Oil & Gas Summiteer

September 14, 2019

Superpowers scramble for oil in the Arctic

oil revenue, Oil firms

oil revenue

By Sonny Atumah

Global citizens are up in protest that oil is contributing to global warming. Global warming is pushing the ice farther north. Manmade climate change is causing the Arctic to grow warmer twice as fast as the rest of the planet. Ices are melting fast and pulling back with no sign of returning to its frozen past. And who cares?  Crude oil production 2017

As the glaciered ocean recedes, the huge reserves of oil and gas are revealed. The melting ice area is described as the Aladdin’s Cave; a suddenly discovered place containing great riches of oil, natural gas and other rare earth minerals. With the attention it has attracted a new battle field for world superpowers has been opened in the pristine Arctic.

The black gold is the reason superpower nation’s thaw out the cold region with heavy icebreakers to plan and manage how oil and gas can be produced and transported. It is indeed a trillion dollar occupation and investment race in one of the world’s coldest regions where temperatures can drop below -50°C.

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The United States Geological Survey has estimated the undiscovered technically recoverable conventional oil, natural gas, and natural gas liquids resources north of the Arctic Circle to be approximately 412 billion barrels oil equivalent. The Arctic has an estimated 1,669 trillion cubic feet of gas, equal to 24.3 percent of the world’s current known reserves.  Giant nations plan to destroy the region as they scramble to exploit the untapped oil and gas reserves. In the same breath they cry wolf that there is global warming.

Can we reconcile the campaign to reduce greenhouse gas, GHG emissions with the escapades for fossil fuels in the Arctic? Canada, Denmark (including Greenland and Faroe Islands), Finland, Iceland, Norway, Russia, Sweden and the United States have territorial claim to the Arctic. But superpowers like the United States, Russia and China now jostle their way to the front for a share of the natural cake of untapped fossil fuel resources that would come within reach easily.

They are striving for superiority, influence and control in what has been dubbed the new cold war. But the fear of battle may be unfounded for these leading world powers that are realigning forces to lay claim to oil wherever they could find it in the Arctic. That is to say, they are canvassing for support by regrouping in competitive collusions with countries that have jurisdictional claims to portions of the Arctic Ocean seafloor.

It was reported that states surrounding the Arctic Ocean are involved in the land grab, applying for right to license oil and gas by making territorial claims under a United Nations Law of the Sea Treaty. The law provides each country an exclusive economic zone extending 200 miles out from its shoreline. If a nation can demonstrate that its continental margin extends more than 200 miles beyond its shore, its exclusive economic zone can be extended to 350 miles. Russia is taking the lead in this contest among rivals.

Russia is expanding its Arctic infrastructure with massive investments which dwarf those of the remaining littoral states.   Russian President Vladimir Putin claimed that US$30 trillion worth of oil lay beneath his country’s portion of the Arctic. Russia has over 40 icebreaker ships in service. Finland, owner of the world’s second-largest icebreaker fleet has seven, followed by Canada and Sweden that have six each. The U.S. has five, with only one heavy icebreaker.

Experts say the Arctic Council of littoral states has been meeting regularly to play down suspicions of a new cold war. Will Russia beat the United States in the new ingenious contest? The United States has a history of territorial expansion. In 1867, it had the territorial purchase of oil rich Alaska from Russia for US$7.2 million. But the current Danish leader Mette Frederiksen turned down President Donald Trump’s offer to purchase Greenland, an autonomous Danish territory. In 1946, President Harry Truman’s proposal to purchase the same Greenland for US$100 million was rejected. Many believe that the post World War II thinking of America to negotiate for military base deals appears more sustainable to be pursued. Greenland was an American protectorate during World War II, when Nazi Germany occupied Denmark. After the war, America was allowed to build radar stations and rent-free bases on its territory including Thule Air Force Base, in Greenland. The United States have up to 800 military bases around the world.

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Where is China in the Arctic regional equation? China is a nation with no territorial claim to the Arctic. But it has risen to be a polar power to compete for resources and influence in the region. With its economic and naval power on the rise, China has begun underwriting Arctic development projects despite its lack of territory there, underscoring the region’s growing global importance.

It is using its financial might to secure access to resources it cannot obtain through territorial claims. How? When the United States imposed sanctions on Russia in 2014, it became difficult to finance the Yamal LNG facility. China stepped in with US$12 billion to complete the Russian project. China has expanded its US$1 trillion global infrastructure initiative, the Belt and Road, to include an Arctic component. In 2013 China won a seat as an observer on the influential Arctic Council and has since been a vocal member.