachma rather than borrowed hard currency. Of course Germany could help Greece with all this but apparently Angela Merkel has decided “no more Mr. nice Frau!”
    It is instructive to compare the situation of the UK to that of Greece. Britain now has total debt ratio to GDP of approximately 560%, this is the second highest in the world behind Japan, and it is completely unsustainable. What is happening now is that Britain is borrowing new principal in order to pay existing debt service costs. What Britain has also done is make huge malinvestments, particularly in the energy sector, these “investments” have been thoroughly documented on this site. A huge difference between Greece and Britain is that Greece is a homogenous country, whereas the “United” Kingdom is no such thing. It is possible that England would grasp the nettle and do what is necessary to restore financial sense, it is beyond belief that the national socialists of the SNP will ever do so, in fact the breakup of the UK is inevitable. Within a decade of that event Scotland would be the Northern Venezuela. The point that Sam Taylor makes is true of course, a nation that creates its own currency can never actually be insolvent, however there is no guarantee that the currency so created will be convertible. For a nation such as Britain which has a food deficit and a technology deficit, such a situation of non-convertibility will be absolutely catastrophic. Incidentally anyone who has lived through the last 40 years has seen the results of money creation in the incredible asset inflation that has happened in the UK, particularly in the South East housing market. When I was born 1GBP = US$4.80, now 1GBP = US$1.50.
    I cannot imagine what Fred is on, clearly he gets his ideas from the Guardian and the BBC. Barack Obama is undoubtedly the worst President the US has ever had, even worse than Carter. During his time in office the national debt has doubled, the economy has tanked, the world has become much more unstable and, perhaps what is worst for us living here; he has deliberately made race relations much worse. It is not an exaggeration to say that the US is more polarized along race lines than ever in its history. As for turning back “corporatism”, he has engaged in cronyism of the worst type and the trade agreements he has negotiated put the interests of multinational corporations before any interests of the people he supposedly represents.

    • A C Osborn says:

      roger in florida says:July 9, 2015 at 4:18 pm ” Britain now has total debt ratio to GDP of approximately 560%, this is the second highest in the world behind Japan”

      Are you sure about the UK’s position?
      The UK Debt is currently £1.36Trillion the UK GDP is £1.83Trillion which is approx 75%
      The USA has a GDP of $17.4Trillion and their debt is estimated to be $18.4Trillion by the end of 2015 which is over 100%

      • Lars says:

        A C Osborn, I suppose Roger is talking about all debts in the country (“total debt ratio”), while you talk about national government debt?

        • A C Osborn says:

          Lars, it could be, but in the UK we have a very debt allied to Mortgages, a lot of other countries do not buy their houses as we do.
          That distorts the situation quite a bit.

      • roger in florida says:

        A C,
        I do indeed mean total debt; public, private and corporate. I believe this makes sense as the debt service costs have to be met from GDP.
        The US is in an even worse state as far as debt goes but we have advantages that Britain does not, in particular our food surplus, energy surplus and at least some of the world’s best technology, not to mention the holy grail; reserve currency status. Of course, like Britain, the US has vast mal-investment in (renewable?) energy. Driving west on I-90 through Montana, Idaho and Washington states your eyes would be assailed by thousands of windmills. when I first saw them I couldn’t help wondering what our children and grandchildren would think of us; it would be one thing if they worked, but we messed up the place for something that doesn’t even do what we said it would, and we knew it!

    • Lars says:

      Roger, I agree with your analysis. I realise this discussion is not about Obama, but I cannot resist reminding what he did to the Brits and Cameron after he became president.
      When Cameron visited the Oval Office and brought his expensive gift (can`t remember what it was) he was given a pack of cheap DVDs or CDs in return, of course American ones that cannot be played in Europe, lol. I suppose that was Obama`s way of reducing the budget deficit for the American tax payer :))
      I`d give a few pennies to hear how Cameron thanked him then. Before this he had removed the bust of Winston Churchill from the Oval Office. You can hardly find a more symbolic way of insulting another nation I suppose, and the nation with whom you supposedly have a “special relationship”.

      Obama has alienated the US` two most important allies, the UK and Israel and cozied up to Iran. Thus he is alienating Saudi Arabia as well and Iran`s neighbours are well under way to get nuclear power and eventually nuclear weapons too like Iran.

      In 2011 he declared that “we don’t have a stronger friend and stronger ally than Nicolas Sarkozy, and the French people”, while the British press wondered what was wrong with the 300 dead UK servicemen in Afghanistan, and no single French of course.

      But of course, Obama has delievered on his promise of “change”.

      • Graeme No.3 says:

        Obama made no friends in Australia by publicly lecturing the Prime Minister about the need for Climate Action when he didn’t want that discussed at the conference he was hosting.
        A blatant disregard of diplomatic protocol. He could have said it privately but he was playing to the media.
        In any case Australia is one of the few countries which might meet its commitment under the (extended) Kyoto agreement in 2020.

    • Euan Mearns says:

      Roger in Florida, thanks for this expansive comment. I’m not sure where I stand on Obama. I do recall thinking he was nuts to take up the reins in the wake of the worst financial crisis for 80 years. He always needs to be judged against that austere backdrop. On balance i’ve been disappointed. His lack of support for the “special relationship” may have something to do with it. I guess he doesn’t have any Scottish uncles.

      On Greek electricity, I agree that 3 nukes may be better than covering the islands with windmills. But while I am absolutely confident that Iran can manage civilian nuclear power, fairly confident that Saudi Arabia could do so, I’m not so sure about the Greeks. The country seems to be gripped by malaise.

      So Florida must be like Greece to the USA 😉 Hot sunny tourist destination. What else makes your economy tick? I read somewhere that tourism was about 20% of the Greek economy.

      • roger in florida says:

        Actually Obama claims Irish descent so I guess the UK is SOL with him.
        Your point about managing a nuclear power station is well made, It was profoundly disappointing to me that Japanese engineers had apparently cut corners in designing the Fukushima complex. In the case of a shutdown those reactors absolutely have to have cooling water, no ifs ands or buts, the cooling water pumps have to run, except they didn’t so we have melted cores and a mess that will take centuries to clear up. I am just finishing Dr. Robert Hargraves book “Thorium, Energy Cheaper than Coal”. A very interesting book, although he is a bit of a climate change ninny, there are reactor designs that are safe and reliable, particularly the LFTR type. The world has to go nuclear and will, it is our only real energy alternative. His premise that we can replace coal burning with nuclear is flawed though, we may not burn the coal for electricity but we will process coal into vehicle fuel, so eventually all the coal will be burnt, it just may take a little longer. The increase in atmospheric CO2 will occur and any climate effects will happen. As nuclear power use spreads there has to be a regime put in place to train and monitor operators. Personally I am not worried about Greeks, having known a few Greek marine engineers who were very competent, but what happens when Botswana or Lesotho get nuclear power?
        Florida is wonderful, as Roger says we are integrated into the whole US economy. People move here from all over the US, many to retire and of course they bring their money with them. There is a thriving modern economy here also, my county, Pinellas, has 33 high schools, so lots of children and young families. The sunshine is wonderful, but then I grew up in the rather dreary NW London suburb of Wembley!
        Tourism is big here of course, like Greece, but the tourism business is very competitive; what is Disney in Greek?

  7. Euan: A couple of off-the-wall questions. How might a Grexit impact:

    1. Cameron’s attempts to wring concessions out of the EU?

    2. The outcome of the proposed UK referendum on EU membership?

    • Euan Mearns says:

      Roger, I’ve been wondering about that. I think the comments here show that one of the main problems with the € zone is not enough integration. So one possible outcome is that the € zone recognise this and press on at greater speed towards a United States of Europe that at present Britain does not want to be a part of.

      I think it is easier to envisage a 2 speed Europe, those in and those out of the €, than a N€ and S€ currency.

      An alternative outcome is that GREXIT pushes € zone towards fragmentation and this would strengthen UKs hand, pushing for unity within a loose federation. But then the € zone already exists.

      • An interesting article here:

        “The euro’s original sin is that it tries to force countries into a single government when the people in those countries don’t want one. That not only makes them want one even less, but also makes them fight when they had no reason to before. But as long as nobody leaves, everybody is too afraid to do so even though they might want to. That’s why whether Greece remains in or is removed from the common currency matters so much for the future of Europe. If it stays, then there’s at least a chance that they could muddle through and, over the next few decades, forge a United States of Europe. But if it leaves, then more might too, and the euro might become the Esperanto of currencies: something that was supposed to bring people together, but didn’t.”

      • Lars says:

        Euan, one can only speculate if the current crises was planned in the first place in order for countries and the populace to see and accept that a political, fiscal and economical union is necessary with a common currency. I find it hard to believe that Euro planners didn`t realise all the way back to the implementation of the Euro that Greece`s and other countries destiny would be to spend money like a drunken sailor in the harbour when they were given the chanse.

        To make scrambled eggs you need to crack some eggs first. Greece is the first to be cracked. If the goal was a full political union in the first place (“United States of Europe”), the Euro was the first means (instrument) to achieve that goal, and they knew if would fail. If that is correct and a political union is achieved, the Euro could turn out to be a big success (not in my view I must add) since it is just an instrument, contrary to most people`s perception of the Euro now.

        I agree with the notion of a “two-tier Europe” however, because some countries, particularly in the South, simply don`t have the needed discipline etc. to be part of a full political union. And I am betting good old UK will leave after 2017…

  8. ristvan says:

    Grexit will happen Sunday. The Euro created a monetary union without fiscal union. Exchange rates are what normalize disparate fiscal policies. Was bound to fail eventually. The interesting questions are what follows.
    First, Greece. There will be an unavoidable period of utter chaos. Converting to drachmas takes time; meanwhile imports of fuel, food (meat), pharmaceuticals, and industrial goods (cars, tires, spare parts) will be difficult to impossible until an exchange rate emerges. Humanitarian aid? Thereafter depends on whether Greece institutes the structural reforms it has so far resisted. If not, likely remains a very marginal economy for decades despite probable revival of tourism to earn FX since now cheaper for vacationing Germans. If it reforms, depends on what and how much and how fast. Hard to know, but with radical leftists in charge not much is likely to happen.
    Second, rest of Eurozone. There are two possibilities. Fix the Euro through binding fiscal union including tax efficiency, deficit spending limits, multinational Eurobonds…. IMO unlikely, since the pain will be in Italy and France. Maybe the sight of Greece in extended chaos would muster the political will, but I doubt it. Or other lax countries eventually follow Greece out. Italy is the most likely next candidate to leave the Euro and return to the lira. 25% of the economy off the books when I was doing business consulting there, structural inefficiencies everywhere, massive tax evasion (a multibillion Italian subsidiary of a German company I consulted to kept three sets of books: one for the government for tax purposes, one for the parent, and one used to run the business), rigid labor markets, no political will to reform la dolce vita.

    • Sam taylor says:

      I think your scenario for the rest of Europe sounds about right though Portugal and Spain perhaps also likely candidates. One wonders when the Germans will realise that they are beggaring their neighbours and come round to their senses. Nobody comes out well, but I suspect Merkel will be and Schauble will be judged harshly by history for their intransigence.

    • Euan Mearns says:

      The new terms submitted by Greece are more austere than those rejected by the people last weekend. And they include introducing lots of measures a long time in the future. And privatisation of industry doesn’t exactly smack of Marxism.

      And the proposals for debt relief include rescheduling payment out into the distant future. It looks like the solution is to give the can an enormous whack down the road. The festering boil of civil unrest in Greece just ain’t going to go away. Any bets on what happens if and when they re-open their banks?

      • Roger Andrews says:

        What caught my eye in the Telegraph article was this:

        This is the first time Europe’s institutions have acknowledged clearly that Greece’s public debt – 180pc of GDP – can never be repaid and that no lasting solution can be found until the boil is lanced.

        If Europe’s institutions really do acknowledge this then they aren’t kicking the can down the road, they’re burying it.

        • ristvan says:

          True. But the German stance has consistently been that the EU and Euro charters do NOT allow one nation ro pay for another’s debts. AFAIK, that is correct. So Greek debt restructuring is off the table. Of course, there could always be another political ‘reinterpretation’.

  9. Javier says:

    Most scenarios assume that the world economy is going to continue doing ok, and that only a few countries currently in a serious situation will have problems. That’s the basis for most analysis about Greece and the Euro a few years from now.

    However peak oil is upon us at a time when most OECD economies have not recovered their pre-2008 level, and China is experiencing the first symptoms of their own debt saturation.

    What is it going to happen to Greece and the euro and the global economy under the assumption that peak oil triggers a new world crisis with most countries reducing their economies to their late 90s or even early 90s level? Greece will become completely insolvent again, except that it will be accompanied by Italy, Spain and Portugal, while France sinks into a strong recession. Japan will not become insolvent, but will have to destroy its currency as it will be unable to pay its principal and interests. The Euro will probably disappear as all the previous monetary unions before it, every heterogeneous country like Spain, Belgium or the UK will break apart, and politics will become a lot more radical, to the point that a new war cannot be completely ruled out.

    We will probably have massive world instability due to food crises as a consequence of energy crisis, economic crisis and monetary crisis.

    The risk of this scenario developing in the next 10 years is quite high and much more likely that current projections, because of the cyclical nature of economic crises and the growing lapse since the last one. Readers of this blog know of the connection between what has happened to oil since 2005 and the current global situation.

    • roger in florida says:

      You are too pessimistic; yes we are at the stage of “peak oil” and there are many economic and political problems ahead, however collapse is a process not an event. There are technologies available that will get us through the problems. As Sam Taylor says in the first comment above; a sovereign nation issuing its own currency cannot become insolvent, so the lesson for Greece and others is either have your own currency or make sure that the central bank of that currency will issue currency as required. The refusal of the ECB to fund Greek banks is perhaps the disgraceful aspect of this whole fiasco, the ECB had no legal or moral right to refuse funding for Greek banks. As long as there is adequate food and a support system for the most disadvantaged among us we will be fine. It is crucial that we develop energy sources that are essentially boundless, that means nuclear.

      • Javier says:

        Roger in Florida,

        Pessimism and optimism are human emotions not linked to reality. Since 1961 the economic cycle expansion phase has lasted and average of 71±36 months.

        Since June 2009 current expansion has been 72 months. Unless you are prepared to believe that this time is different and that monetary policies are capable of abolishing recessions, the next recession is starting to be due and most probably should take place within the next 3 years. Is this pessimism?

        Now do your math. What would a global economic crisis do to the debts? Income will be crushed, expenses will increase and interests rates will become untenable for those in the weakest position. Many countries, not only Greece will become insolvent and the rest will not be in position to “rescue” them.

        Economic collapse is almost instantaneous. If Bear Stearns was almost capable of causing economic meltdown in 2008, imagine what would (or will) happen when a few countries go bust and there is not enough money (collateral) to keep them afloat. Nobody can rescue Japan or the UK. Almost nobody could rescue France or the combination of Italy plus Spain, and even less in the midst of a global recession that affects every country. What about China going into recession? I cannot even think of that.

        We are not prepared for that scenario, yet probabilities indicate that it is “the most likely” scenario.

        Peak oil just makes it impossible to recover, as oil becomes more and more expensive to produce yet economies become less and less capable of paying for it. Recovery would require very cheap resources which is usually what happens during crisis, but resource scarcity makes it impossible for resources to become cheap enough.

        After that globalization dies.

        We are just not facing reality because we don’t like it.

        • roger in florida says:

          Good luck finding any area of human activity where emotion doesn’t have any sway. There is no question that “this time it is different”. what has happened over the last 35 years or so is that money has become disconnected from any asset anchor. I believe that this started when President Nixon finally severed the link between US$ and gold in 1973. It is true that for ordinary people that convertibility had long since expired, but not for central banks, they could still convert their US$ for gold until Nixon stopped it. What that meant was that because the US$ was tied to gold, in effect every other currency was also, that is not the case now.
          The USA has, at the moment, a public debt of some $18Tr, the US Govt. takes in annual tax revenue approx. $2.7Tr and spends approx. $4.2Tr. If the US Govt. were to trim it’s budget so as to live within it’s annual revenue, and set aside a small but significant amount, say $500M per year, to retire the debt, the US would be debt free in about 36,000 years, not bad for a country 220 years old. However no such debt retirement plan is in prospect, in fact the debt is set to explode to approx. $50Tr by 2030, clearly this debt will never be repaid. The UK, Japan and China are all in similar situations, the ECB has no assets at all. What does all this mean?
          Well it means a couple of things: First; interest rates are never going up. Second; the money creation is going to accelerate.
          My parents purchased a 3 bed semi in Wembley in 1948 for about GBP500, at the time my father earned GBP750 a year as a rigger. The house today, with the same bricks, roof tiles, floorboards, is “worth” approx. GBP400,000.00. That is where the money has gone, it might be worth GBP40M in a few years.
          However, notwithstanding all that, technology, particularly in the energy sector, is set to transform human life, we are on the cusp of having unlimited energy and being able to use that energy to raise living standards for all humankind. You say globalization dies, I say globalization has hardly started, if one thing is absolutely clear from post WW2 history it is that the nation state is dead, yes, some people (Scots, Basques, etc.) pine for some national nirvana, it is all crap, one world govt. is on its way, that is what TPP and TAP are all about, worldwide rule by corporations, particularly the financial ones. It is very revealing that Obama interferes with internal EU business accompanied not by Sec. State but by Sec Treasury, Jack Lew.
          Javier, I believe I am a realist, I am also very optimistic about humanity, we are going to be fine, just different.

          • Javier says:


            So you do think that “this time is different”. The Greeks also thought that money was no longer tied to wealth and that debt no longer mattered.

            US and most countries can afford an un-payable debt for as long as the lenders believe that they can pass that debt to a greater fool in case there is trouble. Otherwise the central banks will have to buy all the debt and then money will be in trouble because money is only worth something if people have trust in it, and that trust will be eroded.

            You make the mistake of extrapolating from the past. Because one could buy a house with 1-3 years income 60 years ago and today 7-10 years income is needed, you are wrong at supposing that 40 years from now one will require 20-30 years of income to buy a house. Extrapolation is a mistake, specially when we are dealing with cyclical phenomena, like the economy. No extrapolation from the 80s or 90s has held true.

            I am afraid that your optimism and confidence about the future is based on faith and little else. On the cusp of having unlimited energy? Oil per capita reached a maximum in the early seventies and energy per capita looks like it is peaking right now. Your beliefs are not based on facts.

    • Euan Mearns says:

      Javier, I tend to agree with Roger IF that you are overly pessimistic. I have in preparation a post called RIP Peak Oil. But at the same time I have just read the newly published IEA OMR that makes for very bleak reading for the oil industry.

      I may write a short post on this Saturday. The key line is the last one:

      The bottom of the market may still be ahead.

      I only just began to read the OMR regularly about 10 months ago and I’ve been pretty impressed with the content and balance. We have a growing glut of oil that flies in the face of any steadfast peak oilers. At the same time a price collapse that threatens the very existence of many producers.

      US oil rig count up again this week.

      • ristvan says:

        Euan, recheck shale oil decline curves. Even after refracking they remain very steep. Bet 40-60 that the oil production peak is retro determined to be between 2020 and 2025. Essay Peeking at Peaks.
        Nat gas, who knows? Too many variables in play. Flare, Trr, …

        • Euan Mearns says:

          There are some things that are absolutely certain. Human population will reach a maximum number and then decline. Global oil production WILL reach a maximum and then decline.

          The key and interesting questions are when, at what mass (~volume) and with what consequence.

          • ristvan says:

            I agree. And predicted both (plus minus a few decades) in my first ebook Gaia’s Limits. Very hard to argue with objective (e.g. FAOStat) facts. No models. Just a long data slog. My son said, not a beach read.

          • Euan Mearns says:

            Rud, I had no idea you had such an illustrious career as an author. You should post some links to your books – I have not read any of them.

            Revenge of Gaia was one of the first environmental / collapse books I read. I tend to believe in Gaia and that planetary / environmental forces will shape the human population level on a “sustainable” trajectory. Ageing populations and population decline will present a whole set of new problems currently being ignored.

            I have been following the PO story for about 10 years now and have always been surrounded by individuals calling peak today, tomorrow or this year. My long-standing view was 2012±3 years based on work of Sam Foucher at TOD. Who knows, it may still be correct.

          • ristvan says:

            Euan, three ebooks available on all ebook platforms. Ebooks because extensively illustrated in color; otherwise would be too expensive.
            First is Gaia’s Limits, about human carrying capacity interms of population, food, water, various fuels. Has a number of ‘figurations’ (back of envelope rangings)!i have not seen elsewhere. Peak oil is standard. Biofuel and food calory capacities are novel. Three years to research and write part time, evenings, weekends.
            Second is The Arts of Truth, which was motivated originally by some of the research for limits. Is about media/internet/government spin. The title is itself an ilustration since the book is about the arts of untruth. Over a hundred contemporay examples from policy areas like energy, health care, education, to illustrate the logical framework. Took a year, and was fun to write. 6 months just on the climate change chapter, stumbled into researching possible climate impacts on food production.
            Third is Blowing Smoke: essays on energy and climate. Foreword from Judith Curry of Climate Etc. Is doing reasonably well on Amazon Kindle. Took two years to write, probably the most readable of the three.

            Regards to you and Roger on this excellent blog. Visit often, comment seldom as little to contribute to your expertise.

      • Javier says:

        Euan, the consequence of the previous oil glut (early 80s) was a reduction in global oil production growth rate. Why should we expect any different this time?

        Given global oil production growth rate since 2005 any significant reduction is likely to produce peak oil.

        • Euan Mearns says:

          Javier, I understand your logic. Glut leads to low price, leads to mass insolvency in oil industry, leads to reduced production, leads to new finance crisis. It might happen – its one scenario – check out scenario 2

          Each of the three scenarios in that post engineered Peak Oil in 2015 as supply was cut in face of low price and never recovered. But I got that totally wrong (so far) as detailed in a recent post. I think you’ll find that there is a lot more momentum in the system than anyone figured.

          The current glut, may well herald peak oil. But then again the Saudis may let rip on Ghawar with 100 additional rigs. And the Russians and Chinese may let rip fracking.

          • Javier says:

            Why do you think that you got anything wrong except the timing? The precise timing is unpredictable.

            An economic crisis in the near future is very much in the cards.

            For one side we have a market valuation that it is two sigmas away from the mean and in company of such great moments in economic history as 1929 and 2000.

            On the other side we have the Economic Cycle Research Indicator (ECRI) year on year growth at -1.3%, a value that is associated with really weak economic performing moments, most of them recessions.

            The combination is so frightening as to make a good outcome highly improvable (has never happened).

            Within 3 years we should have a market crash and a global economic crisis, but it could come as early as next fall. Given the world’s debt saturation we can count on a global debt crisis of a magnitude never seen before. Given world monetary easings over the last years we can count on a monetary crisis involving the yen, the euro and perhaps other important currencies.

            All of this before getting into the peak oil problem. My understanding is that peak oil will simply make recovery impossible. The world is going to be a very different place. Most people will be a lot poorer and a lot more radical (has happened to the Greeks) and widespread famine could also be a consequence if we don’t do things right.

  10. Jim says:

    As you probably know (being a geologist..) the discoveries in Egypt and Israel are in Nile sediments, pulsing long distances. The prospectivity of Cyprus is based on this idea. It seems unlikely that sediments can cross the deep central trough to reach southern Greece. What do you think?

    • Euan Mearns says:

      Jim, with my exploration geologists hat on I would say that predicting reservoir would be the least of one’s worries in Cyprus. But I don’t really know enough about Cyprus and how it sits within the tectonic framework, although it looks like it forms part of Eurasia / Anatolia and is part of the over riding continent. It is famous for its ophiolites (as is Shetland). Note no oil or gas in Turkey.

      The most important variable in any hydrocarbon province is source rock and a functioning petroleum system. That is the correct burial history so that the source is currently in or has been in the oil and gas window. Once you have a functioning system then you can worry about reservoir, migration, seals and traps etc.

      Lying on the over-riding plate (or in its own arc system) will mean that the functioning petroleum systems of N Africa will not be there. And so you need to start from scratch. I’d observe that Cyprus lies close to the Dead Sea fault (a rift system) that may be amenable to source rock formation like we have in the East African rift, the sub-salt of Brazil and in the N Sea rift system.

  11. ristvan says:

    On Grexit. It is amazing to me that the media as of late Saturday afternoon EDT has not picked up on the essential problem. Greece wants a third bailout of ~€54 billion; IMF says 74 needed. Yet both Greece and IMF say the current bailout debt is unsustainable and need a haircut of at least 25%. that means any third bailout loan package is really just a gift. Not going to happen.

  12. Aslangeo says:

    On the subject of exploration in Greece

    I consulted a few industry databases – about 50 exploration wells have been drilled on the Greek continental shelf, the last in the early 2000’s and about 10 discoveries made – all are in the northern Aegean Sea

    No international companies are active there in 2015

    PGS, a geophysical contractor are selling a multi client seismic survey which also covers offshore western Greece and Crete –

    A licensing round is planned soon

  13. I see a last-minute deal has been reached and Grexit has been avoided for the moment.

    But the deal might still be rejected by the humiliated Greeks or by any one of a number of Grecophobe European parliaments.

    And now everyone hates everyone else.

    So much for the United States of Europe.

Comments are closed.