The vicious circle of the Arctic: Russia’s petroleum rush

Why should Russia leave the Arctic alone?

With the COP21 (Climate Conference of Paris 2015) approaching, many communities are hoping for a jurisprudential breakthrough in what could be mankind’s biggest challenge: battling climate change. Although a lot of people say “We Must Act Now”, it should be noted that the entire problem is not because of something we are not doing, but because of what we are: combusting carbon-based fossil fuels.

In order to avoid serious climatic catastrophes such as floods and droughts, the scientific community and policymakers have determined a global warming limit of 2 degrees celsius (Elzen & Meinshausen, 2005). To accomplish this goal, our economy should become less dependent on fossil fuels, while it should transit towards a sustainable energy system. In conclusion, we have to quit burning oil, gas and coals.

The technology for a renewable energy system exists (Lund & Mathiesen, 2009), but the economic incentives are still lacking. Although the current oil prices are staggering low, the profits of oil and gas production is enormous. For instance, the five biggest oil companies (Big Oil) have earned a combined total of 93 billion dollars in 2013 (American Progress, 2014).

It is without doubt that these companies and their supported institutions will want to continue these activities, and this could be disastrous. Of the current global oil reserves, only 20% could be combusted in order to stay underneath the two degrees limit. In other words, 80% of the oil reserves should stay where they are: under the ground (Mcglade & Ekins, 2015).

However, the current trends and events show no signs of this behavior. It even seems that countries and companies are trying to expand their reserves. This is because the valuation of oil companies partially consist of the Reserve-Replacement Ratio (RRR) (Osmundsen et al., 2006). A 100% RRR means that the amount of fossil fuels added to their reserves equals the production of one year.

Currently, this is primarily done through unconventional resources such as shales and tar sands (bitumen). But this type of oil/gas production is very costly and brings many uncertainties with respect to environmental risks. Therefore, countries and companies are keen on expanding their production to territories that still contain conventional resources, such as the North Pole. It is estimated that the area north of the Arctic Circle beholds 90 billion barrels of oil, 1,670 trillion cubic feet of natural gas and 44 billion barrels of natural gas liquids (USGS, 2008).

Canada, the United States, Denmark, Norway and Russia have claimed the North Pole. However, it is Russia that is most persistent and advanced in its claim. In 2001, Russia presented its claim to the United Nation that the Lomonosov Ridge belonged to Russia since this underwater mountain range was connected to the Siberian shelf (see figure 1). Although this claim was rejected, on the 6th of August 2007 Russia planted a titanium Russian flag on the seabed of the North Pole (see article image).

lomonosov_ridge_2_2

Figure 1: Map of the territories in the Arctic Region. 

Russia’s interest in the Arctic coincides with its foreign policy and it worsens its relationship with the West. Even after its highly disputed land grab in Ukraine, Vladimir Putin has once again declared the North Pole as Russia’s possession (Gutteridge, 2015).

Although it has never been a secret that Putin would like to convert the Arctic to a ‘resource base’ of Russia, the cruciality of the Arctic resources is rather new. For instance, the economy of Russia is highly dependent of the production of fossil fuels. Sixty percent of its export revenues are made up of the production of fossil fuels, while it encompasses 25 percent of the Gross Domestic Product (Oomes & Kalcheva, 2007). Furthermore, Russia has reestablished itself as a world power through its control of oil, gas and other minerals. This geopolitical power could be strengthened if the Arctic resources would be under their control.

It is because of this geopolitical and economic power that the West is trying to claim these territories as well. However, as it has already been said, these reserves should stay where they are. It is therefore of most importance that neither country will continue with these claims, expeditions and drilling activities. The exploitation of the region for fossil fuels will only make the existing rivalries more acute, while a vicious circle will arise since melting ice caps will result in newly recoverable fossil fuels.

Words: 744 incl. references and figures

References

90 Billion Barrels of Oil and 1,670 Trillion Cubic Feet of Natural Gas Assessed in the Arctic (7/23/2008 1:00:00 PM). (2008). Retrieved November 14, 2015, from http://www.usgs.gov/newsroom/article.asp?ID=1980#.VkeqLLxXWCQ

Elzen, M., & Meinshausen, M. (2005). Meeting the EU 2°C climate target: Global and regional emission implications. Climate Policy, 545-564.

Gutteridge, N. (2015). Vladimir Putin: Russia owns the NORTH POLE – and the UN needs to give it back to us! Retrieved November 14, 2015, from http://www.express.co.uk/news/world/596039/Vladimir-Putin-Russia-north-pole-Denmark-oil-UN

Lund, H., & Mathiesen, B. (2009). Energy system analysis of 100% renewable energy systems—The case of Denmark in years 2030 and 2050. Energy, 524-531.

Mcglade, C., & Ekins, P. (2015). The geographical distribution of fossil fuels unused when limiting global warming to 2 °C. Nature, 187-190.

Oomes, N., & Kalcheva, K. (2007). Diagnosing Dutch Disease: Does Russia Have the Symptoms? SSRN Electronic Journal SSRN Journal.

Osmundsen, P., Asche, F., Misund, B., & Mohn, K. (2006). Valuation of International Oil Companies. EJ The Energy Journal.

With Only $93 Billion in Profits, the Big Five Oil Companies Demand to Keep Tax Breaks. (2014). Retrieved November 14, 2015, from https://www.americanprogress.org/issues/green/news/2014/02/10/83879/with-only-93-billion-in-profits-the-big-five-oil-companies-demand-to-keep-tax-breaks/

Words: 744 incl. references and figures

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