Moderator:  And welcome as well Assistant Secretary Francis Fannon from the Bureau of Energy Resources of the State Department.

I will turn to Ambassador Pyatt and quickly bring him back to ask him, you have attributed the excellent state of U.S. relations with Greece during your tenure to an alignment of interests and if both the U.S. and the Greeks try to boost trilateral cooperation in the region, what do you see the benefits of such an approach for Greece generally, and more specifically on the energy sector?

Ambassador Pyatt:  Thanks, Katerina.  Let me start first of all by congratulating both the Atlantic council and AmCham for this event.  And in the same way it’s been said, the Atlantic Council has made a big bet on Greece.  The United States has made a big bet on the 3+1 framework as a means to build stability and prosperity in a strategically dynamic region.  We can see the challenge of great power rivalry returning to the region even during this Coronavirus period.

I would just say a couple of quick points.  Minister Hatzidakis spoke well to the benefits for Greece from this trilateral cooperation.

For the United States, first of all I should highlight that energy has been one of the real bright spots of our bilateral relationship for a few years now.  We see Greece emerging as a major source of energy security across Southeastern Europe with a whole variety of projects from the expanded Revithoussa Terminal to the TAP Pipeline to the IGB Pipeline, now moving ahead to the floating regasification unit in Alexandroupolis.  So our work together with Greece, Israel and Cyprus brings together three democracies, three countries that enjoy a strong dynamic relationship with the United States for us to work together on.  That was Secretary Pompeo’s message when he went to Jerusalem last spring to launch the 3+1 process with all three leaders.

But it’s not a coincidence I think that the first area to really deliver value in terms of that cooperation is energy.  I’m sure Assistant Secretary Fannon will have more to say about this.  It’s great to see the three Ministers, and of course we had Frank in Athens in August for the first sub-group of the 3+1 which was our Energy Ministerial hosted by Minister Hatzidakis.  We were very excited to do that.  It was really one of the first foreign policy initiatives of the new government when it was elected in July.  I think it reflects how all of us are committed to continuing to work on these issues.

I would just say to finish up, as we look to the future we are going to continue to invest in this 3+1 relationship.  Frank will speak to what we’re going to do on energy, but we see a lot of other areas where we can cooperate including all the work that’s going to have to be done both to deal with the consequences of the COVID pandemic and also to help stimulate growth across this wider region.  And as you know, one of the bright spots for U.S.-Greece cooperation amid the difficulty of the pandemic has been what’s been happening on technology and technology investment where there have been some big investments by American giants like Applied Materials and Microsoft, even during the pandemic.  So we see technology cooperation as a natural area of synergy between the three governments, of the three and the United States.

But we will also continue to work on the big strategic issues including questions like how we stabilize the situation in the North Africa region and how we work together to continue to advance our shared interest in European energy security.

So we’ve got a lot to do and I’m grateful for the effort that AmCham and the Atlantic Council are making to help inform those policy decisions.

Moderator:  Thank you, Ambassador.

So Secretary Fannon if I may turn to you.  Please give us a bigger layout of the U.S. strategy in the region and how you see this developing, also taking into account the current market turbulence because of COVID-19.  You’ve been a supporter of Greece joining, the U.S. has been of Greece joining the [inaudible].  Do you still see value in that?  Do you still see value on continuing exploration in the Eastern Mediterranean?

A/S Fannon:  Thank you so much, Katerina.  Geoff and Ministers, it’s so good to see all of you.  We much prefer to do these kind of things in person but here we are.

I guess Geoff spoke about the construct of the 3+1, Secretary Pompeo’s launching that with the respective heads of state.  I was honored to be with him in that.

The State Department focuses with respect to energy, it’s really where energy is a proxy for broader foreign policy issues which is why the state Department, why Secretary Pompeo from the U.S. side has been so engaged on this issue.

As Geoff mentioned, the 3+1 construct is certainly broader than just energy, but we see in the Eastern Mediterranean region energy is such, has an ability to bring states together to have practical outcomes.  It creates really the evolution of a market where none existed before.

Of course U.S. companies were on the ground level helping to facilitate this new and continue to be this new energy resource in the region.  So our view is where energy can serve as a broader bridge to provide resilience and create the appropriate measures to support broader political stability.  So it’s in that context that we approach energy.

Minister Hatzidakis spoke, I saw a reference on the importance of environment and environmental quality issues.  We also in the energy pillar we have sub-work groups where we’re looking at the specific elements to help with some of these issues of common interest of all the states in the region.  One of those we kicked off, and Minister Lakkotrypis helped host the first of these technical work groups with all the countries present, was focused on environmental quality and the performance of the off-shore development of the region.  It’s everyone’s interest that this be done safely and at the highest levels.

Renewables will be another component.  Cyber security issues will be another component of these sub-work groups.  So [inaudible] is a meaningful forum but it’s not just an area where we get together and have discussions.  Things get very specific and have actionable outcomes.

The point about the market.  Yes, COVID has created an unprecedented economic, the global economy’s in uncharted territory here and energy in industry and the energy markets perhaps even chaotic territory.  But the clouds of COVID will disburse and we will get back to doing business.

Natural gas is, I heard someone refer to it as a [inaudible].  We look at it in the context of it is the optimal fuel source to integrate with existing and new technologies because it can address the intermittency.  So we look at this evolution of holistic energy systems of which the Eastern Mediterranean gas, U.S. gas, will create that foundation.  So we’re excited about the developments.

And I think outcomes of the COVID experience will be underscoring the criticality of having supply, secure and resilient supply chains for everything including energy.  And the three countries participating in the trilat and we of course are the plus-one, as already stated, built on strong shared values, democratic principles and focused on transparency and efficient market design.  And that is a leading component of how we view our engagement in the region and around the world.

Moderator:  Thank you.  And if we may bring into the discussion Ambassador Morningstar.  I remember your lecture in Piraeus University last year when you mentioned that energy security comes late to economic and political security, and this is certainly the aspiration in the East Med with the trilateral cooperation no less.  I’m wondering how do you see the current market pressures?  But also the geopolitical tensions in the region affecting the [inaudible].

Ambassador Morningstar:  Thank you very much, Katerina.  It is good to be with all of you.  A lot of good friends on the screen right now.  Frank, I’m happy to see you’re not — I don’t know if I’m happy to see, but in the last five days you’ve shaved your beard since the last time we were on a panel together.

Your point, Katerina, I think is really important, that we have to recognize that energy security relates directly to economic security as well as political security and stability.  And Eastern  Mediterranean resources are critical to those points and to those efforts both within the region and with respect to Europe which I think is very important for us to remember.

I was also glad to hear, happy to hear all of the participants talking about the whole litany of projects that relate to the Eastern Mediterranean, all of which are important.

Let me, though, focus for a few minutes, a couple of minutes on what was I guess one of the prime purposes of this panel, to talk a little bit about the Israel-Cyprus-Greece Pipeline.  The way I see that from a reality standpoint is there’s some not so good news but there are also reasons to be optimistic.

The pandemic is also, right now anyway, the elephant in the room.  There are delays in projects all over the world as a result of the drop in demand, the drop in prices, and it’s hard to believe that companies would be willing to start a project at least right now.

But there are reasons to be optimistic.  First of all, I noted that my friend Minister Lakkotrypis in the last few days talked about hey, remember, there’s no final investment decision on this project until 2022.  So let’s do the work to prepare for that date now.  There’s no reason why that can’t take place.

One of the criticisms of the project has been, I’ve heard from companies, that from a commercial standpoint it may not make sense, and what may make the most sense is gas going to Egypt and then coming back to countries like Greece, Cyprus, whatever, Europe, in the form of LNG.  We’ll see.  But there are ways, I think, to deal with that and that has to be one of the prime things that’s worked on over the next two years.

I think that U.S. and EU involvement will be absolutely critical.  The Eastern Mediterranean Act, Frank pointed out, is very, very important.  But it may be that forms of government financing can help push a project like that across the goal line from Europe, but also there are new opportunities from the United States.  With the monies that are now available for projects relating to European energy stability through the Development Finance Corporation there’s now something like a billion dollars that’s potentially available for investment.  And that’s necessarily just direct investment.  It can be also in the form of project finance guarantees which allows that billion dollars to be stretched well beyond that amount.

So those are issues I think that really ought to be looked at in connection with that project.

As far as the overall geopolitical standpoint, from that standpoint that you asked about Katerina, I think there are the obvious political obstacles and I think that the United States and the EU have to work together to bring the parties together.

Turkey hasn’t been mentioned during this discussion but hey, Turkey is there.  And it seems to me that every effort that the U.S. and the EU working with its partners in the region have to work towards some kind of reconciliation.

I had always hoped, and looking at it maybe more from an energy standpoint, that there could be some agreement between Cyprus and the northern sector with respect to how to share the energy benefits.  Whether that comes first or an overall agreement comes first, we’ll see.  But we need to all work together to eliminate the political obstacles within the region.  I’ve often said there have never been so many opportunities with so many obstacles and we have to work together to remove those obstacles.

Moderator:  Thank you, Ambassador.  You’ve mentioned two points.  Turkey is certainly in the minds of our, the [inaudible] of our webinar today and it’s also on my mind and I’m going to ask about it.  But first I would like to give the opportunity to Dr. Steinitz to respond to the estimate that, mentioned earlier, that the East Med Gas Pipeline is still the best way to transport this gas.  And I would like to ask you more specifically, a lot of analysts actually are wondering whether the window of opportunity for this project to make commercial sense is closing because of the developments of the last few months.

Dr.  Steinitz:  Thank you, Katerina.  I will refer to this topic but I will refer also to other topics that were raised by my colleagues and the other participants.

First with regard to the East Med, to the [Inaudible] Gas Pipeline, or East Med as many people named it.

Of course now it’s a difficult time.  Gas prices, energy prices went down during the, following the Coronavirus crisis and actually started even a little bit before.  But when we are speaking about such projects in the energy sector and the gas sector we don’t speak about the current situation because as was mentioned already, just to get a final investment decision it will take another year or two.  And then to construct the pipeline will take another, approximately four or five years.  And the return on such investment will take almost a decade.

So we are speaking here, we have to look for [inaudible] between 20-30 years, at least 20 years, and prices are going up and down.  Prices of gas. But the demand is there.  The demand in Europe is huge.  And I’m confident that this project will be viable.  Of course there are sometimes its affects are changing.

Look, you have some types going to Europe from Siberia and also across the Caspian Sea and the [inaudible] and to the Aegean Sea and I think that the East Med should be a very promising project not just because of the amount of gas from the producers and from the market, from the demand, but also because you can rely on Israel and Cyprus and on the East Med Gas Pipeline maybe even more than another way of supply. Because we are speaking on democracies.  Israel, Cyprus and Greece are all three Western style democracies, very stable countries that can be trusted.  All are members of the OECP.  Therefore, to have such a supply from such stable democracies is always I think from a European point of view, there is some advantage here.

Secondly, such an undersea, a deep undersea pipeline will be maybe the most secure pipeline in the world.  Nobody can reach it two kilometers below sea level.  Nobody can sabotage it.  No terrorist, no country.  Maybe only a superpower can locate the pipe and do something against it, but this would be also a difficult mission even to a superpower.  So the pipeline will be very secure.  Israel and Cyprus as a source and Greece and hopefully Italy actually are involved and we have to bring it back onboard with this project, and I believe this is possible, will become possible soon.  This is the most secure pipeline supply, not energy but pipeline supply of gas that Europe can dream of.  And in all my talks with the European previous Energy Commission Mr. [Kamirta] he mentions that they are vehemently supportive of this project not just because of the amount of gas but because of the, not just the value of gas but also the value of the countries involved.  The democratic values and the security.

So I am confident that this project should take place, not without difficulties of course.  We will be able to overcome some difficulties.  We already overcome many difficulties.  But this is not a dream.  This can become a reality.  It depends on us.

Speaking about energy security that was mentioned already here, also during the, in light of the Coronavirus crisis, I want to mention another dimension and this is of course cyber security.  Cyber security is a very crucial element of energy security.  You know there were many reports and rumors about things that were going on in Israel and in the Middle East.

Recently I would comment on both reports but I can say that it’s reemphasizing the importance of cyber security.  Here in Israel we have built the first of its kind Cyber Security Headquarters and Center.  Only for the energy sector. I mean we have, of course, the nations, the country Cyber Security [Cell] which is very good but we already established three years ago a special headquarters only called Energy Sector in Israel to defend the energy sector, our gas platforms, pipelines, power stations, substations, electricity grid, refineries and so on and so forth because we believe that these needed specialty expertise and a special kind of defense.

And you probably won’t be surprised, Katerina, if the only [inaudible] that were invited to visit this unique Cyber Security Center in Beer Sheva for the energy sector where the [inaudible] of the countries are participating in this [meeting].  The President and Prime Ministers of Greece and Cyprus and the two Energy Secretaries of the United States already visited as well — former Secretary Perry and Secretary Dan  Brouillette visited when he was a Deputy Secretary for Energy.  And of course we are ready to share.  Just one week ago I spoke with the American Secretary of [energy] Dan Brouillette to accelerate our cyber security cooperation to do with the energy sector specifically with energy sector and we will do it with the United States and of course with my two colleagues, Greece and Cyprus.

Speaking about energy security, this is an important sector and it’s going to be more and more crucial than before to have a very sophisticated, elaborated cyber defense.

I want to touch another issue brought up by our Greek colleague, by Kostis Hatzidakis previously about the gas as a transition fuel or a transition source of energy, because in the future it should be only renewables in Greece.

And I want to tell you that just yesterday I announced my plans to, since we have a new government, and I became again the Minister of Energy, yesterday I announced some plans for the new [inaudible] and for the next ten years.  What I mainly focused on is that I presented the plans to make Israel in 2030, ten years from now, the energy mix will be 70 percent natural gas and 30 percent solar energy.  This will be the mix in order to get 30 percent solar energy, actually we have to put this about 100 percent of our electricity from the sun in the afternoon.  If we will manage to be able to produce 100 percent of electricity this will amount to 30 percent around the year, around all hours.  This demands huge investment.  We are going to invest about $20 billion — that’s quite a lot for such a little country — in solar systems and energy storage in order to enable it in 10 years.  This will make Israel a leader in solar energy.  The European Union is going to be on nine percent.  We are going to be on 30 percent in ten years from now.

But still, even after 2030 if there will be no major, major breakthroughs in energy storage, if there will be some improvement bug generally speaking it will be like today, we won’t be able to, since in our case it’s only solar, we have very little wind and no hydroelectric so other means.  We will be relying on natural gas also beyond 2030 and 2040, and this will still enable us to reduce pollution from the energy sector by 94 percent.  I mean if I compare it to [2015] when I was first appointed Minister of Energy to 2030, those 15 years will go down by 94 or 95 percent in air pollution in Israel, and more than 50 percent in CO2 emissions, in carbon emissions per capita.  This is significant.  We will do it with natural gas, with natural gas and solar system [inaudible].

Moderator:  Thank you very much.

U.S. Department of State

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