The race to exploit the polar regions, by Michael Richardson

Britain’s Cairn Energy is about to begin a risky but potentially lucrative search for oil and natural gas in waters off the coast of Greenland, where the rapid melting of ice from global warming is expanding opportunities for international commerce.

The search may mark the start of large-scale economic activity not just in the Arctic Circle but also around the Antarctic, where a treaty currently bans energy and mineral exploitation. Climate change in the Arctic is already opening new opportunities. What are the implications of polar geopolitics for Asia?

The most immediate is the shipping short cut between East Asia and Europe, enabling North-east Asian export giants to bypass routes through South-east Asian straits and the pirate-plagued Gulf of Aden. A voyage from Shanghai to Hamburg through the Arctic Ocean free of ice in summer is 6,400km shorter than the route via the Strait of Malacca and the Suez Canal. Last summer, two German cargo ships successfully completed trial voyages from South Korea to the Netherlands through the Arctic.

Around the same time, the US Geological Survey estimated that the region has up to 30 per cent of the world’s undiscovered gas and 13 per cent of its oil. It also contains coal, nickel, copper, tungsten, lead, zinc, gold, silver, diamonds, manganese, chromium and titanium.

Of course, the five states – Canada, Denmark (which controls Greenland), Norway, Russia and the United States – that have territory in the Arctic are in the box seat to exploit its resources. However, Asian states, which have the bulk of the world’s foreign exchange reserves, will be in a strong position to fund some of the expensive search for energy and minerals in the region.

Cairn Energy had said it would not start drilling in the area until next year. However, a deal in October with Petronas, Malaysia’s state-owned oil and gas corporation, which raised US$310 million (S$434 million) for the venture, enabled it to secure two drilling rigs earlier than planned.

A report published last week by the Stockholm International Peace Research Institute said the opportunities arising from an ice-free Arctic could deepen cooperation among East Asian states. It argued that as non-Arctic nations, China, Japan, North Korea and South Korea were all in the same boat, with each of them standing to benefit greatly from shorter commercial shipping routes and possible access to new fishing grounds and natural resources. It said a unified Arctic strategy would be in their mutual interest.

The northern hemisphere ice melt has triggered political and economic jostling among Arctic coastal states, although they say they are committed to orderly settlement of overlapping claims. In the southern hemisphere, the Antarctic Treaty holds national ambitions in check – but for how much longer?

Of the Asian signatories to the treaty, China has probably been the most active in recent years in increasing its presence in Antarctica – the world’s fifth-largest, but mainly ice-covered, continent. Beijing has constructed three permanent scientific bases and will soon starting building a second icebreaker to supply them.

Seven of the treaty members – Australia, Argentina, Britain, Norway, France, New Zealand and Chile – have made territorial claims to around 75 per cent of Antarctica. Most other states do not recognise these claims. Meanwhile the US, Russia and probably China reserve the right to make their own claims.

Last year, Chinese Vice-Premier Li Keqiang called for greater efforts to raise China’s profile in polar and maritime zones.

“Human activities have been spreading at an even faster speed from land to seas and oceans, polar regions, outer space,” he noted. And, he added, “a growing number of countries are eyeing the economic and scientific resources hidden” in the polar regions.

In December, China sent two research ships around Antarctica to prepare for commercial krill fishing in the area.

In January, a delegation of Chinese officials, including the minister for land and resources, flew into an Australian base in Antarctica on their way to a nearby Chinese base. A member of the minister’s party said one of the aims was to investigate the potential of Antarctica’s untapped offshore and onshore resources and how to use them.

The 1991 Protocol on Environmental Protection to the Antarctic Treaty prohibits any activity relating to mineral resources, other than scientific research. However, the ban could be reviewed after 2048 and the protocol binds only the small number of parties to it.

China chooses to be bound by the protocol but is evidently looking ahead to the time when the rules may change.

“China is extremely interested in exploiting Antarctica’s natural resources,” says Dr Anthony Bergin, research director at the Australian Strategic Policy Institute in Canberra. “As the world’s fossil fuels diminish and technology for mining in polar regions improves, pressure will grow for Antarctic mineral development.”

The writer is a visiting senior research fellow at the Institute of Southeast Asian Studies.

blog comments powered by Disqus

Most popular

View all news

Industry Spotlight

View all

Supporting Organisations

Asia Plantation Capital
Diamond Energy
City Developments Ltd