The Arctic This Week Take Five: Week of April 9, 2018

The UK’s Evolving Approach

On April 4, the United Kingdom launched its revised Arctic policy document “Beyond the Ice.” The document lays out the government’s approach to its future Arctic engagement. It focuses on three main pillars: maintaining UK’s global influence, protecting the people and environment of the Arctic, and facilitating regional prosperity. In order to accomplish these pillars, the UK will increase its focus more on improving cooperation, research, pollution reduction, defense investment, trade and infrastructure. The UK hopes that an increased investment will help it to retain its status as one of the most active and influential non-Arctic countries (Arctic.ru, GOV.UK, The NERC Arctic Office).

Energy Goes East

Take 1: The UK has developed a strategy that it hopes will keep it invested and engaged in the Arctic region, yet it faces many new and emerging competitors. Many non-Arctic countries like China see the potential economic opportunities that exist, and are also increasing their investments in the region. At the same time, Arctic bordering countries like Russia are equally trying to stake their claim to the region’s vast mineral wealth. Unless new tools for cooperation are developed, the increasing levels of competition can result in rising tensions and unintentional misunderstandings. The fact that the UK highlights cooperation as a part of one of its pillars is a good step in recognizing the potential future challenges.

At the end of March, the first ever shipment of Russian Arctic LNG was delivered to India via the Northern Sea Route. More shipments from Russia’s LNG plant in Yamal are expected in the future, and are in line with Novatek’s goal to expand its supply geographically and increase its presence in key Asian markets. The shipload to India occurred only a couple months after Yamal started producing LNG in December 2017, reaching a million tons of liquefied natural gas shipments at the beginning of March (The Independent Barents Observer, RT, The Maritime Executive, Offshore Energy).

Take 2: The Asian market is considered to be of major importance for the energy and security sector in Russia. The Russian invasion of Crimea in 2014 elicited the imposition of sanctions from the West. The sanctions restrict Western investment into the Russian energy sector, limit Russia’s access to equipment and technology for unconventional exploration and production, and halt the opportunity for Russian companies to borrow from foreign sources. As a result, Russia has started to diversify its international gas supplies by turning to Asian markets. It has created a remarkable opportunity for Asian investors to open joint ventures in the Russian energy sector. Asian investors provide cost-effective deals and don’t interfere in Russian foreign policy matters. Shipments of LNG to India are particularly desirable, as the International Energy Agency has predicted that India will account for almost 30 percent of global energy demand growth, and 11 percent of global energy use by 2040. Energy deals with India help Russia bypass the West’s sanctions, decreasing its security vulnerability (International Energy Agency).

High-Speed Arctic

The Norwegian government has confirmed that it will contribute 1 billion NOK ($127.8 million) to make broadband communications available in the Arctic. The new project will be developed by Space Norway AS, and involve two satellites that will provide 24 hours a day coverage in the area north of 65 degrees N latitude. The satellites are expected to be operational in 2022 and will have an expected lifespan of 15 years (The Independent Barents Observer).

Take 3: The High North is Norway’s most important strategic area of responsibility (Government.no). It is therefore quite natural that the country wants to establish a solid communications system in the region. As of now, two optical fiber cables exist between Svalbard and mainland Norway, and several interregional tele- and optical fiber links are found along the coast of northern Norway (Space Norway, The Independent Barents Observer). However, the reality is that broadband coverage in the High North is poor and unstable. Fast, stable Internet is absolutely necessary to anyone operating in the area. It is for example an important requirement for the Armed Forces working in Norwegian waters. Poor coverage on the other hand, makes it harder for authorities to conduct search and rescue and oil spill protection operations. It is surprising that action hasn’t been taken sooner to create the fast, reliable communication network needed in the north, especially when it is claimed to be the number one strategic priority area.

Autonomous Ships are on the Move

On April 6, the State Atomic Energy Corporation of the Russian Federation (Rosatom) and the Federal All-Russian Research Institute of Experimental Physics (VNIIEF) announced that they are developing a digital model of an unmanned Arctic vessel that will improve the efficiency of maritime traffic along the Northern Sea route. Without having to think about providing space for crew-members, ships can be constructed with significant improvements on the hull of the ships. In addition, a cargo hold can be installed in the bow, and the dimensions of the vessels can be optimized in a more favorable way. The new ships will be equipped with computer and digital monitoring equipment capable of tracking the ship’s movements in the water (Maritime Herald, The Independent Barents Observer).

Take 4: Unmanned vessels definitely have the potential to become the future of Arctic shipping. They are safer and more cost-effective than vessels operated by crew-members. Today, about 60-80% of all incidents on ships are caused by human mistakes, either in navigation or by other reasons. The new ships can help save a total of $1.5 million a day in navigational errors, in addition to economic savings in salary and worker benefits. Autonomous vessels can be key in future development in the region due to their high potential in improving economic savings and reducing risk (Arctic.ru).

Russia’s Resource Gold

On April 2, the Russian Minister of Natural Resources Sergey Donskoy announced that a Chinese rig (Nanhai VII) discovered one of Russia’s largest reserves of natural gas while drilling in Arctic waters during the summer of 2017. The field is located in the Kara Sea and holds as much as 1,9 trillion cubic meters of gas. That is 850 million cubic meters more than earlier estimates. It is still far less than the Shtokman field in the Barents Sea with 3,9 trillion cubic meters of gas, but it still makes it one of the biggest hydrocarbon discoveries in Russian Arctic waters (The Independent Barents Observer).

Take 5: The new discovery of gas in the Kara Sea adds to Russia’s fossil fuel empire. Russia already holds the largest amount of natural gas reserves in the world, and the big find of natural gas last summer will make sure that Russia stays on top for the foreseeable future. This comes at a time when natural gas production in the country amounted to 691 billion cubic meters in 2017, the highest volume in 17 years. Exports were a record 224 billion cubic meters. The country had seen an increase in investments despite complicated external challenges (Independent Barents Observer, U.S. Energy Information Administration).