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The Arctic land grab underway as the region opens up

A region rich in oil and gas has many suitors, each with rival claims to the icy north

The Arctic ice cap is melting, and as it does, potentially vast riches below are being uncovered. Shipping lanes once too icy to navigate are opening and could reshape global trade. Newly accessible waters are drawing hardy trawlers and their fishermen. Cruise ships now take well-heeled tourists into the once isolated frontier. But it is the Arctic's oil and gas potential that has spurred the Arctic littoral states to press their claims to the region.

The Arctic may hold around a quarter of the world's untapped oil and gas deposits: 80 billion barrels of recoverable oil and 1,670 trillion cubic feet of gas, according to a 2008 US Geological Survey study. Most of those oil- and gasfields are thought to lie in the Arctic's icy shallow waters. For the oil and gas industry, it is one of the final frontiers, fraught with dangers and technical problems but potentially very lucrative.

That economic potential, opening up because of the effects of global climate change in the Arctic, has fuelled a discussion in recent years over who will control the region. The race into the Arctic has led some analysts to recall previous frontier races - the Wild West or the Scramble for Africa. Then, too, explorers rushed into the frontier, chasing untold riches. Some talk of a looming hot war in the Arctic. The region has two potent ingredients for a good scrap: territory and resources. Wars have been fought for less.

Icy cooperation

Yet in the Arctic, cooperation is winning the day. Rather than fuelling conflict, the region's riches have pulled the Arctic nations together. When Russia sent a pair of submarines to plant its flag on the seabed at the North Pole in August 2007, a potential provocation that could have escalated tension, the move was widely dismissed by other Arctic nations. "This isn't the 15th century," Peter MacKay, Canada's foreign minister at the time, said. "You can't go around the world and just plant flags and say, 'We're claiming this territory'."

The eight Arctic nations - Russia, Canada, the US, Denmark (via Greenland and the Faroe Islands), Norway, Iceland, Sweden and Finland - have come together under several international organisations that provide a legal framework for cooperation. The most contentious issue in the Arctic is how to draw up the region's borders. To do so, the Arctic countries have largely committed to using the United Nations Convention on the Law of the Sea (Unclos) treaty to settle its conflicting territorial claims.

Under Unclos, each country has exclusive economic rights, including the right to drill for oil and gas, in waters up to 200 nautical miles from its coastline. These borders are largely settled, though there are disputed island claims that complicate matters. However, a country can extend its territorial claim further afield, up to 350 nautical miles, by showing that its continental shelf stretches beyond 200 nautical miles. Most Arctic nations have claimed such extensions. But figuring out precisely where certain geological structures end and begin can be a tricky business. Compounding the problem is the region's sketchy cartography.

The result is that Unclos has been left with a dizzying array of overlapping territorial claims to disentangle. The Lomonosov Ridge, which is thought to hold significant oil deposits, comes with the most controversy. A section of the 1,700 km long underwater ridge that sits atop the North Pole is claimed as sovereign continental shelf by Russia, Canada and Greenland. The US, on the other hand, has argued that Lomonosov is an independent geological feature beyond the sovereign claim of any nation. Unclos will rely on soil samples, mapping and other data from the area submitted by the countries themselves to try to determine the rightful claim. The Russian government says the point of its trip to the North Pole seabed was not to stake a claim to territory but to gather soil samples and other geological data to bolster its case under Unclos.

Staking claims

Contested areas of the Arctic are scattered around the region. Canada and the US have a long-standing border dispute over a large section of the Beaufort Sea. Canada and Denmark have never settled their disputed claims to the tiny Hans Island, a barren and unpopulated rock in the Kennedy Channel, which separates Ellesmere Island in Canada's north and Greenland.

The countries have engaged in tit-for-tat flag plantings on the rocky outcropping for years. Norway has put forward claims to exclusive economic zone and continental shelf territory six times the size of the Norwegian mainland, including overlapping claims with Iceland, Denmark and Russia. Every Arctic nation has some sort of competing territorial claim with Russia.

For now those disputes are being sorted out not by generals armed with battle plans, but lawyers brandishing geological surveys and soil samples. It will take many years for the process to run its course, though. In the meantime, many disputes could be settled in bilateral negotiations, particularly in those areas where countries are keen to start oil and gas exploration. Russia and Norway finally reached a deal over their disputed maritime border - and the seabed - in the Barents Sea in 2010.

The Arctic Council, an inter-governmental body, has proved to be another effective forum for cooperation on Arctic issues. It was founded in 1996 and has become an increasingly robust international bureaucracy, developing joint initiatives on a range of environmental, social and commercial activities, from protecting indigenous communities to oil-spill response.

Cooperation, though, has its limits. An agreement similar to the 1959 Antarctic Treaty is not in the cards. Before that treaty, a number of countries had made overlapping claims to parts of Antarctica, similar to today's situation in the Arctic. But the treaty set aside those claims and established a shared governance structure for the region, while also discouraging military and industrial activity in favour of scientific research. In the North, countries are pursuing strategies clearly aimed at maximising their slice of the Arctic.

Russia, more than any other country, has pinned its fortunes on developing the Arctic and sees itself as an Arctic power. "For Russia, the Arctic is our home and our future; we are by far the largest Arctic nation and for this reason alone we bear a special responsibility for the state of affairs in the Arctic," Anton Vasiliev, Russia's most senior Arctic official, said recently.

Energy is at the centre of Russia's Arctic strategy. Nearly half the Arctic's oil and gas resources are thought to lie in Russian territory. National oil companies Rosneft and Gazprom have signed joint exploration deals with ExxonMobil, Statoil and BP. The government is also keen to push ahead with gas development in the Arctic. The government has broken Gazprom's long-standing gas export monopoly to allow Novatek and France's Total to move ahead with the Yamal liquefied natural gas (LNG) project. Built on the Yamal peninsula's permafrost and under constant threat from ice floes, it is one of the most technically complex LNG projects in the world. Newly passable Arctic sea routes are crucial to getting that gas to lucrative Asian markets. 

Canada takes the reins

Under prime minister Stephen Harper, Canada has taken a far more aggressive line on its sovereignty over the Arctic. In December 2013, the Harper government made Canada's claim to the North Pole official in claiming the Lomonosov Ridge at Unclos. "Canada has a choice when it comes to defending our sovereignty over the Arctic: either we use it or we lose it," Harper said early in his term. "And make no mistake, this government intends to use it."

Despite Harper's hard talk, action has been slow to follow. After pledging when he took office to build three large icebreakers to help Canada operate more effectively in the Arctic, ambitions have been scaled back. Just one vessel has been ordered and it is still years from delivery. Harper also pledged to build a naval base at Canada's only Arctic deep-water port in Nanisivik. Nearly seven years after the announcement little has come of the plan. Nor has the country moved aggressively to explore its Arctic oil and gas resources. Chevron, Statoil and Repsol have carried out some initial exploration activity in the Beaufort Sea, but no drilling has been planned.

The US is an outlier in the Arctic. While other nations have moved aggressively to claim territory and bolster their capabilities in the Arctic, the US has been left behind. That is at least partly because staunch opposition from conservative congressional Republicans to Unclos has prevented the US from signing onto the treaty. Agreeing to the treaty, they argue, would be an unacceptable sacrifice of US sovereignty - along the lines implied by former president Ronald Reagan, who called it a "dramatic step towards world government". In practice, successive US administrations have seemed to largely accept the Unclos framework for settling territorial disputes in the Arctic. The government has spent millions of dollars to prove that its continental shelf extends north of Alaska beyond the 200-mile exclusive economic zone. And as other countries have stepped up activity to strengthen their Arctic claims with Unclos, opposition in Congress has softened. But if the US does not sign on to the treaty it risks being left out of the process as the Arctic's borders are drawn up. The US has a long history of Arctic oil and gas activity. Alaska's North Slope has been a prolific oil province for decades and a major supplier to the lower-48 states. The government has also handed out a number of exploration licences in the Arctic Beaufort and Chukchi seas. Shell's difficult experience in the Arctic, though, has slowed momentum.

Outside actors are also shaping the future of the Arctic. China, not wanting to be left out of the action, has signed a major oil exploration deal with Iceland and is keen to play a role in new Arctic shipping routes. Non-Arctic countries are also keen to get a foot in the door at the Arctic Council. China, along with a number of others such as India, France, Germany, the UK, South Korea and Japan have joined as observers.

Non-governmental organisations are also getting involved in the region. The global environmental movement has sought to prevent oil and gas development and other industrial activities in the Arctic, arguing that the risks to the environment are too high. None has been as provocative as Greenpeace. The group has hounded Shell over its Arctic exploration plans and taken direct action against drilling activities in Greenland and Russia. In Russia, 30 Greenpeace activists were arrested and held for weeks after attempting to occupy the Gazprom-operated Prirazlomnaya platform in the Kara Sea. 

Figure 1: Arctic boundary claims
Figure 1: Arctic boundary claims

What is Unclos?

The United Nations Convention on the Law of the Sea (Unclos) is an international treaty governing the world's oceans and its resources.

Unclos was opened for signing in 1982 and came into force in 1994. It has been ratified by more than 160 UN member states and is the pre-eminent international rulemaking body for issues related to the sea and maritime borders. It covers a wide range of economic, environmental, scientific and commercial activities related to the sea. The UN secretary general oversees Unclos.

Key terms of the treaty include:

- Coastal states may exercise complete sovereignty over seas extending 12 nautical miles from its shores;
- Coastal states have the right to an exclusive economic zone (EEZ) extending 200 nautical miles from its shores, where it can develop natural resources, carry out economic activity and regulate scientific research and environment protection;
- Coastal states have similar economic rights over their continental shelf. The continental shelf can extend as far as 350 nautical miles from its shore if it is determined to be a natural prolongation of the state's sovereign territory;
- The rules for EEZs and continental shelf also apply to islands, but not rocks that could not sustain human habitation or economic life of their own; and
- Disputes can be submitted to the International Tribunal for the Law of the Sea, the International Court of Justice or to arbitration.

What is the Arctic Council?

The Arctic Council is a high-level inter-governmental forum established by the 1996 Ottawa Declaration to promote cooperation and coordination among Arctic states.

It is a voluntary organisation and its decrees do not carry the weight of international law, but it has become a key body for joint decision-making on issues related to the Arctic.

The Arctic Council is comprised of member states, permanent participants and observers.

- Member states are the founding Arctic nations: Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden and the US;
- Permanent participants include indigenous groups such as the Inuit Circumpolar Council, the Arctic Athabaskan Council and the Russian Association of Indigenous Peoples of the North; and
- Observers do not take part in decision-making, but they participate in Arctic council meetings. They include non-Arctic countries such as China, India, Germany, Japan and the UK, as well as other international non-governmental groups such as the UN Development Programme and WWF.

The Arctic Council's chairmanship rotates among member states every two years. Canada is the current chair, and the US will take over in 2015. Meetings with senior Arctic officials from member countries are held every six months and are hosted in the chair's country.

Initially focused on scientific and environmental issues, the Arctic Council has increasingly taken on security, geopolitical and economic matters.

It has carried out detailed studies on oil and gas and shipping activities in the Arctic and developed some guidelines and rules to regulate these activities.

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