Weekly Cover | A new book about possible future developments for petroleum development in the Barents Sea represents an historical collaboration between Norwegian and Russian scholars
Tore Andre Kjetland Fjeldsbø
As last year’s steep decline in the price of oil reminds us, the only thing that is certain when it comes to oil and gas development in the Arctic is the uncertainty.
But for Norway and Russia, the vast amounts of offshore hydrocarbon resources in the Barents Sea remain strategic and economic assets. However, without collaboration between Moscow and Oslo developing those resources could prove to costlier than necessary.
Which preconditions must be meet in order for the two countries to co-operate on hydrocarbon development in the Barents Sea? This is the question asked by a group of Russian and Norwegian scholars in International Arctic Petroleum Cooperation: Barents Sea Scenarios, a book published in June.
The work, compiled by Norwegian and Russian authors specialising in technology, social science, economics and natural science, posits three scenarios for Norwegian and Russian oil and gas co-operation in the Barents.
The book takes the 2010 bilateral agreement on the delimitation line, dividing the Barents Sea between the two countries, as its starting point. The underlying idea behind the project is that human interaction will continue play a large part in how the Barents Sea is developed. And, accordingly, the three scenarios have been given metaphorical titles related to interaction between people.
“After you sir”, the book’s first scenario, envisions petroleum development in the Barents Sea region as a co-operative enterprise. However, due to changing energy markets both countries are hesitant to make the first move on investments. In this scenario the two countries resemble British gentlemen in front of a door. “After you, sir,” says the one. “No, after you,” insists the other. With the result being that little progress is made.
In contrast, “Parallel play – not only for children” resembles a situation in which energy prices are high, but relations between the two countries are cold. In this scenario, Russia and Norway resemble two children who try to play together, but are unable to do so.
“They are in a group, and they see opportunities, but their cognitive abilities limits them to playing only as individuals,” says Frode Mellemvik, who is the current director of Norway’s High North Centre for Business and Government, and a co-editor of the book.
The third scenario, “Let’s dance, but where is the music?”, envisions a future in which the two countries co-operate on energy development in the Barents Sea, but large-scale projects are hindered by strict environmental regulations that leaves the Arctic less commercially attractive.
“This scenario predicts high gas prices, and the oil prices are higher as well, but globally the climate regime has made it politically difficult to opt for exploration,” Mr Mellemvik says.
The three scenarios provide the foundation for the book, but Mr Mellemvik underscores that economic development in the Arctic will always be susceptible to external factors. In what the authors label as “wild cards”, they try to envision unknown events and factors that could affect oil and gas development.
One example: green social movements increasingly influence Arctic policy-making. Another, along the same lines, would be an event such as an major oil spill that pushes the environment further up the poliical agenda.
“Climate change is incredibly important in a global context,” Mr Mellemvik says. “So we imagine a stronger environmental legislation, and, who knows, this might lead to new technology. There is, for example, serious German research into what they call ‘the fourth industrial revolution’. Perhaps we will see a technological revolution that significantly reduces our energy needs.”
Although the scenarios are treated separately in the book, Mr Mellemvik underscores that it is not impossible that they might intersect.
“We believe that each factor will play a role in some way. We can also see a mix of scenarios. For example, we might come into a ‘Let’s dance’ situation, where the two try to dance, regardless of what music is playing. It might be a climate-band playing, or a price-regime band. The community will follow whatever music is playing, as long as there is a global audience.”
Mr Mellemvik cautions that, historically, there is little to suggest that oil and gas prices will remain at the current level, although new technological developments, he admits, could prove him wrong.
As for Oslo-Moscow relations in the Arctic, Mr Mellemvik, perhaps inspired by the successful collaboration between the Norwegian and Russian contributors to the book, remains optimistic.
“We expect that it will be managed well. There will surely be tensions between the great powers in the future, but Norway has shown itself willing to avoid confrontation and go for co-operation in its High North. I think we will maintain good relations with the Russians.”
And this seems likely, as the two countries could find themselves in a situation in which they are dependent on each-other in order to develop their vast offshore resources.
“I personally believe in good relations between Norway and Russia in the coming ten years. We will see a price regime for oil and gas that is better than today. However, future environmental legislation will affect the activities in the Barents Sea. There will also be room for Norwegian and Russian actors to co-operate on emergency preparedness, infrastructure and scientific developments.”
International Arctic Petroleum Cooperation: Barents Sea Scenarios
Edited by Anatoli Bourmistrov, Frode Mellemvik, Alexei Bambulyak, Ove Gudmestad, Indra Overland, Anatoly Zolotukhin. Routledge: 292 pages; £90
Originally published by The Arctic Journal. Re-published here with the permission of the author.
The Weekly Cover is The Rasmussen’s main story of the week. These articles will sometimes look ahead at one of the more important or interesting topics of the coming week, or they may provide insight and analysis about a current issue.
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