WINDSOR ENERGY GROUP
Annual Consultation
“Global energy uncertainties – finding new directions”
Windsor Castle, UK
4-6 March 2011
“High Noon in the High North?”
As our Annual WEG consultations draw to a close, I am able to add new uncertainties to my list of “known uncertainties”. Amplified not only by the global economic downturn that we are struggling to get out of, but also by the political tsunami that is unfolding very dramatically across Northern Africa and into the Middle East as we meet. Not to forget the “unknown unknowns”, the additional uncertainties that are out there and that we also must deal if and when they appear. And the “game changers” and technological breakthroughs, expected and unexpected, that can turn a lot of things up side down.
Uncertainties and vulnerabilities prompt countries and groups of countries to re-think and re-shape fundamental energy security policies. The policy tuning of one country to meet new challenges and to reduce its particular energy uncertainties can, however, exacerbate existing uncertainties or create new ones for others. Global energy dialogue and awareness of long-term common interests become increasingly important to get things right.
While our uncertainties and vulnerabilities, and not least our confusion, may increase, a fundamental certainty remains. The world will need more and cleaner energy, used in a more efficient way, accessible and affordable to a larger share of the world’s population.
Finding new directions?
Our theme this year, “Global energy uncertainties” has the add on “finding new directions?” In the 19th Century, the mantra was “Go West, Young Man!”. That could mean “High Noon” shoot-outs between gunslingers, as shown on this slide, and also Klondike scramble for resources.
Lord Howell tells us to look in the opposite direction. “Eastwardization” - the centre of global economic and political gravity moving eastwards. Even the “Go East, Young Man!” scenario has a “High-Noon” concept - as you see here in “High-Noon Shanghai”
Today, when we are all looking South at the political and energy uncertainties in Northern Africa and the Near East, there is also a case for a contrarian Norwegian like me, and others, to suggest “Go North”.
To the High North and Arctic. This slide is black, as is the Arctic “High Noon”. Total darkness around the clock, but only in winter. In summer, the Arctic sun shines around the clock. At “High Noon” as well as “High Midnight”. As this next map shows, the Arctic ice sheet is melting at an alarming rate, being reduced by an area two and a half times that of the U.K. per decade. As the Arctic ice sheet is getting smaller and smaller, international interest in the Arctic is getting bigger and bigger.
New Petroleum Frontier
High oil prices and energy security concern have attracted petroleum political and industry attention to the Arctic. Climate change and the melting of the ice is making a substantial new frontier accessible for long-term petroleum activity in an energy hungry world.
More than a fifth of global yet-to-be-discovered reserves of oil and natural gas could be found in the Arctic. The biggest concentration is in the Russian part of the Barents Sea. State-of-the-art technology is called in the Arctic’s challenging and high-cost environment. Norway is already producing and exporting oil and natural gas from our Arctic offshore. Our state company Statoil is in partnership with Russian GAZPROM and French Total in developing the enormous Shtokman gas field in the Russian part.
“High Noon or High Tea – High North”
My assumption is that this session was given the title “High Noon – High North” to remind us that it has to be concluded by High Noon as the programme indicates, and not continue to “High Tea” this afternoon. I can accept that. If, however, the title is political and Wild-West inspired implying a shoot-out or scramble for resources, it is misplaced.
Why? Because, while conflict and political unrest may characterize many of the other petroleum provinces of the world, the Arctic stands out as a stable and peaceful region. This above-ground factor increases interest in the below-ground petroleum promise of the High North and Arctic.
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Norway is centre stage in Arctic developments with rights and responsibilities under international law as an Arctic Ocean coastal state. Our present government has defined developments in the High North as its main foreign policy priority.
We have an integrated management plan for our northern-most offshore areas that takes a comprehensive, step-by-step approach to the development of petroleum resources. An approach based their co-existence with other interests at sea, such as fisheries and transport, and with due regard to environmental concern. After Macondo, we have taken measures to further strengthen and improve our rules and regulations for petroleum activity.
Norway and Russia settle boundary issue
Since our WEG consultations and High North update last year, the Prime Ministers of Norway and the Russian Federation have signed a bilateral Treaty (15 September) on Maritime Delimitation and Cooperation in the Barents Sea and the Arctic Ocean. After forty years of bilateral negotiations. Dividing a formerly disputed area two-thirds that of the U.K approximately 50/50. The delimitation line defines the jurisdictional boundary between us in accordance with international law and concerns the continental shelf and 200 nautical mile economic zones. It does, however, not limit the freedoms of the high seas.
The Treaty ensures continued close co-operation in the sphere of fisheries and also contains provisions on co-operation regarding trans-boundary hydrocarbon (oil and gas) deposits – unitisation rules, similar to provisions in other treaties. Since the 1980’s, Norway and Russia had agreed not to carry out exploration for and exploitation of hydrocarbon resources in the formerly disputed offshore area. That moratorium will come to an end when the treaty enters into force. The Norwegian parliament gave its consent to ratification last month. I expect also the Duma to do so in the very near future.
Flags, flags, flags
Flags are planted here and there, often under quite heroic circumstances.
Here we see to the left one of Norway’s national heroes, Roald Amundsen, who was the first person in history to reach the South Pole, where to prove a point he planted the Norwegian flag. That was in 1911, when he beat Britain’s Robert Scott to the spot in the epic dog-sled race, very distastefully for the British I know, because he made it back by eating his dogs. Norway is celebrating the Centenary of Amundsen’s achievement this year in a big way.
In the middle, we see the American flag half a century later being planted on the moon. It was planted there without it being seen as any sovereignty claim that I am aware of. Ambassador Jones might correct me if I am mistaken.
The picture to the right reminds us of how the planting of Russia’s flag on the seabed of the North Pole three years ago received great media attention. There was some exaggerated speculation of an alleged race for the Arctic and scramble for its resources on more or less a “first come first serve” basis with an inevitable clash of national interests in a “no-man’s land” outside the reach of international agreements.
Orderly development
The gentleman to the left on this slide, Uncle Scrooge, also known as the “King of the Klondike”, was lucky and successful. The gold miner gentleman to the right probably much less so.
Rather than anticipating a modern day Klondike and free-for-all-scenario with legal disputes and increased military activity to project or protect national interests, it is important to note that all land in the Arctic already belongs to established nation states.
It is equally important to note that the area surrounding the North Pole is not land. Under the ice is sea. We already have a robust international legal regime governing the sea here, as elsewhere. The United Nations Convention on Law of the Sea gives the five coastal states bordering the Arctic Ocean specific rights and obligations in the area as a consequence of internationally recognised sovereignty over land and jurisdiction over maritime zones. Aware of their international rights and responsibilities, there as elsewhere, these five Arctic Ocean coastal states - Russia, Canada, Denmark/Greenland, the USA and Norway - have confirmed their continued commitment to the existing legal framework in the Arctic Ocean and to the orderly settlement of possible overlapping claims.
The Convention stipulates that a coastal state has sovereign rights on its continental shelf extending at least 200 nautical miles from the coastline, including the exclusive right to explore for and exploit its natural resources. The outer limit of the continental shelf is determined by criteria set out in the Convention. If the shelf stretches further out seawards than 200 nautical miles from its coastline, the coastal state can submit documentation supporting its claim to the Commission on the Limits of the Continental Shelf. It has provisions for overlapping claims as well.
Norway and Russia have submitted such documentation claiming areas beyond 200 nautical miles. Canada has until 2013 and Denmark until 2014, while the USA has yet to accede to UNCLOS.
The special Commission accepted March 2009 the Norwegian claim that our shelf stretches northwards beyond 200 nautical miles to around the 85th parallel. 550 kilometres from the North Pole. Extending Norway’s continental shelf, and responsibility for resource management, by an area about the size of the U.K. land area.
Norway is not laying claim to the North Pole. Russia is, and others may do so. But what some people feared would be a wild and confrontational scramble for resources is not happening. Arctic coastal states are submitting information and claims in accordance with established international law.
The prospects of increased activity in the Arctic Ocean will require stronger presence on the part of coastal states in order to exercise jurisdiction, sovereign rights and authority in a credible, consistent and predictable manner.
In addition, co-operation within a wider group of countries in the Arctic Council, the only circumpolar organization, is important. Here we are negotiating a legally binding agreement on search and rescue. The Council has furthermore undertaken comprehensive environmental and scientific studies on shipping in the Arctic, on oil and gas activities and ocean management. And on the global scene, the International Maritime Organisation, IMO, is developing a mandatory polar code.
The North-East Passage reduces sailing distance from Yokohama to Rotterdam by 40%. Not least for that reason, Japan, China and South Korea are now applying for permanent observer status in the Arctic Council, increasingly interested in what is going on in the High North and Arctic and wanting to take part.
Climate change will create an increasing number of climate refugees in the years ahead. Let me conclude my introductory remarks by asking you to consider the predicament of the polar bear on this slide as we start our discussions.