Bordered by five states — Canada, Denmark, Norway, Russia and the United States (US) — the Arctic Region is a resource bonanza, it is rich in both proven and unproven resources. It is estimated that the Arctic Region holds around 22% of the world’s undiscovered energy resources, much of which lies below melting sea ice, making the region a potential flashpoint for conflicting offshore claims. Environmental changes like melting sea ice, may make it easier to exploit these resources and raise tensions in the Far North. But key questions remain. What are the risks and challenges associated with the development of new energy resources in the Arctic and how will the Western sanctions against Russia affect the Arctic arms race?
Arctic energy exploitation has been ongoing since the early 1920s. And major resource extraction dates back even earlier, to the Klondike Gold Rush in 19th-century Alaska and 19th century whaling. Today, the US Geological Survey estimates that the Arctic region accounts for 13% of the total undiscovered oil and 30% of the world’s undiscovered natural gas.
Around 84% of these resources are located offshore in the Arctic Ocean, making it a region of strategic importance for Arctic states and a potential resource battleground.
Within the Arctic, energy reserves are not distributed equally among Arctic states. Russia, for instance, accounts for around eighty percent of its remaining offshore oil and gas reserves in the Arctic Ocean, with the American resources constituting around 33% and 18% of the total recoverable offshore oil and gas for the whole region. The economic development of energy resources is also unequal and exacerbated by unequal production and exploitation. Norway ranks first in terms of gas production, despite having low access to offshore gas resources. Yet despite these discrepancies, this large amount of estimated resources has attracted the attention of various actors and competitors, from coastal and external states to private and lobbying companies. For instance, the Russian Federation has lately proposed opening its Arctic shelf to private energy companies, and intensified modernisation programmes for Arctic energy development. Bringing about concerns for a race to develop Arctic energy resources, Russia has pushed for new trade and shipping routes, established partnerships with external actors such as China and Saudi Arabia, and developing new pipelines, notably the ambitious Arctic Liquid Natural Gas (LNG) 2 project. Despite the recent international sanctions on Russia and the halt in construction on the pipeline, years of increasing investments and multinational cooperation with other countries such as France, Korea and Japan, signal that the pipeline may yet have a future, albeit one that straddles geopolitical fault lines. Cancelled since the start of the war in Ukraine, deals like the LNG 2 project nonetheless demonstrate how Russia has added new players to the gamble for Arctic.
The arrival of new actors in the region, drawn by energy resources, increases the risks of conflict, as well as encroachment of new shipping routes over Exclusive Economic Zones (EEZs). Arctic nations have various, competing claims over the extent of their EEZs over the Arctic Ocean, notably Russia. Despite international agreements such as the United Nations Convention on the Law of the Sea, Russia has frequently lodged submissions to extend its continental shelf next to Danish and Canadian EEZs, striving for access to extended rights of energy resources exploitation. As much as these claims do not indicate future conflicts over borders and continental shelves, they still illustrate how the race for Arctic energy resources institutionalises Arctic maritime security at the international legal level.
Furthermore, private and state-owned energy companies are also increasingly eyeing towards the Arctic for hydrocarbon drilling and exploitation like the British multinational oil and gas company Shell plc, or Russia’s semi-private and semi state-owned Gazprom and Rosneft. As the degree of state involvement in these companies varies, it indicates a divergence in policy frameworks for energy exploitation, and hence in the applicability of international regulations to private corporations. The sanctions against Russian energy giants Rosneft and Gazprom will surely tip the edge of the Arctic race, as Russian companies risk losing the benefits of their exploitation and production, given their dependence on Western technologies. Besides, Russia has seen its export markets shrink since the start of the war. Yet despite such challenges, Russia is unlikely to halt its Arctic developments. As Russia President Vladimir Putin had already stated in 2019, “sanctions have not stopped Russian Arctic hydrocarbons development.” And while the impact of the current sanctions on Russia is unclear and has largely avoided targeting the Russian energy sector, it remains that Russia will turn towards Asian markets, and increase its military presence in the North.
Tension between increasing availability and exploitability of offshore energy resources as a result of global warming, and concerns about the environmental impact of resource exploitation is another fault line in the Arctic. The emission of greenhouse gases has doubled in the last two decades, leading to increasing temperatures, rising sea level and melting ice. Companies such as Shell have considered increasing offshore drilling during summer, as ice melting continues opening new possibilities for oil extraction. However, critics argue hat this may risk further endangering maritime biodiversity, including the particular fauna and flora endemic to the region. What is more, the consequences of oil spills would be tremendous and further risk endangering human security in the whole Northern Pole. To mitigate the risks posed to the environment, some border states have launched initiatives to preserve Arctic biodiversity. The US has notably passed under Congress voting the Alaska National Interest Lands Conservation Act (1960), establishing the Arctic National Wildlife Refuge (ANWR). Tasked with protecting Arctic wilderness on the Alaskan territory and territorial waters, the ANWR is nonetheless subject to frequent Congress votings to pass legislations authorising the opening of some areas of the refuge to drilling and exploitation. Hence, resource exploitation risks taking precedence over environmental issues. The multiplication of transit routes and resources exploitation may well degrade the safety of sea routes, with frequent glacier melt endangering maritime circulation. Coupled with climate change, this concern for the preservation of Arctic biodiversity indicates well some challenges for Arctic environmental security at the maritime level. Indeed, the more fuels are burned for drilling resources, the more greenhouse gases are emitted. And the more such gases are created, the more glaciers melt, opening new routes and opportunities for offshore drilling. Further complicating the situation is that further Western sanctions on Russia will also risk jeopardising any environmental framework that could have existed between Arctic states.
The development and exploitation of energy resources in the Arctic present economic, environmental and human challenges for Arctic maritime security. The involvement of multiple actors and powers in resources drilling and exploitation, not yet heralding military or border conflicts, nonetheless risks endangering coastal states’ economic and environmental security, as competition is sure to take its toll on environmental cooperation. Western sanctions on Russia will speed the Arctic energy race up by closing Western markets to Russian resources and forcing Russia to turn towards alternative markets, hence bringing even more spotlight to the Arctic region. The multiplication of actors and EEZ claims risk increasing as Russia will strive to develop its access to offshore resources to satisfy new markets. The Arctic race may now lead to tensions over energy resources, amid renewed concerns over climate change. The Western sanctions on Russia will need to be even more focused to counter any Russian Arctic assertive endeavour.
Alice Staikowski
Masters student in International Peace and Security at King’s College London’s Department of War Studies, she specialises in Russian security and defence studies. Her main areas of interest are NATO-Russia relations, Russian security policy, energy security and the Baltic Sea Region.