Russia’s polar quest

From washingtonpost.com, Vladimir Chistyakov - APRussian ships, including an atomic icebreaker and a research vessel, have reached the North Pole and are in the preparing to drop two mini subs over 13,000 feet to place a capsule holding a Russian flag on the ocean bottom at the pole. The expedition is led by the Russian explorer and politician Artur Chilingarov, and ties in some scientific goals with the larger aim of solidifying Russia’s claim on a vast stretch of undersea territory stretching from the country’s northern borders up to the North Pole. Estimates have placed up to 10 billion tons of oil and gas reserves in the 460,000 square mile area of ocean shelf.

Chilingarov emphasized the expedition’s role in securing Russia’s territorial claim to this region, an assertion based on the idea that the Lomonosov Ridge–a thousand mile underwater mountain range that crosses the polar region–is an extension of Russia’s continental shelf:

“The Arctic is Russian…We must prove the North Pole is an extension of the Russian coastal shelf.”

Some of the scientific activities of the trip are focused on finding evidence to back that claim up. However, the dropping of the capsule-encased flag is more of a symbolic gesture. Sergei Balyasnikov, the spokesman for the Russian scientific institute coordinating the expedition, beamed about the accomplishments:

“For the first time in history people will go down to the sea bed under the North Pole,” Balyasnikov told The Associated Press. “It’s like putting [a] flag on the moon.”

Such a statement emphasizes the third motivation (besides scientific research and securing mineral rights) behind this expedition–renewed nationalism, particularly in the face of potential competition for the rights from the West. Denmark asserts that the shelf is an extension from Greenland, and as such should be considered Danish territory. Canada is in the process of beefing up its arctic presence with aims at acquiring extended territorial rights. The US is also considering adding to its icebreaker fleet, increasing its ability to project into the Arctic Ocean.

All of this is becoming more of an issue now, given that global warming (or natural temperature fluctuations, if global warming isn’t your thing) has caused ice floes to recede, increasing access to the region–and the region’s natural resources.

Russia already controls the rights to the giant Shtokman gas field in the Barents Sea, and has recently reached an agreement with the French firm Total to assist in extracting the natural gas from the difficult arctic environment. However, recent Gazprom statements have suggested that even this partnership will not be enough, and the company may soon add another international investor to the project.

Despite the difficulties involved in running an arctic, off-shore project, Gazprom is excited about the expedition and the promise of “major new discoveries,” according to company spokesman Sergei Kupriyanov. Gazprom lacks the technology or capital necessary to develop any of these potential oil or gas deposits it expects to find, but that isn’t the point. Having control of the reserves is much more important at this point than actually extracting them, because access to large deposits is the one thing the international energy firms lack, and the single largest bargaining chip Russia can play when negotiating over foreign investment.

That has already played out to a certain extent with the negotiations over access to the Shtokman field, with Total agreeing to a shared ownership in the subsidiary that will run the extraction, which does not grant them assurances on the reserves themselves. This is a departure from deals in the past, where the international firms typically banked on control over a portion of the deposit in order to guarantee a return on the investment being undertaken. This is a symptom of the global shift in power away from the established international oil companies (IOCs) and towards those firms–typically government-run–that have control over the resources. The expertise needed to extract the resources is a much more elastic good at this point than the resources themselves, especially as the IOCs begin falling over themselves to secure involvement with the next round of (challenging) oil and gas projects.

Given all that, any sort of resource extraction from the polar region now being explored is still decades away, and may in fact never become fully viable. This would especially be the case if no one lines up to partner with Gazprom (assuming it is granted the rights to the future off-shore projects–the other option would be Rosneft, but that is a story for another post) to develop these risky, expensive projects.

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One response to “Russia’s polar quest

  1. Pingback: Kremlin, Inc » Polar expedition follow-up

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