Russia and North America Diverge on Arctic Resources
by Rob Huebert
February 3, 2017
Most people talk of the Arctic as if it is one homogenous region. “The Arctic is melting.” “The Arctic is a treasure trove of resources.” “The Arctic is a region of peace and cooperation.” These are just a few of the refrains heard whenever the Arctic is discussed.
The reality is that there are multiple Arctics. This is especially true in regard to Arctic oil and gas production. Since the publication of the well-known 2008 United States Geological Survey study of oil and gas reserves, most people have discussed Arctic oil and gas as if it was one consistent entity. Events in December 2016 and January 2017 demonstrated how wrong this thinking is.
On December 20, 2017, Canadian prime minister Justin Trudeau and U.S. president Barack Obama announced that their countries were banning oil and gas development in their northern waters – the U.S. indefinitely and Canada for a five-year period. One month later, on January 18, 2017, Russian president Vladimir Putin announced the opening of several major oil and gas pipelines that will bring large amounts of oil and gas from their northern fields in Yamal into production. One of these pipelines will double the capacity of the Nord Stream that connects Russian Arctic gas production to Germany. So, as Canada and the United States decide not to develop their Arctic offshore oil and gas, Russia is moving forward with growing intensity to develop its resources.
This not only highlights the differences that exist in oil and gas development regimes, but also in the thinking of the leadership of all three countries.
The decision taken by the Obama administration can be seen as part of Obama’s effort to consolidate his legacy as an American president focused on issues relating to the protection of the environment and climate. However, the timing of the decision in the final days of his presidency suggests that the decision will not be one that lasts.
The reasons behind the Canadian five-year moratorium on oil and gas offshore development are a little harder to understand, given the fact that there was limited public discussion regarding the possibility of such a move. However, the current Liberal government has been facing challenges in maintaining its efforts to be seen as environmentally focused while ensuring that its energy sector is able to maintain itself. This may reflect its efforts to respond to environmental concerns as it moves to approve the development of pipelines elsewhere in the country.
The Russian decision, meanwhile, demonstrates Putin’s commitment to maximize the development of northern resources. It also shows his determination to break the impact of the sanctions currently imposed on Russia by increasing energy exports to Germany.
Ultimately, the decisions made by the North American governments – regardless of what happens at the end of the five-year period for Canada and any efforts on the part of the new Trump administration to overturn the American decision – mean that there will be no oil and gas development on the North American side of the Arctic for this foreseeable future. Meanwhile, Russia will be poised to become a dominant producer of Arctic oil and gas and will move ahead in the necessary knowledge and technology.
It is also clear that Russia will be able to further integrate itself economically with Europe – and, one suspects, the Asian markets. It is interesting to note that while European-based environmental groups have been vocal in their efforts to stop North American development of new Arctic offshore oil and gas resources, there seems to have been a much more muted response to the Russians.
Furthermore, the Russian Bovanenkovo-Ukhta gas pipeline opened in January feeds directly into the Nord Stream system. This means that the added production does not pass through Ukraine, which eliminates the ability of that country to interfere in the Russian supply to Germany. It also means that Germany’s dependence on Russian oil has just increased. At what point does increased gas production eliminate the German appetite to maintain sanctions?
Perhaps the decisions made by all three countries have one thing in common, which is that they ultimately demonstrate the power of their national leaders. Motivations may differ, but what is striking is the power that all three have in enforcing their own particular vision.
There is growing criticism in Canada and the United States that the December announcement did not follow consultations with any of the three premiers of Canada’s northern territories. Concerns have also been raised by some of the northern Indigenous organizations that they were not involved in the decision-making process. Commentators such as Nils Andreassen of the Institute of the North have also pointed out that there were minimal consultations within Alaska on the American decision. There is no evidence that the Russian leadership had any meaningful consultations with its northern inhabitants, either.
What this suggests is that decisions – whether for or against oil and gas development – will be made by the leader of the state and not the people of the affected region. So while it is clear that it is now impossible to talk of one Arctic when talking of oil and gas, it still remains possible to talk of one Arctic in terms of governance.