According to the U.S. Geological Survey’s estimates the Arctic region is the geographically largest unexplored prospective area for oil reserves. It calculated that the northern area of the Arctic Circle contained about 13% of the world’s undiscovered oil, 30% of the undiscovered natural gas and 20% of undiscovered natural gas liquids (excluding unconventional resources such as gas hydrate and shale gas and oil) and it is possible to reach these reserves in the result of melting of polar ice caps in case of climate changes. The Arctic operations to tap up to 160 billion barrels of undiscovered oil could require an estimated 250-400 billion USD.
Earlier in August, Russian oil company Rosneft said it teamed with U.S. company Exxon Mobil to work on exploration plans in the Arctic regions of Russia. Exxon and Rosneft have started geophysical studies but there won’t be any oil during the next ten years, because, that is a very long-run project. Rosneft is already conducting surveys in East Prinovozemelsky-1 and East Prinovozemelsky-2 blocks in the Kara Sea. Meanwhile, Rosneft’s Arctic Research and Design Centre is collating expertise and technology to design and develop suitable ice-class structures and pipelines capable of operating in the challenging Arctic environment.
India’s state-owned Oil & Natural Gas Corporation said it was interested in taking a stake in one of the three joint ventures on the Arctic shelf that Rosneft signed with US ExxonMobil, Italian ENI and Norway’s Statoil in a letter to Rosneft on May 4. ONGC says it is keen to get a foothold in the Arctic with Rosneft after Moscow proposed to lift all export duties for new projects in the Arctic shelf. Company also wants to expand in Siberia and Russia’s Far East (India’s The Economic Times).
Another company engaged in this area is the Gazprom’s subsidiary Gazprom-Neft Shelf that holds the license for the Prirazlomnoye oilfield in the Pechora Sea (a southern part of the Barents Sea north of the Russian coast) installed the platform at the Prirazlomnaya oil field last year and is preparing to drill the first well. The platform is about 1,000 kilometres from the nearest port, Murmansk. Prirazlomnoye is estimated to hold reserves of 526 million barrels. Prirazlomnaya is the world’s first ice-resistant oil platform. When it begins drilling it will make Gazprom the first-ever company to commercially produce oil on the Arctic shelf.
The Russian Arctic nature is specific with high sensitivity and exposure to man-made impacts. The groups of Greenpeace activists, who include Greenpeace Executive Director Kumi Naidoo (from South Africa), were criticizing oil and gas development on Russia’s Arctic shelf (Prirazlomnaya platform). Environmental groups have repeatedly criticized Gazprom for failing to publish their full “oil spill response plan” for the platform, saying that no technology yet exists to clean up oil spills in icy conditions and that even a small accident could be catastrophic for the Arctic ecosystem. There are protected natural areas, home to endangered species such as walruses and beluga whales, just 50 to 60 kilometers from the platform. Furthermore, Arctic ice caps also very rapidly getting melted. One can see an ice-free North Pole after several decades. Naidoo also wrote in his blog that “Gazprom is set to begin dangerous drilling on the Arctic shelf with no viable oil spill response plan”. Gazprom-Neft Shelf has rejected claims that the platform is a threat to the environment, claiming the platform’s performance last winter proved its reliability and that professional emergency response crews are on duty 24 hours within a day.
Konstantin Simonov, head of Russia’s National Energy Security Fund in Moscow, told that “it will be difficult for an organization like Greenpeace to stop Russia’s Arctic plans. But, Russian companies must begin dialogue with them. It’s a good experience for Gazprom, but these actions will not stop and will not change the state policy of Russia in Arctic zone”.
Arctic oil exploration is vital to sustaining Russia’s long-term status as the world’s top oil producer. Russia’s oil and gas production in western Siberia is declining. It means that Russia needs to find the alternative fields. Russian President Vladimir Putin has made the exploration of Russia’s Arctic reserves a strategic priority of Government. Now the Arctic is a national project and Russia will support it and is ready to invest for implementation of that project and the Greenpeace’s actions will not be able to stop Putin’s desire to begin the production of oil and gas in Arctic.
It seems that environmental protection and ecological disasters are not high priorities for Kremlin strategists, who consider the energy sector as the instrument which Moscow can use to cement its position as a superpower both in the region and the world.
Recently, Russia started the construction of one of Russia’s new generation submarines and Putin vowed to boost nuclear naval forces to guarantee the country’s position as a leading sea power. Putin said that Russia’s navy would protect Russia’s interests in the energy-rich Arctic zone. This is obviously means the militarization of Arctic, and Russia is also a part of this process. Not only Russia, as well as increasing military presence of United States and Canada in this area. The problem is very simple because Arctic states (Russia, United States, Canada, Norway and Denmark) still have no decision to divide the Arctic. Prirazlomnoye is on Russian part of Arctic. But there are still a lot of grey zones and there are still a lot of questions. The shipyards in Severodvinsk, on the White Sea, where nuclear submarines were built, have turned attentions to assembling drilling platforms. One was just recently assembled for use at the Prirazlomnoye oilfield in the Pechora Sea. The enormous metal construction, operated by a subsidiary of Russian energy giant Gazprom, is expected to start drilling operations in the coming months.
In this regard, U.S. frequently emphasizes the importance of providing the marine security in the Arctic by U.S. Armed Forces. Because, Northwest Passage is the shortest way to deliver the energy resources of Arctic to Asia, Europe and Pacific coasts of the U.S. In 2007, Russia declared to establish Arctic Military Unit to protect the Northern continental shelf (the future energy reserves until 2020). Last year (2011), Russian Defence Minister Anatoly Serdyukov announced that Russia intends to create two new military brigades (with 10.000 troops) to protect its interests in the Arctic. The energy potential of the Arctic is a major driver behind Moscow’s decisions. The most of the proved oil reserves in the region are within the 200-mile economic limits of Russia and Canada.
Canada, Denmark and China highlighted the significance of this question as well. Yet there are currently not an official Chinese Arctic strategy, which outlines China’s regional interests, political approaches, and legal positions in the near-term. However, over the past ten years, China has developed a serious interest in Arctic science, structured along four main axes: oceanography, biology, atmospheric science, and glaciology. The development of Arctic shipping routes is the driving factor of China’s Arctic interest, as the access to Arctic shipping routes could profoundly impact the country’s future trade and shipping patterns. Arctic Ocean offers China not only substantial commercial opportunities in terms of distance savings, but more importantly allows it to diversify its supply and trade routes. Because, China’s economy depends highly on the Strait of Malacca and the China’s economic development relies on secure access to its maritime communication lines. The geo-economics considerations, especially the access to natural resources and Arctic shipping lanes are the true driver of China’s regional policy. China’s rapidly growing energy demand requires country to find alternative routes and sources. Although China’s influence is thus far limited to political and economic power, the United States – which has historically seen the Pacific as its sphere of influence – worries about Beijing’s long-term intentions and involvement in the Arctic region in terms of naval expansion. Because, the Arctic is considered as European, North American and Russian strategic space.
NATO also didn’t late to make a statement on the competition for the energy resources of Arctic. NATO says that Arctic region might be potential armed conflict region in the future among its eight stakeholders because of its energy resources. Thus, since 2007, the disputes over Lomonosov Ridges between Russia and Canada still continue. Arctic is a strategic region for Russia not only for its energy security, as well as for nuclear deterrence capacity. Because, given the satellite radars, missile and anti-missile systems of U.S. and NATO in the world and in space, the best place for Russia for its anti-missile capacity against nuclear strike are the polar ice caps in the Arctic. Russian submarines, under the polar ice caps of Arctic have a great importance in terms of response to prospective nuclear attacks and monitoring of the region.
Moreover, some of the world’s biggest energy producers, including the United States, Norway and Russia, ratified the Antarctic agreement, whose Article 7 states that “any activity relating to mineral resources, other than scientific research, shall be prohibited.” But none of these countries borders Antarctica have ratified the Brussels-based Energy Charter, the world’s most internationally ratified energy treaty, which 51 countries have signed. EU countries have ratified the treaty, along with Central Asian producers and consuming nations like Japan, but the United States, Canada, Russia and Norway have not. The biggest Arctic natural gas resource is situated off the north coast of Russia, while the largest Arctic crude oil resource is off the northern coasts of Alaska and Canada. Under the UN Convention on the Law of the Sea, these countries have exclusive rights to much of these resources, up to 350 nautical miles out.
In order to promote cooperation, coordination and interaction among the Arctic States in particular issues of sustainable development and environmental protection in the Arctic, the Arctic Council were established with “Ottawa Declaration” in 1996. The Arctic Council consists of the eight Arctic States: Canada, Denmark (including Greenland and the Faroe Islands), Finland, Iceland, Norway, Russia, Sweden and the United States. Six international organisations representing Arctic Indigenous Peoples have permanent participant status. Six non-arctic countries have been admitted as Permanent Observer States to the Arctic Council: France, Germany, The Netherlands, Poland, Spain, and United Kingdom (www.arctic-council.org).
You can find original article in Strategic Outlook: http://www.strategicoutlook.org/asia—pasific/news-the-arctic–venue-of-geopolitical-wars.html