Daily Archives: November 19, 2011

"arctic oil" Norway mobilises for oil push into Arctic

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By Walter Gibbs and Balazs Koranyi

OSLO, Nov 18 (Reuters) – Norway unveiled a 20-year plan to unlock offshore Arctic oil and gas resources and channel them to worldwide markets, a project the foreign minister said may cost billions of dollars and bring rivalries over Arctic resources to a head.

“It is the project of a generation,” Foreign Minister Jonas Gahr Stoere said in an interview. “As the ice melts, new transport routes are opening up, resources are becoming accessible and human activity is drawn to this region.”

The 134-page white paper said massive infrastructure building, research investment, a new fighter-jet fleet and careful diplomacy will help bring “a new industrial era in the high north”, including an island group where jurisdiction is contested.

Neighbours like Russia and the United Kingdom have already begun to challenge Norway’s claim of full tax and regulatory power in the potentially oil-rich waters off the Svalbard island group, halfway between Norway and the North Pole.

Last month Russia formally protested against Norway’s temporary seizure of Russian trawlers for fishing violations in what Moscow considers international waters, and populist Duma member Vladimir Zhirinovsky likened the actions to piracy.

Diana Wallis, a European Parliament vice president and Arctic affairs specialist, said she too questioned unfettered Norwegian control in the northern Barents Sea zone and that future oil exploration would magnify the dispute.

“At the moment there are gaps in the (jurisdictional) framework, especially in the scenario of an oil and gas boom,” she told Reuters.

A 1920 treaty gives Norway sovereignty over Svalbard and a tight ring of surrounding water on condition it impose minimal taxes and give all 40-some signatory nations equal access to the area’s bounty.

But Norway has since declared a 200-mile economic zone around Svalbard and says its autonomy over oil, gas and fish beyond 12 miles is unconditional — as in the Norwegian North Sea, where oil firms pay 78-percent income tax.

“It is Norway’s sovereignty and therefore it’s Norway’s responsibility to decide the rules,” said Stoere.

“Those that argue that our interpretation is wrong are free to take this to the Hague,” he added, referring to the International Court of Justice.

Stoere played down the potential for conflict, saying exploration off Svalbard is years away. “The oil industry is busy elsewhere,” he said.

F-35 FIGHTERS

A grand slam of oil and gas discoveries in 2011, including Statoil’s big Skrugard find in the western Barents, has energised Norway’s offshore oil industry.

And Russia’s anger over Svalbard did not stop it from signing a new sea boundary with Norway in the central Barents, freeing a promising zone for oil exploration on both sides.

Norway and Russia are both among the world’s largest gas exporters and oil exporters.

The northward movement of capital, infrastructure and manpower that Stoere envisions will meet little political resistance south of Svalbard, where Norway’s economic zones are unchallenged and Statoil already produces natural gas.

Today’s earth-observation satellite stations, F-16 fighter jet bases and oil-and-gas outposts in Norway’s sparsely populated high north are “only the beginning” of decades of growth and research to come, Stoere said.

By leveraging its oil wealth in public-private partnerships, he said, Norway will consider building a 1,400-kilometre extension of its North Sea pipelines to the Russian frontier to transport Barents gas to western Europe with spurs ashore to power mining and other new industry in northern Norway.

The white paper sees heightened military activity in the far north, including more NATO exercises and the planned purchase of 48 F-35 Joint Strike Fighters from the United States to replace Norwegian F-16s now stationed above the Arctic Circle.

“The government will enforce sovereignty and exercise authority in the north in a credible, consistent and predictable way,” Norway’s white paper says.

Political analysts said they have noted a pick-up in Russian naval and air force patrols across the Barents in the past five years, though far short of what was normal in the Soviet era. (Editing by William Hardy)

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Guggenheim Partners announces Arctic investment fund

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Environmentalists fear the move by the privately held investment firm based in the US will accelerate exploitation of the region

Leo Hickman
guardian.co.uk

Guggenheim Partners, a privately held investment firm based in the US, which manages more than $125bn worth of assets on behalf of its clients, has confirmed it is setting up a new fund dedicated to making investments in the Arctic region.

The news has been criticised by environmentalists who fear that it will further accelerate the exploitation by oil and shipping companies of the region which is being made even more accessible by climate change.

The fund was first revealed over the weekend at a conference held by the Juneau World Affairs Council in the Alaskan capital on the “politics of climate change“. Alice Rogoff, the publisher of Alaska Dispatch who is married to one of America’s wealthiest men, Carlyle Group co-founder David Rubenstein, told the conference that she had learned Guggenheim Partners was planning a fund “worth billions”. She added that it might concentrate first on building a privately funded icebreaker, which could then be leased to the US coastguard.

There have been growing calls in Alaska for a $1bn “heavy” ice breaker which could be used not just to help tackle any possible oil spills and perform search and rescue duties, but also further secure new shipping routes into the area. Shell confirmed last year that it is already building two of its own icebreakers in preparation of it being granted an extended permit to drill in the Chukchi and Beaufort seas from next year onwards.

Mead Treadwell, Alaska’s lieutenant general, said the fund was a “major announcement” for the region, adding that the Alaskan Arctic also currently lacks a deepwater port. Without such a port available, he said, oil companies would incur extra costs by having to supply a “flotilla” of support vessels when drilling at sea.

The Guggenheim Partners website posted a link to an Alaska Dispatch story about the fund, but a company spokesman refused to provide any specific details. “We are in the very early planning stages for an Arctic investment fund,” said Jeffrey Kelley. “At this point in time it would be premature to comment further about potential structure or investment parameters.”

A permanently secured route through the Bering Strait up into the Arctic would be a major boon to shipping companies and resource extractors. Last month, Nordic Bulk Carriers, a Danish shipping company, said it would save a third of its usual costs and nearly half the time shipping goods if a route to China was available through the Arctic instead of via the Suez Canal and the Indian Ocean.

Ben Ayliffe, an Arctic campaigner for Greenpeace, criticized the fund: “We shouldn’t be surprised that the industry which got us into the worst global economic crisis in living memory now has the planet’s last great wilderness in its sights. But, even by its own standards, it would seem exceedingly short-sighted to pour billions of dollars into the extraction of climate-changing fossil fuels just as scientists warn that the Arctic’s summer sea ice is entering what they call a ‘death spiral’.”

Greenpeace is campaigning for the Arctic to be better protected.

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