Sunday, August 30, 2015

The Race For Arctic Energy: Team Obama Dithers, While Russia and China Rev Things Up

In his message to the American people about his visit to Alaska next week, President Obama said “The alarm bells are ringing, and as long as I’m president, America will lead the world to meet this threat before it’s too late.” He was talking about climate change. But his words could just as well apply to the strategic moves that are being made in the vast Arctic region to secure its resources and potential. 
The Russian port of Sabetta on the Kara Sea in 
the Arctic circle, April 16. Photo: Getty Images
Russia is taking the lead in Arctic offshore oil production. Russia began producing offshore oil at the Prirazlomnaya field in the Pechora Sea in 2014, and last year it delivered roughly 2.2 million barrels. Gazprom Neft expects to more than double oil production this year from the country’s only offshore Arctic oil project.
China isn’t far behind. Between 2009 and 2013, Chinese companies—mainly the big three, China National Petroleum Corp., Sinopec and China National Offshore Oil Corp. (Cnooc)—were the largest buyers of international oil assets. Several of these acquisitions were made with the Arctic in mind, such as Canada’s Nexen and Russia’s Yamal LNG. Early last year, Cnooc obtained an exploration license for Iceland’s Dreki region in the Norwegian Sea. The company is also expected to be involved in Norway’s 2016 licensing round in the Barents Sea.
China Eyes International Collaboration for Arctic Oil
Russian and Chinese activity goes beyond a scramble for resources. Russia has added a 6,000-soldier permanent military force, including radar and sensing networks, in the Arctic’s northwest Murmansk region. Russia recently submitted a large extended continental-shelf claim for the Arctic, which, if accepted, will give Russia rights to seabed resources beyond its 200 nautical-mile exclusive economic zone. China’s maritime activity in the region has increased, and it is making significant investments in Arctic research, infrastructure and natural-resource development. Although not an Arctic nation, China sees the value in building modern icebreakers to support its activity in the polar regions—north and south.
The dominant posture Russia and China are assuming with regard to Arctic oil and gas stands in contrast to the U.S. After holding a record-breaking lease sale in the Chukchi Sea in 2007, (and collecting billions of dollars for federal coffers), the federal government has failed consistently to demonstrate it has the political will and agency know-how to allow Arctic offshore oil-exploration to move forward.
Read the rest of the WSJ op-ed HERE.

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