Drilling in the Barents Sea Could Lead to Demanding Cooperation Between Norway and Russia
The entire energy world will turn its eyes to the north if large cross-border discoveries are made here, says Kjell Giæver, Director of Petro Arctic.
This summer, there will be a lot of oil and gas exploration in both the Norwegian and Russian north. In the Norwegian part of the Barents Sea, there is a field on the easternmost border called Stangnestind, which is located right on the demarcation line between Norway and Russia.
Aker BP previously decided not to drill wells in this field, but has now altered its decision and will be drilling this year. The company is primarily drilling for gas and the reservoir it believes to be there, is believed to extend into the Russian side.
According to the Treaty between Norway and the Russian Federation concerning Maritime Delimitation and Cooperation in the Barents Sea and the Arctic Ocean, discoveries with reservoirs that extend into both the Norwegian and the Russian zone should be jointly developed and exploited. If Aker BP were to find something there, the clauses of the Treaty on how to handle such deposits will apply. Attachment 2 of the Treaty could provide many opportunities for business on both sides of the border.
Not without complications
Kjell Giæver is Director of Petro Arctic. He says that if a significant discovery were to be made in the Stangnestind area, this would have the potential of becoming one of the largest foreign policy issues in the High North.
"The entire energy world will turn its eyes to the north if large cross-border discoveries are made here. As for potential ripple effects, it is not without complications. Due to the crisis in Ukraine, a part of the oil and gas industry is subject to sanctions against Russia. This means that business opportunities in this area are very demanding between Norway and Russia, and this will create difficulties".
Giæver says it is rather obvious that these remote areas automatically will generate significant activity in East and West Finnmark, as well as North-West Russia.
"If Russia makes discoveries in this area, or further north in the northern Barents Sea, it will be inconceivable for Norway not to at least investigate how much of the deposits that are on the Norwegian side. This cannot be done without drilling appraisal wells. A discovery on the Russian side will also mean exploratory drilling, and drilling on the Norwegian side. And then one can only imagine what this would mean politically in Norway, as the northern Barents Sea is one of the most contested resource areas in Norway", Giæver says and adds:
"This is exciting, as most of Norway's remaining oil and gas resources are located in these areas. If it turns out that natural gas will be one of the ways forward for pure hydrogen which, in turn, will solve the world's climate challenges, this area will be no less relevant."
Due to the crisis in Ukraine, a part of the oil and gas industry is subject to sanctions against Russia
Oddgeir Danielsen is the Regional Director of the Norwegian-Russian Chamber of Commerce (NRCC). He says that a joint development project would bring many opportunities.
What could this mean for Norwegian-Russian cooperation?
"The agreement on the demarcation line in the Barents Sea has been mentioned as one of the largest achievements within Norwegian-Russian cooperation, as well as within the Barents cooperation. Obviously, a joint project and successful development of a hydrocarbon field located on both sides of the border would be an even greater achievement", Danielsen says and adds:
"A joint development project in such a field as this would open a lot of opportunities for the industry and service providers for the oil and gas sector in the region. Both Russian and Norwegian stakeholders from the business community and others would thus be able to be active in this and thus creating activities and added value for the region."
The Ministry is not negative
State Secretary Tony Tiller from the Norwegian Ministry of Petroleum and Energy says in an e-mail to High North News:
"The drilling now about to commence is part of the working program that the rights holders took on when this exploration license was granted. It is positive that exploratory drilling now takes place, so that there may be more clarity about potential resources in the area. If any cross-border deposits are found and prove to be financially viable and worth exploiting, they can be developed and operated in adherence to Norwegian regulations, and in keeping with the demarcation agreement with Russia".