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Russia Gets a Head Start in the Arctic Race
Despite global media hysteria about possible future conflicts over hydrocarbon resources in the Arctic, most experts agree that Russia is playing a constructive role in carving up the cake.
Russia’s planting of a titanium flag on the seabed at the North Pole last summer was one of the media highlights of 2007. Combined with soaring energy prices and the melting Arctic ice, the images of the Russian expedition sparked at times wildly speculative panic-mongering about the “coming Arctic war.”
In fact, the hype around the flag’s planting was little more than an election campaign gag for the pro-Putin United Russia party in the run up to last December’s State Duma elections—the United Russia flag was one of the items deposited on the seabed in a time capsule, and the expedition’s leader, famous explorer Artur Chilingarov, is a United Russia deputy.
But there was a serious scientific purpose to the expedition as well: to gather seabed samples. They were required as evidence of Russia’s claim that the submarine Lomonosov ridge running through the Central Arctic is an extension of Russia’s continental shelf.
Russia is filing its claim in the framework of the United Nations Convention on the Law of the Sea (UNCLOS). UNCLOS allows countries to expand their maritime Exclusive Economic Zones (EEZ) beyond the current 200 nautical miles from the coastline, up to a maximum of 350 nautical miles if their continental shelf extends that far out to sea. A country has sole rights to exploit mineral deposits located in its EEZ.
And for a country like Russia that positions itself globally as an all-round energy supplier to Europe and beyond, the Arctic’s oil and gas resources not only constitute a source of extra income, but are also crucial to the Kremlin’s plan of turning Russian energy companies into global majors.
This might be a source of friction if there were significant resources just outside of Russia’s reach. But in fact, most Arctic hydrocarbons seem to be located in recognized Russian waters, making Russia the least likely country to start a brawl over boundary issues.
A tale of two studies
July 23 saw the prestigious United States Geological Survey (USGS) publish its widely awaited official analysis of the oil and gas riches of the Arctic, a document destined to become a key reference point for determining U.S. policy toward the area.
The USGS study trumpeted that the Arctic “may constitute the geographically largest unexplored prospective area for petroleum remaining on Earth.” According to the survey, Arctic resources account for about 22 percent of the undiscovered, technically recoverable resources in the world: about 13 percent of the undiscovered oil, 30 percent of the undiscovered natural gas, and 20 percent of the undiscovered natural gas liquids.
However, the USGS report ignores the very different findings of a survey conducted by Wood Mackenzie, published in November 2006. Wood MacKenzie’s study found that the Arctic only contained three percent of the world’s recoverable hydrocarbon reserves. “The Wood Mackenzie survey is proprietary and we haven’t bought it,” laconically explained the leader of the USGS Arctic team, Don Gautier.
In stark contrast to USGS’s enthusiasm for the Arctic, Wood Mackenzie’s lead author, Andrew Latham, commented that their assessment “basically calls into question the long-considered view that the Arctic represents one of the last great oil and gas frontiers and a strategic energy supply cache for the United States.”
Without delving deep into the details of methodology, the huge discrepancy between these figures shows just how much of such studies is basically guesswork. And memories of the hyperbole about Caspian Sea resources in the 1990s may incline observers to prefer the more conservative estimates.
However, just as their contradictions on quantity are revealing, the two studies share three key findings regarding the quality of the Arctic’s hydrocarbons.
Firstly, both studies agree that the Arctic’s hydrocarbon resources consist predominantly of natural gas. “Arctic resources are gas-prone, with around three times more gas than oil,” said Gautier. Wood Mackenzie claimed that 85 percent of the discovered resource and 74 percent of the exploration potential is gas.
The second key finding both studies share is that, as Gautier noted, while 84 percent of the undiscovered oil and gas is indeed offshore, most of it “lies within national boundaries as currently defined.” Thus the UNCLOS is in fact of secondary importance to Arctic resource ownership.
Thirdly, and crucially, most of the gas is in the Russian sector. “The West Siberian basin is outstanding for gas,” the study found, and the East Barents Sea is also pretty rich. Around 60 percent of total Arctic gas lies squarely in the Russian EEZ. So, without a shot being fired, it seems that Russia has already won the “coming Arctic war.”
No cause for alarm
But this still leaves around 30 percent of Arctic resources that both studies estimate to lie more than 200 nautical miles offshore, jurisdiction over which is thus subject to UNCLOS findings.
This is where Russia’s claim to the North Pole, i.e. the Lomonosov ridge, which caused so much controversy in 2007, comes in. Russia’s claim to the ridge is indeed disputed by Canada and Denmark—but purely within the framework of UNCLOS, which no party has ever questioned.
The point is that all signatory states committed themselves to UNCLOS precisely as a non-conflicting, impartial means of resolving marine jurisdiction. The United States, in contrast, has for over 25 years refused to sign up to UNCLOS, because the idea of a UN body ruling on the boundaries of American jurisdiction is anathema to the country.
“Rights to the resources of the continental shelf beyond 200 nautical miles have been enshrined in international law since at least 1994, when UNCLOS took force, and so far all of the Arctic states have followed the procedures established under UNCLOS for claiming those rights,” said Martin Pratt, the head of research at Durham University’s International Boundaries Research Unit, who published the definitive map of Arctic boundaries on August 5. “All of the available evidence still points to a peaceful division of the Arctic,” Pratt claimed.
“The conflict’s potential is inflated mainly because people find it exciting to talk and write about, and perhaps also to some extent because some people miss the Cold War,” argued Indra Øverland, the head of the Energy Program at the Norwegian Institute of International Affairs (NUPI). “There are in fact no more territorial disagreements in the Arctic than in most other parts of the world. Such disagreements are a normal part of inter-state relations.”
The perceived “race” is merely a reflection of a UN ruling that a country has ten years to make claims beyond the 200-mile zone—and since Russia was one of the first to sign up in 1997, it is compelled to get a move on in filing its claims.
“Russia does play by the rules laid down by the law of the sea convention, and agrees with the other Arctic nations that this convention is the basis for future developments in the region,” said Alf Håkon Hoel, head of the politics department at the University of Tromsø in the Norwegian Arctic.
“But that doesn’t mean that the Arctic coastal states aren’t keen to secure rights to exploit resources in such areas in the future,” Pratt noted. “That is the process in which Russia is currently engaged with the Commission on the Limits of the Continental Shelf—and once the outer limit of the Russian continental shelf has been defined, it won’t be able to claim sovereign rights over any other areas of the Arctic seabed.”
However, the idea that signatories to a UN convention regulating maritime jurisdiction could come to blows over its findings is as absurd as suggesting that a war could break out between Germany and Poland over voting rights in the European Commission.
Moreover, the timescale of the division and exploitation of the Arctic is likely to stretch decades into the future, with the UN’s Commission on the Limits of the Continental Shelf (CLCS) not due to complete its work till 2020. Only when all disputes have been solved will it be possible to commit the massive investment and start the pioneering work needed to get at the oil and gas that lie far offshore.
“Referring to the extension of the continental shelf beyond 200 miles, I would say that possible resources in this area will only be relevant in a much longer time perspective, for technical and economic reasons,” said Arild Moe of Norway’s Fridtjof Nansen Institute. “There is no imminent conflict over resources there, of which we know little and about which the most recent USGS study is not particularly optimistic.”
It’s the technology, stupid
The barrier that Russia—along with other countries–faces in accessing Arctic resources is arguably not connected with maritime jurisdiction disputes, but with technology.
The most ambitious current Arctic project underway is Gazprom’s giant Shtokman field in the Barents Sea. With 3.8 trillion cubic meters of natural gas and more than 37 million tons of gas condensate, the field contains enough gas to fuel Europe for seven years. But the question is how to extract it. The field is 550 kilometers offshore from the port of Teriberka and 2,300 meters beneath the seabed. Further hazards include icebergs, drift ice, sub-zero temperatures, polar nights, mega waves, and an uneven seabed.
Put simply, nothing like this has ever been attempted. “Nobody has yet attempted multi-phase gas flow transportation over such a distance, and that’s the main technical and technological problem today,” Alexander Selin, an official at the Shtokman license holder Sevmorneftegaz told the Interfax news agency at the end of July.
According to Konstantin Batunin of Moscow’s Alfa Bank, not even Gazprom yet knows what technology will be used. Russia’s gas giant has enlisted the help of Norway’s Statoil and France’s Total as junior technology partners, and this international collaboration to pool expertise is another sign of how the Arctic is likely to produce new partnerships rather than fuel rivalries.
Oil and gas development and the opening of the Arctic to shipping due to global warming—the summer of 2008 showed the lowest ice level since records began—also mean that new shipping technologies are needed to master the Arctic waters. And here Russia is kitting up as well.
In 2007, Russia started the merger of all state-owned shipping and ship-building assets into two giant holding companies—Sovkomflot-Novoship, now the world’s fifth largest shipping company, and the United Ship-building Corporation. Both of these companies are under orders to focus on energy shipping in general, and ice-class ships in particular.
On March 25, a state-linked investment company FLC bought a 70 percent stake in three German shipyards belonging to Norway’s Aker group—specialized in building dual-action ice-class ships, the stern of which doubles up as an ice-breaking bow. Finally, on August 27, Russia’s seven nuclear-powered icebreakers were transferred from the trusteeship of a private shipping company and transformed into the state enterprise “Atomflot,” part of the newly-formed nuclear power state corporation.
So, in fact, the correct interpretation of Russia’s submarine flag-planting at the North Pole in August of 2007 was that the medium is the message: Russia was vaunting that it had the bathyscape technology needed to conduct Arctic seabed research.
But much of the Western media preferred to believe that Russia’s flag planting was an aggressive assertion of rule over the North Pole—and conspiracy theorists even perceived a Kremlin master plan to seize control of Christmas.
Conspiracy theorists will see their fears confirmed with Chilingarov’s next bathyscape dive announced at the end of July: he intends to dive to the bottom of the Mariana Trench, the deepest part of in the world’s oceans. The Mariana Trench is in the middle of the South Pacific—surely indicating a Kremlin claim to Easter Island.
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