Another frontier falls

2010-09-15 00:00

FIRST, the good news. Today, Russian foreign minister Sergei Lavrov and Norwegian foreign minister Jonas Gahr Støre will sign an agreement in Murmansk that resolves the long dispute between the two countries over their Arctic sea bed. So there will be no military confrontation in the Barents Sea between Russia and Norway, a North Atlantic Treaty Organisation (Nato) member, over who owns which part of the sea bed, even if oil is discovered there.

Now for the bad news. Today, Russian foreign minister Lavrov and Norway foreign minister Gahr Støre will sign an agreement that resolves the long dispute between the two countries over their Arctic sea bed rights. That means that drilling for oil can get under way in the Barents Sea, in waters that are deeper than the BP well that blew out in the Gulf of Mexico — colder waters in which an oil spill would linger for many years.

Two years ago, the military and the think tanks in Moscow were obsessed with the prospect of a military confrontation with Nato over Arctic sea bed rights. Mention climate change to them and you would immediately get a lecture about Russia’s right to sea-bed oil and gas in the Barents Sea and American plots to steal those resources.

About 175 000 square kilometres are at stake. Geologists believe that there may be large oil and gas reserves in the area, but there has been no drilling because for 40 years the two neighbours were unable to reach a deal on their sea-bed frontier.

During the Cold War, the area was tense, with Nato maritime patrol planes regularly overflying the area claimed by Russia. Even after the collapse of the Soviet Union the tension continued, leading Norway to carry out a recently completed modernisation of its navy that effectively doubled its capacity to operate in Arctic waters.

Russia and Norway have now resolved the disagreement by dividing the disputed sea bed evenly between them. The deal was announced in principle when Russia’s president, Dmitri Medvedev, visited Oslo in April, and now it is ready for signature. It will still have to be ratified by the Norwegian and Russian parliaments, but that is a foregone conclusion.

Now that the confrontation is over, the two countries will probably work together to develop the region’s resources, since Russia needs Norway’s more advanced technology for deep-water drilling in Arctic waters. The returns may be huge, as the Arctic basin is thought to hold up to 20% of all the world’s remaining undiscovered oil.

But the downside of this development is that drilling, long stalled by the geopolitical uncertainties of the region, can now begin. It will take place in an environment where storms are fierce and frequent, and sea ice is a regular seasonal phenomenon. The polar icecap is retreating as global warming proceeds, but there will still be ice in the area in winter for several decades to come.

 

The risk of a major oil spill is hard to calculate, but it certainly exists. Norway has a good reputation for minimising environmental damage when drilling in Arctic waters, while Russia’s reputation in this area is much less impressive. But the drilling will probably go ahead anyway, because the oil price remains high and both countries need the cash flow.

This is the first part of the Arctic Ocean where large-scale exploitation of hydrocarbons is likely to happen, because the other two promising areas, in the Bering Strait between Russia and the United States and on the sea bed north of Alaska and Canada’s Yukon territory, are still in dispute. Sporadic negotiations take place between the United States and Canada, but the U.S.-Russian seabed boundary is not even being discussed by the two powers.

This is because back in 1990, when the old Soviet Union was stumbling towards collapse, Soviet foreign minister Eduard Shevardnadze made a deal with U.S. secretary of state James Baker that accepted almost all of the American claims in the sea-bed area in dispute between Alaska and Siberia. Russia’s own claims were simply abandoned.

It was an agreement made at Russia’s moment of maximum weakness, and the Russian Duma (parliament) has never ratified it. It never will, just as the U.S. Senate would never ratify a deal that surrendered all of the U.S.’s claims.

A compromise like the one just worked out between Norway and Russia is the only way to settle the issue, but which American politician would take the responsibility for giving up sea-bed territories that belong to the U.S. under the 1990 accord, however unjust it was? At the moment, the two countries are not even talking about it.

So we may get the worst of both worlds: deep-water drilling in the environmentally vulnerable region of the Barents Sea (which is also home to major fish stocks), and a new cold war over rival American and Russian claims to the sea bed in the Bering Strait.

There is also the possibility, of course, that the global response to the threat of runaway warming will be so rapid and effective that the demand for oil and gas will fall faster than existing reserves are depleted. In that case, it might never be economically sensible to start drilling for oil and gas on the Arctic sea bed at all. But I wouldn’t bet the farm on it.

 

 

• Gwynne Dyer is a London-based independent journalist whose articles are published in 45 countries.

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