Geopolitics of the Arctic

Geopolitics of the Arctic

José Luis Lezama

El Colegio de México

jlezama@colmex.mx

The Russian government seems eager to show its response capability to subdue those who challenge their authority and threaten their interests, especially if their opponents do not have the political, military or economic strength of their developed industrial world counterparts, whose civilized democracy they aspire to imitate in order to transcend someday the condition of savage capitalism prevailing in Russia after the collapse of the Soviet regimen.

In 2002 it did not hesitate to sacrifice around 130 of the 850 hostages at the Duvrovka Theater in Moscow, which was taken by a terrorist commando that demanded the withdrawal of Russian troops from Chechenia. In 2006 and 2009 Russia left Ukraine without fuel in the middle of a severe winter to exert pressure in the dispute for the high prices of gas which it sells to this country and the use of the Ucrainian gas pipelines, which are necessary to distribute gas from Russia to Europe.

Last September the Russian government took by storm the Arctic Sunrise, iconic ship of peaceful protest from Greenpeace against the oil drilling carried out by Russia and other countries in the fragile ecosystems of the Arctic. Charges made to keep prisoners the so called Arctic 30 are disproportionate and are a testimony of theRussian Style of conflict resolution: first piracy and now hooliganism, both with penalties of over 7 years in prison.

For Russia, the resources of the Arctic are crucial in their political and economic aspirations. Without the oil that is kept there their production would decrease dramatically. Currently Russia produces 10 million barrels a day; the worldwide production is 89 million barrels. Without the Arctic, Russia’s production would descend to 1 million barrels a day by 2020.

Russia prominence in terms of gas in the world and its oil policy in general face a serious threat that comes from the drastic changes that are happening in the worldwide energy geopolitics. Russia bet on large projects based on a misinterpretation of the evolution of the market and technology. For example, the exploitation of the world’s largest gas reserves, known as Shtokman Field, in which the state company Gazprom invested 20 billion dollars, and partnered with western oil companies in order to benefit from the foreign technology it does not possess, was intended to satisfy the increasing demand of gas in the United States.

The emergence into the scene of U.S. gas through the so called Shale Gas Revolution, which has flooded the world market with physical and virtual gas, tore down Russian expectations. The United States no longer needs Russian gas and, many of the European countries, which constitute the main source of income of the Russian monopoly of gas exports at the hand of Gazprom, reduced  their imports due to various factors, which aside from the existence of Shale Gas in their own territories, include: a lower consumption due to the economic crisis, the substitution of gas for renewable energy, a greater integration of the European gas market, the lawsuits initiated by the European Union against Gazprom for monopolist practices, the entry into Europe of liquified gas from Qatar, Canada and Australia, and Gazprom’s own policies that have punished Europe with high prices, especially preying on former members or allies of the former Soviet Union.

The Shale Gas Revolution has repositioned the U.S. in the world market. Not only because of the large volumes of gas released by the fracturing of rocks underground, but also because they have the technology to do it, which they control and sell to countries that are in need or anxious to access their reserves.

Last year (2012), the partners of Gazprom in Shtokman in the Arctic, abandoned the Project because it is economically and technologically unfeasible. The American Shale Gas has made the international prices drop, removing the profitability of the Russian projects of exploiting its vast Arctic reserves.            

Artic hydrocarbons temporarily rest in peace, not so much because of protests from environmentalists and scientists concerned with the damage to these ecosystems which are essential to planetary life, but because of its unaffordability and technological difficulty. Paradoxically, Shale Gas, another great environmental predator and doubtful ally of the ecological cause, seems to have come to the rescue of the Arctic, delaying for the time being the exploitation of its energy resources.

In the Arctic, nevertheless, there are vast economic temptations: thanks to global warming, a promising maritime route for commerce and tourism has opened, and the underground seems full of gold, diamond, iron, thorium and other minerals of ample demand by the microelectronic industry.

The market will end up reducing the Arctic to trinkets, raw material, waste, to be consumed superfluously to feed, not humans, but the economy itself and those who command it, if there is an absence of a truly global citizen’s consciousness and defense of its fragile and crucial ecosystems. 

www.joseluislezama.com