Arctic Economics

The E.U. Challenges the Premises of the Ilulissat Declaration

 

European Parliament Building in Strasbourg.  Source: Wikipedia

In May, ministers from the five nations with Arctic coastlines (Russia, Canada, Denmark (Greenland), Norway, and the United States) met in Ilulissat Greenland and adopted a declaration on Arctic governance (The Ilulissat Declaration) whose key points were:

1. the unique relationship of the five coastal nations to the Arctic;
2. the Law of the Sea treaty as the key to the legal framework for development;
3. the legal framework is best implemented through national action by the five coastal states;
4. there is no need for a comprehensive new legal regime for Arctic development;
5. a role for "other users" of the Arctic - nations that do not use the Arctic evidently don't have a role..

Earlier this month, the European Parliament adopted a resolution saying, "Not so fast."  Tony Barber reports (Europe's Arctic Challenge):

A sober look at the Northern Sea Route

Claes Lykke Ragner of Norway's Fridtjof Nansen Institute has written an excellent, short (8 pages) up to date (2008) status report on Russia's Northern Sea Route:The Northern Sea Route.

The Russian's opened the Northern Sea Route to transits by foreign ships in 1991.  It has not been used much (I'm only pulling his discussion of cargo carrying transits here, not his discussion of local traffic or non-commercial and cruise ship transits):

Russia's Shallow Arctic Seas and Straits

The Northern Sea Route cuts 39% off the shipping distance between Hamburg and Yokohama, but that doesn't help much if you have to make four separate trips to move the same amount of stuff. 

According to researchers at the U.S. Army Corp of Engineers Cold Regions Research & Engineering Laboratory (CRREL, in 1996), depth limitations in important straits and ports limit the size of ships that can use the route to vessels with a cargo capacity 25% of the vessels using more southerly routes.  It would take one of these ships four trips to move the cargo that a larger vessel can move in one trip.

Northern Sea Route prospects

When you look at a globe it's clear that trans-Arctic shipping routes between Europe and Northeast Asia are short compared to alternatives through the Panama and Suez Canals.  But trans-Arctic shipping may not spring into existence as the ice cap shrinks as quickly as some expect. Once you begin looking more carefully at the routes various challenges become clear (Old ice and the Northwest Passage).

The Northern Sea Route runs from the Barents Sea, across Arctic Russia, to the Bering Straits and the Pacific.  But some of the Route's infrastructure has decayed, and trans-Arctic shipping may not be economical on it anyway.

Source: Maritime Market.  The Northern Sea Route expects active maritime traffic

Gazprom explores Alaska

Senior Gazprom executives met with State of Alaska and energy company executives earlier this week.  They were interested in local business opportunities, including potential participation in one of the projects to build a gas pipeline from the North Slope tthrough Canada to the Lower-48.  Wesley Loy reports for the Anchorage Daily News: Russian Gas Conglomerate Visits Alaska.

What do the Russians see when they look north?

Keir Giles says they see NATO. 

Giles' short piece on Russian perceptions of the Arctic, Looking North, was published by the Defence Academy of the United Kingdom a year ago. It was one of two essays in a report called Russia and the Arctic: The 'Last Dash North'. Giles pulled several themes from his reading of Russian security and economic thinking:

Rambunctious Russians

The Economist reports on Russian activity in the Barents Sea and northeastern Alaska (The Arctic contest heats up):

...in Norway, where fighter jets scramble on average once a week to intercept Russian warplanes buzzing close to their country. The Kremlin’s aircraft and ships do not quite break international law. But they commit what a senior official terms “breaches of etiquette”. These have included naval manoeuvres in the midst of Norway’s oil and gas platforms in the North Sea, involving aggressive air sorties that grounded all offshore helicopter flights; that was inconvenient, expensive and dangerous. Also troubling was a mock bombing run against Norway’s northern command centre at Bodo, and at least three other, so far unpublicised, incidents.

ConocoPhillips in Russia

 

Polar Lights operation.  Source: ConocoPhillips.

Houston based ConocoPhillips is deeply involved in Russian oil and gas projects and has been for a while: ConocoPhillips Russia. 

Life in Eek

Rural Alaska has one foot in the modern cash economy, and the other in an older subsistence economy.  In the subsistence economy, rural residents hunt, fish, and gather foods and materials.  The economies overlap.  The subsistence economy needs cash for fuel, snowmobiles, ammunition, and other stuff, and some items coming out of the subsistence economy are sold.

Mark Constantine describes life in the remote, Yupik village of Eek in Alaska, for readers in Michigan: Remote Alaskan village hangs onto heritage.  He covers the subsistence economy well, but although the residents of Eek are obviously spending a fair amount of cash, there's not much information about where it comes from.

The 2000 census says the 280 or so residents of Eek had an aggregate income of about $2.5 million.  The article mentions one man who serves in the National Guard and another who works as a village public safety officer.  I can guess that some comes from government jobs in the school or village government, some comes from work in regional commercial fisheries, some from the Alaska Permanent Fund or Alaska Native corporation disbursements, and some from transfer payments.

Hat tip to Grassroots Science.

Will the financial crisis slow development of the Shtokman gas field?

Location of the large Shtokman gas field in the Barents Sea (Gazprom map)

From the Barents Observer: Shtokman in jeopardy?

The rapidly unfolding world financial crisis could have wide-reaching consequences for a number of giant regional industrial projects. One of them is the Shtokman field in the Barents Sea.

Several major industrial projects are under planning in the Barents Region. Now, the financial crisis and falling raw material prices could result in the postponement of several of them. As BarentsObsever recently reported, leader of the Shtokman Devlopment Company, Yuri Komarov already last month expressed concern about possible Shtokman consequences from the world financial crisis. The situation looks far more gloomy today. Gazprom is heavily dependent on loans and credits for the development of new projects. Now, the credit market is drying out, and new major loans for Gazprom might be put on hold.