A future scenario developed by North Energy depicts the Barents Sea densely covered with subsea pipelines and oil installations in year 2030. According to the company, the region has the potential to fully please oil-hungry Norway over the next decades.
Company Board Chairman Johan Petter Barlindhaug says to BarentsObserver that Norway’s oil and gas production can be boosted by as much as 50 percent by year 2030 if the potential of the country’s Arctic shelf is exploited. “This is not a dream, it can become reality, and Europe needs the gas”, he says.
North Energy wants Norway to extend its current gas pipeline network to the Barents Sea and thus give the Arctic gas easy access to the European market.
However, Barlindhaug is skeptical about cross-border developments with Russia. The energy potential of the area located along the border to Russia is believed to be significant and oilmen have for decades with stars in their eyes spoken about the Hjalmar Johansen High, the area on the Russian side called Fedinsky High. These waters could hide oil and gas resources of elephant proportions, experts say.
But the oil companies might still not be ready to take on the risks related with borderland drilling. If discoveries are found, the resources are likely to stretch across the border, and a careful puzzle of negotiations with powerful commercial and political stakeholders will have to be concluded. Although the Border Delimitation Agreement from 2011 clearly outlines procedures in case of such discoveries, the pressure on the licenseholders could ultimately be insurmountable.
According to Johan Petter Barlindhaug, the oil companies both on the Norwegian and Russian sides will be careful to develop other regional resources before they start looking at the border areas. “There can only be one project operator in cross-border fields, and negotiations will inevitably be very complicated”, Barlindhaug says. “The Russians do not have experiences from these kind of negotiatiations”, he adds.
Norway and Russia should now focus their joint efforts in other Arctic projects, Barlindhaug argues. Russian companies should be given license rights to more Norwegian fields, and there is a need for cooperation in the field of rescue and emergency, navigation, and electric power production, he says.
The international oil industry now with increasing interest looks towards the resources in Norwegian and Russian Arctic waters. In the 22nd Norwegian License Round, a total of 29 companies got license rights, among them both Rosneft and Lukoil. The upcoming 23rd Round is expected to include blocks located also in the previously disputed waters between Norway and Russia.