Arctic Competition Heats Up
The Arctic, a rich source of oil and natural gas, is currently being claimed by five different countries: Norway, Denmark, Russia, the United States, and Canada. Yet for all the vast potential that might be achieved through cooperation in the Arctic, there is also the possibility of conflict.
While most of the world has been focused on conflicts in the Middle East and Eastern Europe, a competition has been quietly brewing in the far north. Just this past December, Denmark made a claim on territory in the Arctic. Before that, in 2007, a Russian submarine planted a Russian flag at the bottom of the North Pole and one of its explorers claimed that the Arctic has always been Russian. In fact, five different countries, Norway, Denmark, Russia, the United States, and Canada, have made claims, often conflicting, to Arctic territories. The Arctic is believed to have large supplies of oil and natural gas. Interest in these resources has increased as rising global temperatures melt the ice. Yet for all the vast potential that might be achieved through cooperation in the Arctic, there is also the possibility of conflict.
Arctic oil may be the last large reserve outside of the OPEC countries. An assessment by the U.S. Geological Survey (USGS) in 2008 estimated that there are 90 billion barrels of oil, 1,669 trillion cubic feet of natural gas, and 44 billion barrels of natural gas liquids undiscovered in the Arctic. This could amount to approximately 22 percent of the world’s undiscovered oil and natural gas reserves, a quantity 3 times the amount of the United States’ oil reserves and almost five times its natural gas reserves. The majority of these reserves lie in territory that belongs to Russia and the United States (Alaska), but some also lie in Norway, Canada, and Denmark (Greenland). One potential source of conflict could be over resources in the Chukchi Sea. The 2008 USGS study assumed that the United States and Russia would share the resources there equally. While there are not currently any Arctic disputes between the United States and Russia, the rapid deterioration in relations over the last year make conflict a possibility.
The littoral states along the Arctic are not the only ones interested in its resources. China in particular has been making investments in the Arctic. Its primary interest is in shipping lanes that are opening due to global warming, but it also has an interest in energy and rare earth mineral deposits there. As a non-Arctic state, China will have to work with Arctic states to have access to these resources. China is currently one of the largest investors in mining operations in Greenland. In 2013, it even signed a deal with Russian gas company Rosneft to double its imports of Russian oil in exchange for helping oil exploration in the Arctic.
Despite the Arctic’s vast reserves and relatively low levels of political risk (as opposed to many sites in the Middle East), extracting the oil and gas there still comes at very high costs. With oil prices as low as they are now, there is less interest in investing in Arctic resources than there was in 2008 when oil prices were at an all-time high. However, extracting oil and gas in the Arctic will continue to get easier as the ice melts and the technology improves. The Arctic is a long-term investment and resources there may prove to be important to global energy demand in the 21st century.
Conflict over Arctic territory has been on forecasters’ minds for many years. In January 2014, Russian President Vladimir Putin stated that expanding Russia’s military presence in the Arctic was a top national security priority and Wikileaks cables published in 2010 show that policymakers have worried about militarization in the Arctic long before Mr. Putin’s statement.
While there is the potential for conflict, the Arctic countries have thus far abided by international law and resolved disputes peacefully. Russia and Norway, for instance, calmly settled their disagreement over the Barents Sea in 2010. The Arctic Council may also play a major role. Founded in 1989 as an advisory group serving to protect the Arctic environment, the Council has since transformed into a decision-making body for political issues common to all Arctic states. It may be crucial in setting the rules of the game and arbitrating conflicts. The United States will take over the two year chairmanship of the Council later this year. Hopefully, President Obama and his successor will use this position to implement the rules and norms that will ensure peaceful coexistence in the north.