Russia, Finland and Norway are in talks to create a fund that will help pay for investments in the Arctic Barents region as part of a plan to gain access to billions of barrels of oil and natural gas.
Talks between nations gathered for the 20th anniversary of the Barents Euro-Arctic Cooperation agreement focused on “how better to use the money or institutions we already have,” Finnish Prime Minister Jyrki Katainen said in an interview today in the Norwegian city of Kirkenes, close to the Russian border. “It could be a kind of common fund, where the money could come from Russia” and lenders such as the European Investment Bank and the Nordic Investment Bank, he said.
Russia, Finland and Norway, which already channels its oil riches in the world’s biggest sovereign wealth fund, are targeting the Arctic to replenish their oil and gas reserves. The Nordic part of the Barents Sea alone is estimated to hold 6 billion barrels of oil and gas. Companies including Statoil ASA will drill a least 12 wells in the Norwegian Barents this year, matching the record number tapped in the past two years combined.
The cost of finding and extracting resources in the Arctic remain prohibitive. Statoil, which operates about 80 percent of Norway’s oil and gas production, estimated it will spend more than 80 billion kroner ($13.8 billion) with partners to develop Skrugard and Havis, two finds in the Barents Sea. It plans to build a 280-kilometer pipeline and an oil terminal.
Statoil and partners Total SA also shelved an expansion last year of the Snohvit field because of a lack of gas.
In the Russian Barents, OAO Gazprom’s Shtokman project in iceberg-ridden waters 600 kilometers from land has been stalled for years amid galloping costs and technical challenges. A venture agreement with Statoil and France’s Total SA lapsed July 1, opening the door for talks with potential new partners.
Norway is opening an area in the south-eastern Barents that may contain a further 1.9 billion barrels of oil equivalent, according to the Norwegian Petroleum Directorate. The area had been off limits for four decades because of a dispute with Russia that was resolved in 2010.
The Barents Sea nations said today in a joint declaration they support the continued development of their cooperation and target managing the region’s natural resources in a “sustainable manner.”
According to Katainen, the goal of sustainability will now also encompass the financing. Nations in particular want to explore how best to combine the firepower of various development banks.
“We should have a more strategic view on what we want to do and those banks should have kind of a special line for a fund which would be common for all those investment banks,” Katainen said. “Russian money and those European development banks’ moneys could be funded to one goal. We didn’t find any concrete solutions but this is what we more or less talked about.”