Russia and Arctic Shelf: Let’s wait and see, let’s wait and get

Last Tuesday, on August 4, Russia submitted a revised application to the United Nations seeking recognition of its sovereign rights to the Artic Shelf, the territory of which is currently not within the Russian exclusive economic zone, in over 350 nautical miles from the shore. Actually, this refers to delimitation of the Arctic Ocean central part. In late July 2015, in Russia, on the Navy Day, a new Maritime Doctrine was adopted. The Maritime Doctrine of the Russian Federation studies military and economic problems related to the sea and resources of Russia. The issue of resources is prevailing over others covered by the document. In particular, the Maritime Doctrine says: “The prospect of depletion of hydrocarbon reserves and other mineral resources on the mainland prejudges reorientation exploration and production of mineral resources on the continental shelf, and in the future and the ocean floor and slopes of the ocean.”  In this light, the National Maritime Policy for the Arctic regional direction is determined by the particular importance because of the wealth of the exclusive economic zone and continental shelf of the Russian Federation. Geological surveys have revealed that the two-third of all the resources of the entire shelf, not just the Russian arctic shelf, is concentrated in the Barents, Pechora and Kara seas.  Russia’s application to the United Nations for the expansion of its Arctic Shelf border is in harmony with the Arctic resources-related policy of Russia that is defined in its Maritime Doctrine.

Unlike the present-day Russia, the Soviet Union proceeded from the need to divide the Arctic into sectors. Yet on April 15 1926, the Presidium of the USSR Central Executive Committee (CEC) announced all the areas and islands located in the Arctic Ocean, which are not the territories of any third countries recognized by the USSR Government, as the territory of the USSR. The geographic maps of the Soviet Union demonstrated the division of the Artic into sectors. The entire artic waters adjacent to the continental territory of the USSR were described as the territory of the Soviet Union. Borders were stretching from the Soviet Union’s border with Norway in the west and from the median line of the Bering Strait in the east towards the North Pole. Sometimes, the North Pole was marked with a red flag to make it more evident that the area belonged to the USSR.  However, in 1997, Russia ratified the United Nations Convention on the Sea Law dating back to 1982, and, actually annulled its self-proclaimed sovereignty over the Arctic territory and waters.

Actually, Russia recognized such ideas as: “internal waters,” “territorial waters” (12 nautical miles), “contiguous zone” (12 nautical miles), “exclusive economic zones” (EEZ – 200 nautical miles), “continental shelf,” and “open sea.”

Guided with the Convention of 1982 Russia insists on its right to divide the Arctic, but it is not ready to refuse from the principle of sectoral division either. It keeps using that principle as a comfortable method for instance against “internalization” of the Northern Sea Route or when dividing the zones of environmental liability, providing navigation services etc.  

For the time being, in conformity with the Convention of 1982, all the countries bordering the Arctic Ocean, including Russia, have expanded their jurisdiction over the Arctic Shelf within their exclusive economic zone in the Arctic Ocean extending 200 nautical miles. However, under Article 76 of the above Convention, “The continental shelf of a coastal State comprises the seabed and subsoil of the submarine areas that extend beyond its territorial sea throughout the natural prolongation of its land territory to the outer edge of the continental margin.” Such definition affords ground to the countries bordering the Arctic Ocean – Russia, Canada, and Denmark that has sovereignty over Greenland – to claim that the Lomonosov Ridge in the Arctic Ocean is part of their continental platforms (shelf). After years of research, Russia have applied for additional territories in the area of not only the Lomonosov Ridge, but also Mendeleev-Alpha Rise  - two big geological structures. 

In 2001, Russia sent its first official application to the United Nations Commission on the Limits of the Continental Shelf seeking an expanded outer limit of the continental shelf, but in 2002, the Committee requested additional research. In 2007, Russia again made claims for the area.  An expedition on a mini submarine deposited a Russian flag on the seabed at the North Pole. After that demonstrative step, Russia conducted hydrographical activities to receive proofs, grounds for its claims. Denmark and Canada did the same.  The precedent of 2009, when the UN Commission satisfied Norway’s claim for the Arctic Shelf in the other part of the Arctic Ocean, became an impetus for the other countries.

UN anticipated Russia to make a new claim. The Arctic Council anticipated and prepared for it too. However, earlier on December 15 2014, the UN Commission on the Limits of the Continental Shelf received the application from Denmark. With its autonomous region of Greenland, Demark claimed its right to the 895 sq. m area of the shelf that extended over the entire Lomonosov Ridge and bumped into the Russian EEZ extending 200 nautical miles.  It is evident that Moscow was informed of Denmark’s claims and decided to claim the same area. Russia’s application site was even wider - about 1.2 million sq. m.  Denmark representatives notified the Commission beforehand that they anticipated return claims from Russia and Canada, which will create a basis for negotiations.  Canada is expected to apply to the Commission for the disputable area this year or at least next year. In view of its heavy workload, the Commission is likely to study the claims for 12-20 years. That is why, international talks on division of the Arctic waters may even exceed the above term. The Russian Foreign Ministry has already declared that Russia is ready for talks.

The Ministry supposes the talks with Denmark may take 10-15 years. Similar talks of the USSR/Russia on the maritime boundary delimitation with Norway took 40 years and resulted in an agreement in 2010. The international talks on the disputable territories may start yet before the verdict of the UN Commission.  Therefore, Denmark with its steep demands counts that in the course of the negotiations Russia will reduce the area of its application site. Even minimal concessions by Russia may become a success for the Danish diplomacy. 

It is obvious that Denmark and Canada will request United States’ support to exert more political pressure on Russia. In case possible negotiations between the parties are terminated before reaching an agreement, the dispute will be settled by the UN International Court of Justice.  

To assess what is taking place around the claims of Denmark and Russia for the expanded outer-limit of the continental shelf, one should realize that the given area is underexplored. Nothing is known about the mineral resources in the area. The permanent ice and lack of safe and efficient technologies to explore the minerals in the given area make it unpromising for exploration, much less for mining.  However, this is about delimitation of the last free maritime territories on the Earth amid certain political nervousness caused by the growing activity in the Arctic after 2007.

It has been repeatedly forecasted over the last years that the climate change and melting of Arctic ice will create favorable conditions for sailing and recovery of mineral resources in the Arctic Shelf. Such forecasts are too optimistic. First, the climate change in the Arctic is nonlinear. For instance, this summer there was no warm day in Murmansk and Arkhangelsk. It was as cold there as it is usually in Naryan-Mar and Norilsk. In addition, general warming in the Arctic does not preclude cold winters when sailing and activity in the Arctic is impossible.  So far, the climate in the Russian sector of the Arctic is relatively favorable for oil and gas recovery only in the Barents Sea.

Besides, Russia no longer has overrated expectations from the Arctic Shelf. As global prices for energy resources keep falling, mining in the Arctic Shelf appears to be unprofitable. The project of the Shtokman gas condensate deposit in the Barents Sea has been postponed for indefinite period.  The “shale revolution” made Russia’s project of the Arctic liquefied natural gas (LNG) export to U.S. impossible.  At present, Russia’s only operating oil platform there is the Prirazlomnoye field (operated by GazpromNeft). Gazprom started producing oil from the Prirazlomnoye field in December 2013. Since then, the company has recovered 4.3 million barrels of oil for about $215 million in today’s prices. It is quite good a result. However, the project’s opponents say the Prirazlomnoye field is not profitable, as the oil price is $60 per barrel. Apparently, the Prirazlomnoye field remains a research and development facility for the Russian oilmen working in the shelf.

It has been affirmed that Rosneft is postponing its plans to launch drilling activities in the Arctic Shelf.  Without cooperation with ExxonMobil (U.S.), Rosneft is not ready to implement its project in the Arctic. Nevertheless, Statoil (Norway) continues cooperating with Rosneft in exploration operations on the Perseevsky license block in the Barents Sea, despite the policy of sanctions against Russia. This demonstrated the strategic interest in the oil recovery in the Arctic shelf amid current market conditions. It is evident that Russia’s claim for expanded outer limit of the continental shelf is of strategic nature.  It was planned yet a decade ago, and the plans must be implemented. Therefore, the discussion of the issue will take long too.  In this light, the market conditions pale into insignificance and there will be no strife either.  Russia’s application to the UN means: let’s wait and see, let’s wait and get.

EADaily Analysis