Today, the Murmansk International Economic Forum met in the world’s largest city north of the Arctic Circle. The Barents Sea Nations, which are composed of Russia and the five Nordic countries of Denmark, Finland, Iceland, Sweden, and Norway, convened to discuss the future of oil and gas development in the region. The Shtokman Field is the heart of the gas deposits here, and Gazprom is counting on it to boost up the whole of the Russian gas industry in the future.

Russian Foreign Minister Sergei Lavrov dismissed the need for militarization of the Arctic, stating, “Any problem of the Arctic could be solved by peaceful dialogue and cooperation.”

In addition, Aleksei Miller, chair of Gazprom, noted that extensive efforts would be made to support social development in this remote corner of Russia. This comment comes in light of recent outcry over the treatment of indigenous populations in Murmansk, whose traditional reindeer herding is threatened by the gas projects.

The forum may not only have economic effects, but also geopolitical ones. The CEO of Rosneft, Sergei Bogdanchikov, said that he wants the so-called gray zone between Norway and Russia to be opened for development. Although some progress has been made in determining the borders of this disputed area in the Barents Sea, but until the two countries reach an agreement, no drilling can occur in the region. An estimated 400 million tons of oil lie in the seabed of the gray zone.

Video address by Murmansk Oblast’s Governor Dmitry М. Dmitrienko

News links

“Murmansk declared gas capital,” Barents Observer

“Future of the Arctic in focus at Barents Sea nations forum,” Russia Today

“Norwegian-Russian Swap Deal in the Barents Sea?” Who Owns the Arctic blog by Dr. Michael Byers

The Los Angeles Times has posted an audio slideshow by Robert Gauthier featuring photographs of the Alaskan Arctic, along with commentary by various residents. The images document the changing environment of the Seward Peninsula, whose coast lies along the Bering Strait. In two and a half minutes, the slideshow touches on topics such as the indigenous and European origins of the Seward Peninsula’s residents, the effect of increased noise from shipping on the local whale population in Kotzebue, and the epic scale of the Alaskan wilderness.

Nenets Reindeer Herders

Reuters put out an interesting story today on how development of the natural gas fields on the Yamal Peninsula could disrupt the indigenous Nenets tribe living there. A few weeks ago, I wrote about the conference held by the Russian government for foreign investors interested in developing these very resources. Gazprom is seeking to turn a profit from the Bovanenkovskoye deposit of gas within the next couple of years. However, developing this natural resource will not be a boon for everyone.

Reindeer herder Andrei Yezgini observed,

“For them it is fortune, for us terror.”

There are about 41,000 Nenets people, most of them living in Yamal. About 10,000 Nenets people migrate with their 300,000 reindeer anywhere from 500 to 1000 kilometers from north to south across the tundra every year. Along with the Sami, they are some of the last migratory reindeer herders in the world. The Nenets are a Samoyedic people, and their minority status has caused them to suffer much discrimination throughout the age of the Russian Empire, the Soviet Union, and even still to this day.

According to the Reuters article, even though gas drilling has not yet begun, the effects of the industrialization of the area are already being felt, as the gas pipeline is breaking reindeers’ legs.

Gazprom’s website has a section on “Social Responsibility,” where they claim that

“One of the underlying principles of the commercial development of Yamal is maintaining a reasonable balance between the industrial development and a solicitous attitude towards the traditional lifestyle of the indigenous minorities.”

In fact, the website goes so far as to state that one of the primary goals is

“Reclamation of lands disturbed during oil and gas exploration in the 1980s so as to increase forage acreage for reindeer herding.”

In addition, Moscow has offered the Nenets people small amounts of monetary indemnities and housing in the capital of Yamal, Salekhard, as compensation. However, this means nothing to a people who could lose their entire way of life. There really is no question of whether the gas fields of Yamal will be developed, either: as the Gazprom website concludes in bold typeface, “There is no alternative to Yamal!”

Other links

The Nenets Tribe, BBC

Two speeches in the past couple of days have the tone for NATO’s position on conflict and cooperation in the Arctic. Currently, the organization is emphasizing diplomacy and communication over military disputes.

Anders Fogh Rasmussen, the new Secretary General of NATO and former Prime Minister of Denmark, spoke at a joint conference organized by NATO and Lloyd’s of London on October 1 (video and transcript). His speech covered climate change, piracy, and cyber defense - all issues which have also been important to Denmark itself. The country has been at the forefront of tackling climate change and will host the Copenhagen talks in December. The Danish navy has helped to escort ships through the dangerous waters of the Gulf of Aden and is also part of the multinational Combined Task Force 150, which is combatting piracy. Finally, as one of the most technologically advanced nations in the world, Denmark is concerned about securing its cyber connections to the rest of the world. All the way back in 1995, the government established the Danish Government IT Cybersecurity Council.

Hence, it’s quite possible that the new Danish leadership is coloring NATO’s public diplomacy. If this is true, we can expect to see an even greater emphasis on the Arctic in the future, since Denmark is one of the five Arctic countries. Whether NATO will tend towards diplomacy or military action, however, remains to be seen. Fogh Rasmussen was cautious in his views, warning of the security implications of climate change. He said,

We know that Arctic ice is retreating.  In fact the Arctic is warming faster than other part of the world.  This is not necessarily a threat.  In many ways it’s an opportunity – opening up the Northwest Passage cuts 4000 nautical miles off the trip from Europe to Asia.    You can bet a lot of companies have done that math.   But we can’t wish away the security implications.  An entire side of North America will be much more exposed.  Increased shipping means a greater need for search and rescue.  And there will be competition for resources that had, until now, been covered under ice.

There are more examples, but to my mind, the bottom line is clear.  We may not yet know the precise effects, the exact costs or the definite dates of how climate change will affect security. But we already know enough to start taking action.  This is my first point: either we start to pay now, or we will pay much more later.

By “pay now,” Fogh Rasmussen means that countries need to look at climate change as a serious threat to national security and prioritize diplomatic resolution of conflicts. He continued,

“The political track should be used to the fullest to ensure that the High North remains an area of low tension.  The international community has made a good start, including through the Arctic Council. We should ensure that the right deals are done now – on jurisdiction, on access to resources, on fishing — so that we head off tensions in future.

This echoes what NATO Secretary General Jaap de Hoof Scheffer said in his speech in January 2009 regarding the potential for NATO involvement in the Arctic.

I think that NATO might also have a contribution to make. Of course, the Arctic Council should remain the focus for much of the discussions and cooperation amongst the Arctic rim states. However, once the conditions are right for resuming normal business with Russia in the NATO-Russia Council, and I hope we will see that development soon, I see merit in using that particular forum for including Russia in wider cooperation, and also as vital element in building mutual confidence.

In both of these speeches, the Arctic Council remains the go-to body for resolving Arctic issues. NATO hopes that disputes between the four Arctic states which are NATO members (Canada, Denmark, Norway, and the U.S.) and the one that isn’t (Russia) will be peacefully resolved. At the same time, the potential for NATO involvement could possibly increase due to the opening of waterways and the fights for resources, which could entail international military conflicts.

SACEUR James Stavridis

While a speech yesterday by Admiral James Stavridis, the Supreme Allied Commander Europe, ratcheted up the military rhetoric a few notches further, the focus still seemed to be on maintaining peace and security in the Arctic.

“This is something we are starting to spend more time looking at. I look at the high north and I think it could either be a zone of conflict, I hope not, a zone of competition, probably. It could also be co-operative … and as an alliance we should make this as co-operative as we possibly can.

He added,

“There are certainly going to be areas of disagreement between the alliance and Russia, but the issues are so big and so important that a cooperative approach, finding zones of cooperation, will be very important in the time ahead.”

More ominously, when prompted by worried Eastern European diplomats already feeling somewhat exposed due to the cancellation of the U.S. missile defense system, Stavridis brought up Article 5 of NATO, which states that “an attack on one NATO party is an attack on all.”  Therefore, if Russia were to attack any of the other four Arctic countries, all of which are NATO members, the retaliation could be swift. Yet at the same time, Stavridis was clear to say that NATO should not be thought of as a “world policeman.”

News links

“NATO commander warns of conflict with Russia in the Arctic Circle,” The London Times

Russia’s envoy to NATO, Dmitry Rogozin, said in an interview today with Vesti, a Russian news outlet, that the U.S. could deploy a mobile missile shield in the Arctic. He voiced his trepidations over the Obama administration’s decision to not erect an missile defense shield in the Czech Republic and Poland, noting that now, American military actions will be more ambiguous.

He said,

“Before, we knew exactly that Poland would have 10 missiles and the Czech Republic would have radar, while we would have our own Iskander missiles in Kaliningrad. One after another, look: what was once controlled is now frightening. Now the defense system will be placed on the deck of the American cruisers, and where they tomorrow will be remains to be seen. This is all the more so given the climate changes and changing conditions in the Arctic zone. NATO has already predicted that the Northern Sea Route will be year-round With the ice melted, NATO will definitely be in the Arctic. They have long been planning. But maybe there will be some very bad conditions, and the U.S. missile defense will be on the decks of just those same ships. Therefore, I am not a supporter of euphoria. ”

(I apologize for the rough translation, which is courtesy Google Translate and some of my own tweaking. If there are any Russian speakers out there who can translate Rogozin’s comments, that would be much appreciated).

This claim comes just as the Russians are carrying out their annual military exercises in the Arctic north of Murmansk. Clips from Ladoga-2009, as the exercises are termed, can be seen on 1tv.ru. First, thousands of troops are seen unpacking and gearing up in the snowy night. Then, paratroopers jump out of airplanes at a height of 600 meters to practice landing. A total of 462 paratroopers safely made the landing. Later in the clip, helicopters fly over Murmansk doing what looks like target practice, while large ships sail up to the shore underneath as part of the amphibious assault exercise. Specifically, 11 IL-76 aircraft are involved in these exercises. In the background, tanks are rolling over the tundra landscape in the background.

News links

“US could deploy missile shield in Arctic,” RIA Novosti

“Large strategic exercise in Russia,” Barents Observer

In the northwestern Siberian town of Salekhard, Russia, President Vladimir Putin held a meeting on the development of the liquefied natural gas (LNG) industry on the Yamal Peninsula in the Arctic. In attendance were oil and gas companies from around the world, such as Shell, Exxon Mobil, and others from Germany, Italy, and Japan. Russia badly needs foreign investment in order to develop its massive natural gas resources. Though the country would probably rather rely on its own investors, the recession has hit Russia hard, forcing it to turn to wealthier foreign companies for money and technology.

LNG is a particularly technologically-intensive industry, since the process of turning gas into LNG entails the removal of other chemicals, dehydration, refrigeration it, and finally liquefaction it for transport. Since LNG is less dense than natural gas in its normal state, it costs less money to transport and can therefore be carried on special ships rather than through pipelines, which would be a boon for remote Salekhard.

The Kremlin reportedly has considered creating tax incentives to entice companies to plumb the depths of this frozen region of the world. Shell and Exxon Mobil were in attendance at Putin’s announcement in Salekhard. Putin also suggested that Russian and foreign companies “swap assets,” as the Wall Street Journal wrote. For instance, French company Total has considered selling off its least profitable European refineries.

Russia’s proposed plan is to center the LNG industry at the Tambey Fields on the Yamal Peninsula, thereby turning Russia into a major LNG exporter. Consequently, Gazprom would become a company with global, rather than simply Eurasian, reach [1].

But as the Interfax article makes clear, this isn’t a plan along the lines of a happy-go-lucky, Thomas Friedman style of globalization where the West supplies much-needed technology to emerging markets around the world. Instead, it appears as if Russia is attempting to export its monopolistic style of managing oil and gas resources into the global arena. By “swapping assets” with other countries, the Kremlin would control infrastructure in other countries and have special direct access to their markets. This might bring shivers down the spines of those who recall Russia’s past behavior with the Ukraine, which has on several times borne the brunt of Russia’s decisions to shut off the gas flow.

Russia’s end goal may be to create an international LNG cartel - perhaps one along the lines of the OPEC cartel for oil. Already, Russia has held talks with Iran and Qatar to discuss this possibility, which is still a long way off. All of this infrastructure, transportation, and technology, which are prerequisites for a healthy national LNG industry, if not a global cartel, comes at a hefty price, so Russia would be unable to control the worldwide natural gas market on its own even though it already dominates the European market, as this map below shows.

News links

[1] “Putin touts vast Yamal project for global export of Russian LNG,” Interfax

An article from September 10 in The Globe and Mail discussed the possibility of Canada and Denmark working out a solution to the conflict over Hans Island. The half-square mile island has technically been in dispute since 1973. A treaty was signed between the two Arctic nations regarding the delimitation of the Canadian and Greenlandic continental shelves, but one small portion of the region within the Nares Strait was left undelimited. Hans Island falls within that area.

The article quotes Professor Michael Byers of the University of British Columbia as saying that there are no known resources under the island, which should make the dispute easier to resolve. However, according to author Rongxing Guo, there are three other factors which may make the territorial issue somewhat thornier.

Firstly, Hans Island is located in the center of the Kennedy Channel in the Nares Strait, which is important for navigation, as it flows between Ellesmere Island and Greenland. While the Nares Strait is usually frozen, in August, the low amount of ice makes it navigable. But this type of condition could become more permanent once the ice further melts, making the passage a more practical route for transportation and shipping. On the contrary, the route is very far north, which could work against turning the Nares Strait into a popular shipping channel. Secondly, winning control of Hans Island could give either Canada or Denmark a strong precedent for other Arctic claims. Sovereignty and national pride are at stake here, with both countries having set foot on the island and planting flags. Finally, the channel is a prime spot for oil companies to test how their artificial islands and platforms for oil rigs, would stand up to ice floes. [1]

Two possible solutions he suggested are that

“Canada and Denmark could consider dividing the island in half, with each getting a side, or [create] a so-called condominium of shared sovereignty. Each country … could take turns during the year administering it.”

Byers cited the example of Pheasant Island, which France and Spain jointly control. The island, which lies in the center of the River Bidasoa running along the border between the two countries, is controlled by France for six months out of the year and then by Spain during the other half of the year.

There have been no formal discussions about the territoriality of Hans Island since May 2008, though a spokesperson from Canada’s Ministry of Foreign Affairs remarked that “negotiations are on a diplomatic track.” There is no deadline for a resolution, but if none is ever reached, both Canada and Denmark have agreed to take the issue to the International Court of Justice.

Other links

[1] Territorial Disputes and Resource Management: A Global Handbook, by Rongxing Guo.

Professor Byer runs an informative blog on the Arctic.

A recent article from Reuters paints a bleak picture for research in the Arctic. International conflict over resources has strained scientific cooperation, while oil companies’ financial means give them the ability to contract icebreaker ships for long periods of geophysical surveying, shutting out scientists.

The good news is that there are also some bright spots. Ironically, the global recession has actually had at least one beneficial impact on Arctic oceanography: for the first time since the 1980s, the U.S. will construct a ship dedicated entirely to research. The National Science Foundation is using $200 million of the money it received in stimulus funding to build the Alaska Region Research Vessel (ARRV). The ship will be able to break through 2.5 feet of ice and will be docked in Seward, Alaska.

Currently, researchers in the Arctic are stuck between a rock and a hard place. They either have to use ships that are designed for research, but lack icebreaker capabilities, or they must rely on the U.S. Navy’s Arctic icebreakers, which are best suited for defense - not science. The ARRV, however, will finally allow scientists to carry out research on a ship optimized for their needs.

According to the ARRV website, proposed research projects include “furthering our understanding of sea ice recession, changing ocean currents and Arctic habitats and ocean acidification,” along with extensive seafloor mapping.” Only 10 percent of the Arctic is mapped to international standards. Lawrence Brigham, an Arctic sea expert, remarked that “the hydrographic data base is not sufficient to support safe operations.”

The vessel is still a long way off though, with delivery scheduled for 2013 and research expected to begin in 2014.

But just because American oceanographers and climatologists will have a ship at their disposal doesn’t mean that research will be entirely easy to conduct. As the Reuters article points out, the race for resources in the Arctic, especially oil and gas, is causing countries to be more defensive about their borders, and less keen on scientific expeditions entering into national waters. For instance, 12 of the 14 requests made by U.S. researchers to take soil samples from Russian waters have been turned down.

Contrastingly, there are some heartening signs of cooperation, one of them being the ongoing Russian-American Long-term Census of the Arctic (RUSALCA) expedition, a joint project between Russia and the U.S. to map the waters around the Bering Strait and farther north into the Arctic. Since 2004, scientists on deck have been charting the Bering and Chuchki Seas, which fall into both Russian and American territory. It is a promising sign that the Kremlin has allowed American scientists into their waters at all. You can follow the work done aboard the Professor Khromov here.

Russia and America aren’t the only two countries cooperating, of course. Canada and Denmark, which have been haggling over Hans Island for years, have worked together on a bathymetric survey to map the area between northern Canada, near Ward Hunt Island, and Greenland. The Canadian Hydrographic Service, the Danish National Survey and Cadastre and the Danish Maritime Safety Administration are all involved in the survey, which is written about in some detail here.

Now if all six Arctic nations could pool their resources together, maybe the Arctic would finally be mapped to international standards.

With 99% of the votes counted, Prime Minister Jens Stoltenberg’s center-left coalition appears to have won the national elections held on Monday. 86 of the 169 seats in the Storting went to the Red-Greens, giving them a plurality.  If the victory is indeed confirmed, Labour and its partners will be the first government to be re-elected in sixteen years. This result means that oil drilling around Lofoten is now unlikely, since the leftist coalition is opposed to opening up the Arctic waters to exploration. Stoltenberg remarked,

“We had two goals for this campaign. First that Labor would win the election, and [second] that the red-green coalition would continue. That we have clearly done.”

More to come…

News links

“Labor headed for victory in Norway vote,” New York Times

“Norway government ahead with 95% of votes counted,” Reuters

“Regjeringen fortsetter, de borgliger krangler videre,” Aftenposten

“Oil cash crucial to Norway vote,” Upstream Times

In the United States, issues of Arctic resource management are rarely national issues, let alone ones that could decide an election. Drilling in the Arctic National Wildelife Refuge in Alaska comes up as a hot button topic now and then, but is hardly as sensitive as oil drilling in Norway.

The Norwegian elections on September 14 could prove to be a turning point in the country’s position on drilling in the Arctic. The race is too close to call right now, so both oil companies and environmentalists are waiting with baited breath to see how the hammer will fall. Currently, the so-called Red-Green coalition, which is a center-left coalition between the Labour, Socialist Left, and Centre Parties headed by Prime Minister Jens Stoltenberg, has blocked drilling in the pristine waters around the Lofoten Islands, which are estimated to hold two billion barrels of oil. The coalition is tracking at 46.7%. The opposition parties, which would likely form a four-party center right coalition, has 50% of the vote in opinion polls. If they win, the waters around the Lofoten Islands could be opened up to oil exploration and exploitation.

The lure of oil

Oil drilling around Lofoten would begin around 2020, right when projected supplies are expected to fall off sharply. An expansion of the industry would create new jobs, which is a selling point with the Labour Party. Perhaps most importantly, it would allow Norway’s Government Pension Fund to continue raking in the kroner. Interestingly, the oil fund itself is trying to move towards more environmentally-friendly investments as it tries to set the standard for sovereign wealth funds around the world [1]. But what good are green investments when the country’s own oil industry is responsible for 2.7% of the world’s carbon dioxide emissions?

It appears that Norway feels a certain amount of guilt for having an oil industry. A country that prides itself on its traditional respect of nature, encapsulated in the word friluftsliv, or “open air living,” with people hiking in fjords and skiing down snowy slopes, has at the same time become the world’s fifth-largest oil exporter and a major carbon dioxide emitter. In order to mitigate the industry’s negative impact on the global environment, the government has invested in many environmental projects abroad through foreign aid, such as its donation of $1 billion to rainforest preservation in Brazil. Norway hopes to become carbon neutral by 2030, yet this will only come through foreign aid and the purchase of carbon credits, not by an actual reduction of the national oil industry. For instance, 100 million kroner would purchase 100 times as many emission credits as the amount that oil exploration in the Lofoten Islands would cause, making it easy for Norway to become carbon neutral on paper. [2]

Yet even if a victorious center-right coalition were to open up the wells around Lofoten and generate more revenue, this won’t guarantee them long-term popularity. No government has been relected in 16 years, a statistic which Stoltenberg is trying to change. He has spent more of the oil and gas money than any other Norwegian government in history in order to prevent a recession, yet his party is still behind in the polls. [3] Norwegians seem to always want their government to spend more money, yet politicians prefer investing it for a rainy day when all of the wells are dry.

Problems of drilling in the Lofoten Islands

Drilling in the Lofoten would be particularly troublesome for two major reasons. First, the rigs would be placed relatively close to the islands, since the continental shelf is narrow. This presents both an aesthetic problem and an environmental problem. If there are any mishaps on the rig, the oil slick could come close to shore. It also would be slow to dilute given the cold temperatures of the northerly waters.

Secondly, the Norwegian Sea is plentiful, and a major fishing grounds for a country in which fishing is still the third largest export sector. When researchers from the Norwegian Petroleum Directorate attempted to survey the area to find out how large the oil deposits were, they offered compensation to fishermen whose activities would be disturbed by the seismic testing. Some fishermen were so opposed that they refused the money, leaving the survey partially incomplete. [4] Suffice it to say that if actual drilling were to occur, much more controversy would erupt, and those hardy Norwegian fishermen probably will no’t go gentle into the Arctic night.

News Links

[1] “Norway fund moves towards green investments,” New York Times

[2] “Lofoten olje verdt 100 mrd,” e24.no (in Norwegian)

[3] “Stoltenberg struggles in election after record handout,” Bloomberg

[4] “Norway vote may break Lofoten drilling gridlock,” Reuters