Νatural gas as the ideal “fellow traveller” for Renewable Energy Sources

Sophia Michelaki, Head of Legal Affairs Division, Hellenic Natural Gas Transmission System Operator (DESFA) S.A.

Please tell us a few words about yourself and your professional course to this day.

As is the case with many Legal Consultants, I began my professional career in private legal practice (a “working lawyer” as we say) and then went on to an association with the Public Gas Corporation (DEPA) S.A., a company established in Greece in 1988 with the aim of incorporating natural gas into the country’s energy balance. This combination enabled me to gain first-hand experience of a lawyer’s every-day work and the different circumstances and difficulties encountered in these two situations. I think this helped me understand the conditions surrounding both roles (external and “in-house” lawyer).

In 2006 the (then) management of DEPA S.A. placed me at the head of the legal team responsible for detaching the Hellenic Natural Gas System (ESFA) sector and establishing a new company to operate it, namely DESFA S.A., as required by Union legislation about separating the production and supply activity from that of transmitting natural gas. DESFA has undertaken the transmission operation.

This project -one that was special, complex and unique in Greek experience- was completed successfully. Then, I undertook the great challenge of continuing as head of the Legal Affairs Division of the new company (DESFA), which was essentially a “start-up” enterprise. During the first years of operation of a legal and regulatory framework that was unknown in Greece at the time, we tackled this challenge with zeal and enthusiasm, and we continue to do so to this day.

With a small number of colleagues-lawyers who were transferred from DEPA S.A. to the new company, we were able to set up the new Legal Affairs Division and develop it, reflecting the new company’s structure by deploying a specialist lawyer for each business sector. The outcome has been a Legal Affairs Division that functions quickly and competently, in line with international standards (it was included in the most recent Legal 500 list for the year 2019).

Lastly, in 2012 I was one of the Founding Members of the “Hellenic Association of Energy Law” and I remain on its Board of Directors to this day. I had the honour to be included in the first and most recent “Legal 500 powerlist for In-House Lawyers in Greece and Cyprus” which was published in May 2018.

As Head of the Legal Affairs Division, which attributes do you consider a team must possess in order to function effectively?

Most Legal Consultants originally worked in the field of private legal practice; therefore, they must acquire the attributes that will enable a smooth transition to a corporate environment.

For a lawyer who began his career in the competitive market of private legal practice, the cultivation of a team spirit is a challenging process. In many instances it is both difficult and simple to understand that the job can only be done by uniting our forces and pursuing the result by which we are judged. It is the same as a football or basketball match. The team wins irrespective of which players performed best. Also, the team may lose even if it has in its ranks players who are excellent but play in an individualistic way.

In today’s environment, one that demands highly specialised skills in various legal fields, cooperation and dialogue between colleagues, exchange of views and a sense of a common objective, are key factors for attaining a successful collaboration and good results.

We serve better our ambitions when we place that target at the service of a higher objective, namely team success

Certainly, a team needs an appropriate mix of personalities and specialist expertise to function effectively. I consider it important for people to realise that yes, the need for personal distinction is always the aspiration of every professional, but that we serve better our ambitions when we place that target at the service of a higher objective, namely team success. I believe that in the modern-day work environment people are gradually becoming aware of this.

Which are in your opinion the greatest challenges for a Legal Consultant who works in a regulated market involving special conditions, such as the energy market?

The Legal Consultant now understands that he is part of the enterprise and cannot just sit there and wait for others to come to him with questions

The role of the Legal Consultant cannot (at least not any longer) be easily and neatly compartmentalised. The Legal Consultant now understands that he is part of the enterprise and cannot just sit there and wait for others to come to him with questions. He must advance the company’s operations, contributing at all times to the attainment of its objectives and business transactions.

To restate the question slightly, I would say that the issue is how to combine legal competence in the changing legislative environment of a regulated market -which requires specialist knowledge and therefore constant learning- with the challenges of a business environment that must respond to the speed of technological progress in our time and a status quo that is always being questioned.

We often hear that success lies in improving team work and communication, structure, understanding and perception. Yes, all these elements are necessary. But I believe that the key for a modern-day Legal Consultant to be effective is to understand well, interpret correctly and communicate with precision to colleagues and clients not the legal issues involved, but the aims and strategy of the enterprise, while also pursuing his traditional role of ensuring legality and reducing business risk.

Further, in every instance when he offers advice, the Legal Consultant must first understand his audience, and adapt to their particular needs. As we know, in our day managers and executives are always in a hurry and wish to be given information less in the form of a detailed analysis and more in a direct, simple and clear-cut manner. It sounds easy, but it isn’t.

Thus, in my opinion the greatest challenge faced by a Legal Consultant is how to ensure that his voice, and therefore his opinion, is heard and understood. How to achieve that? By improving communication skills, simplifying his discourse and using and incorporating into the Legal team the same tools that a lawyer deploys (concise summaries, diagrams, power point presentations), i.e. tools that are comprehensible and familiar to his audience.

Which are the most complex legal issues in the natural gas market?

The natural gas market is a regulated market, and it is reasonable to say that since the regulatory framework applying in Greece is an institution that was introduced not so long ago, the conditions under which it functions are been “mapped” in these recent years

As stated above, the natural gas market is a regulated market, and it is reasonable to say that since the regulatory framework applying in Greece is an institution that was introduced not so long ago, the conditions under which it functions are been “mapped” in these recent years. Thus, the interpretation of this new regulatory framework and its application in practice is a difficult task, since we must, in every case, examine the particularities of the national energy market and incorporate into our approach European and international best practices so as to attain a good balance between the aims of the company and the interests of the ultimate consumer.

Concurrently, the transactions and investments pursued in the broader natural gas market include players from abroad and require a broadening of the legal approach used in the contractual documents at the level of commercial law, since in many instances the aim is to blend institutions from different jurisdictions even if only one law applies. In the same context, companies active in the natural gas market are often involved in international arbitration procedures and other alternative dispute-resolution methods, and this requires that their lawyers be well-versed in such institutions and monitor on an on-going basis the related developments and trends.

The master plan for the country’s lignite phase-out was approved very recently. Taking also into account the new ten-year ESFA Development Plan 2021-2030, do you think that natural gas could function as a “transition fuel”?

The role that natural gas is called upon to play as a “transition fuel” is due, inter alia, to the fact that the transition via natural gas can be made in terms favourable to the environment, since it is the most environment-friendly fuel, while also ensuring favourable financial terms for the ultimate consumers. DESFA, and all European Natural Gas Transmission System Operators, are called upon to perform their duty and contribute to “green growth”.

In this context, I would like to note here that the main guideline in the design of the new ten-year ESFA Development Plan 2021-2030 was to achieve the aims of National Energy Planning in conjunction with broader European trends in this field. It is true that the closure of lignite units by 2023 in accordance with the provisions of the master plan for a fair transition of western Macedonia and Megalopolis to the next day undoubtedly involves investments linked to natural gas. DESFA’s new investment for extending the ESFA network towards Western Macedonia via a high-pressure pipeline that will also be hydrogen-ready comes under that framework, thus confirming in practice DESFA’s planning for the next day in energy transition by advancing the technical preparation of its pipelines so they can receive hydrogen.

How do you assess the provisions of the European Green Deal about natural gas?

The European Green Deal represents an unprecedented transition in the field of energy and in social terms, advancing the development and broad use of Renewable Energy Sources and innovative low carbon transmission technologies, with the ultimate aim of forging an energy system for the new era. However, this move from carbon to something entirely different from fossil fuels requires a transitional stage which will be based on currently available technology and know-how and must be viable and in line with “green” targets.

The reasons that render reasonable the choice of natural gas as the fuel for that transitional stage are, inter alia, the fact that natural gas is the most environment-friendly of all conventional fuels, provides high energy performance at a low cost, and its facilities feature a level of technological flexibility that make natural gas the ideal “fellow traveller” for Renewable Energy Sources. By extension, the decision of the European Union to continue including natural gas among EU-financed energy sources creates favourable conditions for continuing investment on natural gas infrastructure, while also giving European Operators time to prepare their transmission networks and develop appropriate regulatory frameworks for the gradual substitution of natural gas by “renewable gases”, as they are called.