Clinton to assert U.S. claim in scramble for Arctic

OSLO Thu May 31, 2012 7:27am EDT

Secretary of State Hillary Clinton listens as Egyptian Foreign Minister Mohamed Kamel Amr answers a question during a joint news conference at the State Department in Washington September 28, 2011. REUTERS/Molly Riley

Secretary of State Hillary Clinton listens as Egyptian Foreign Minister Mohamed Kamel Amr answers a question during a joint news conference at the State Department in Washington September 28, 2011.

Credit: Reuters/Molly Riley

OSLO (Reuters) - Secretary of State Hillary Clinton will assert U.S. interest in the Arctic, where the prospects for abundant oil, gas and new trade routes has been likened to a modern-day gold rush, when she visits the region on Saturday.

As the sea ice recedes with climate change, huge oil and gas fields are adding vast amounts to global reserves, while sea passages are opening for longer periods each year and cutting thousands of miles off trade routes between Europe and Asia.

Clinton will visit Tromsoe, a Norwegian town in the Arctic Circle, as part of an 8-day trip to Scandinavia, the Caucasus and Turkey.

She follows a host of high-profile international visitors as the region enjoys unprecedented political and economic power.

Norway has moved its military operational headquarters into the Arctic Circle, China has development plans for Iceland and countries, including Russia, are laying claim to exploration rights in the once pristine Barents Sea.

European Union foreign policy chief Catherine Ashton visited the remote Svalbard archipelago this year and a regional summit of Nordic leaders takes place in June.

But while the resources are there, the rules and infrastructure are just emerging.

"A lot of people perceived this as a modern-day gold rush into a no-man's land," Jan-Gunnar Winther, director of the Norwegian Polar Institute in Tromsoe said. "The interest is not just from the traditional polar countries but China, Korea and Japan are also coming to the table.

"It has taken a lot of work to create an understanding that this isn't the Wild West and it's actually government by law," Winther said.

A senior Oslo-based diplomat said of Clinton: "Her aim is to emphasize that the U.S. is keeping its eye on the Arctic and remains very keen. Big firms are investing big money and she wants to say 'I can do more than one thing at a time, the world is not just Pakistan, Afghanistan and Iraq'."

Testifying earlier in May before the U.S. Senate, Clinton said that as the Arctic warmed: "It is more important that we put our navigational rights on a treaty footing and have a larger voice in the interpretation and development of the rules. You will see China, India, Brazil, you-name-it - all vying for navigational rights and routes through the Arctic."

One of the biggest reasons for the interest is energy.

"It's all about oil and gas. It's just a hot issue, it's almost a cliché already," Aileen Aseron Espiritu, director of the Barents Institute at the University of Tromsoe, said.

"Even Russia, the largest provider of oil and gas to Europe is keen to accelerate gas production from its offshore gas fields as soon as possible, or as soon as economically viable."

The U.S. Geological Survey estimates that the Arctic holds about 13 percent of the world's undiscovered conventional oil and 30 percent of its undiscovered natural gas resources.

OIL BOUNTY

Development costs in the area could be twice as high as in the case of conventional onshore resources but that is not stopping some of the sector's top players.

"All the major powers are positioning themselves for this development," said Ole Arve Misund, director of the University Centre in Svalbard. "The resource has become more available and prospects have already been opened in Norway, Russia, Canada, the U.S. and Greenland."

ExxonMobil is working with Rosneft to develop blocks in the Kara Sea, off Siberia, despite sea ice for up to 300 days a year.

Gazprom is also working with Total and Norway's Statoil on the 4-trillion-cubic-metre Shtokman gas field 550 km offshore. Statoil has also established a strong Arctic record with its Skrugard and Havis finds, holding up to 600 million barrels of oil.

But the rush for oil and gas has brought condemnation from environment campaigners and those who say the rights of local people risk being trampled.

Only about 4 million people live in Arctic areas, leaving local interest groups weak and creating a high risk of uncontrolled development, a major challenge for the Arctic Council, the forum of the eight polar nations.

"The climate is changing very fast and the ecosystem is extremely fragile," Misund in Svalbard said.

The Arctic ice cap shrunk to 4.33 million sq km last summer, one of the lowest levels on record, and 2.38 million sq km below the average of 1979-2000, the National Snow and Ice Data Centre reported, opening the northern shipping route between Europe and Asia.

Only a few ships actually took advantage of the opening, which could save 7,000 km and 14 days on a journey between Rotterdam and Korea, as the route's availability is unpredictable and it lacks the necessary infrastructure, like safe harbors and navigation equipment.

But the sea ice will continue to recede and the Arctic could be nearly ice free in summers within 30 to 40 years, the Oslo-based Arctic Monitoring and Assessment Program said.

The promise of economic bounty has actually fostered some cooperation, experts said.

Russia and Norway settled a decades-long border dispute last year, allowing both to start exploring.

And while problems have continued to simmer, such as a fishing dispute with Iceland, experts say Norway's 'High North, low tensions' approach may be working.

"There is no reason to believe that conflicts, small or large, would lead to heightened tensions or war," Espiritu said.

(Added reporting by Arshad Mohammed; Editing by Alistair Scrutton and Janet Lawrence)