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31 Aug, 2011 11:25

Energy race turns up heat on Cold War in Arctic

The Arctic’s untapped resource-rich seabed increasingly resembles an ice-cold battlefield where trans-national energy corporations vie for a bigger slice of future profits, creating covert alliances while maintaining an aggressive façade.

Two global energy giants – America's Exxon Mobil and Russia's Rosneft – struck a multi-billion dollar partnership agreement on Monday.The sweeping deal focuses on the exploration of Russia's vast Arctic shelf.But the Arctic is not just the property of Russia and the US – there are eight other players on that white field, including Canada, Denmark, Finland, Iceland and Sweden. It would be no exaggeration to say that one of them – Norway – holds the highest stakes in the game – and probably has a couple of aces up its sleeve.RT talked to Norwegian diplomat Erik Lahnstein who shared Oslo’s view of the troubled situation on the Arctic front. Erik Lahnstein, Secretary of State at Norway’s Ministry of Foreign Affairs, boasts that his country is investing heavily in human capital, infrastructure and exploration so that once climatic conditions allow, the country will be first off the starting blocks.  The Norwegian diplomat says his country intends to explore the Arctic seabed in such a way as to “fully comply with international law and the law of the seas that lay out very detailed rules for how this area should be divided between the states”.Norway’s position is stable because “Norway’s continental shelf has been recognized and all our border issues are settled,” whereas Russia’s bid for the Lomonosov Ridge is subject to the results of research by scientists, before politicians can take a decision about its ownership, believes Lahnstein. The diplomat doubted a single country is capable of developing the Arctic’s resources single-handedly and identified international co-operation as the key to success. This is why Norway is thoroughly preparing its infrastructure and skilled labor so as to be ready to form an alliance with powerful players.The melting of the Arctic ice cap is well underway and it is an extremely worrying fact, agrees the diplomat, not doubting that climate change will dramatically change lives of indigenous people and all other life in the region. But at the same time he believes this opens up new commercial possibilities and “there is no reason why we should not use these opportunities.”It will still be a couple of decades before the start of real development of the region, which is also reckoned to have “some of the richest fish stocks of the world”.Norway is a major player on the global gas market and the development of Arctic resources will only reinforce the country’s position, Lahnstein stresses.“Norway is the first country in the world that started production of liquefied natural gas within the Arctic,” Lahnstein acknowledges, but “Russia has by far greater resources potential, though the costs of development of this potential remain uncertain”. Norway is evidently investing a lot into human capital and infrastructure so the international companies “will find Norway as a relevant partner whatever development we will see in the Arctic”.Russia is developing its own gas projects, linking them into the system of pipelines used to supply Europe with gas. The Norwegian diplomat believes that as the world’s energy needs grow, the value of the Arctic resources will only increase – and Norway “will be very much involved” in the development of these resources.Speculation about Norway becoming a hydrocarbon extraction hub, playing the same logistical and economic role as the Middle East does now, should be regarded as premature, insists the Norwegian diplomat, but “we cannot rule it out”, though the development of Arctic resources is still at “a very early stage”.Norway “is already one of the richest countries in the world” and heavily investing in exploration of the Arctic in an eco-friendly way will make the country even richer, Lahnstein believes. Norway is also expected to benefit from the increased the cargo flow on the Northern sea route that goes through Russian territorial waters to the Pacific ports of China, Japan, South Korea and other countries.Despite the media hype, Arctic countries are not in a state of conflict but “mostly have joint interests”. If the “Russian Route” becomes commercially attractive, the shipping companies of Norway will be interested in doing business in this direction.“We are in very close co-operation with the Russian authorities to identify critical obstacles that are currently not making this sea route work optimally from a commercial point of view,” reveals Erik Lahnstein.The Norwegian Foreign Ministry spokesman hopes security in the Arctic region will be easily maintained due to “a very open and close co-operation between the Arctic states” which is to all intents and purposes already in place.