Energy Developments in the Arctic Highlight Norway’s Importance to Houston and World

April 11, 2012

On April 6, 2012, Stratfor reported on the increasing Arctic militarization by Norway, as evidenced by its recent announcement that it would establish an “Arctic Batallion” in response to similar military moves by Russia in the region a year earlier.  According to Stratfor, the Arctic has become more relevant to geopolitics over the past decade.  This is reinforced by a recent report in the Atlantic Sentinel that the Arctic is in the process of assuming newfound importance in the global economy as a result of climate change.  The Atlantic Sentinel report explains that melting ice in the High North could shorten global supply chains and free up vast oil and gas reserves to exploration.  Although the probability of increased exploration has prompted a flood of activity by both Norway and Russia to ostensibly protect their territorial claims, it has also stimulated vast interest in the Arctic from Houston to as far away as Beijing.

The developments in the Arctic are of special significance to Houston, where Norwegian Foreign Minister Jonas Gahr Store recently revealed Norway’s visions and strategies for the “High North” in a speech at the Petroleum Club in Downtown.  Mr. Store emphasized that while the energy industry has previously focused on developments to the east (e.g., China) or those to the south (e.g., Brazil), the future will focus on the developments to the north, specifically, the Arctic.  The Atlantic Sentinel report states that the Arctic is estimated to contain 13 percent of the world’s undiscovered oil and as much as 30 percent of the world’s undiscovered natural gas, comprising a combined 22 percent of all untapped but recoverable hydrocarbons.  In light of these figures, what goes on in Norway is of particular importance to Houston, which the Norwegian Foreign Ministry acknowledges is still the energy capital of the world.  It is no wonder why, according to Foreign Minister Store, Houston now serves as the American base for a multitude of Norwegian companies and is home to more Norwegians than any other U.S. city.  With the growing influence of Norway in the global energy markets, Houston will continue to play a key role in the Arctic for years to come.

Though far removed from the Arctic, the Atlantic Sentinel notes that China has a definite interest in asserting a presence there.  Relations between China and Norway soured in 2010 when the Nobel Peace Prize committee honored a Chinese dissident.  But that has not stopped the Chinese government from building six new heavy ice breaker ships to prepare for routes that promise to open up in the Arctic.  To put in perspective how far ahead China is thinking, Norwegian Foreign Minister Store noted that the U.S. currently only has one heavy polar ice breaker ship – and it is not operational.  Clearly, China is seeking inroads to the untapped energy resources in the Arctic, which reinforces the complex geopolitics of the Arctic region.  This complexity is underscored by an agreement between Norway and Russia this past March to improve military cooperation in the Arctic, not to mention that their respective state energy companies, Statoil and Gazprom, continue to jointly develop offshore energy projects.  Perhaps in the long run the recently expanded militarization by Norway and Russia has more to do with protecting their interests from outside influence than from each other.