Russia and Norway wrestle over Barents Sea

By Lennart Simonsson and Nick Allen Jun 26, 2006, 3:37 GMT

Moscow/Oslo - For a generation, Norwegian and Russian negotiators have bickered over where to draw the borders in parts of the Barents Sea that could hold vast reserves of gas and oil.

During the Cold War, the Arctic seas north of NATO member Norway and the then-Soviet Union were primarily of military importance.

Cooperation between the two neighbours has since developed in various fields but the unresolved delimitation has stymied the exploration of offshore energy deposits.

When a new government entered office in Oslo late last year, talks with Russia resumed in December after a two-year hiatus, with predictions in Moscow that the matter would be wrapped up in six months.

Today, with a breakthrough still elusive, no one is making bets on when there will be a final demarcation of the disputed zone between the Spitzbergen archipelago and Novaya Zemlya that measures more than 155,000 square kilometres.

On the surface, officials often cite the need to resolve the row for the sake of ordered harvesting of the area's bounty of cod, herring and other fish species.

However, the bigger problem runs deep beneath the seabed.

'The real reason for the arguments is the oil rather than fish,' said Mikhail Margelov, head of the international affairs committee of Russia's Federation Council upper chamber of parliament.

However, he added that 'Russia has no intention to monopolize the hydrocarbon market,' and was ready to cooperate with Norway in offshore fields development.

Some commentators cite a possible softening of the Russian position as the result of pressure by the United States and the European Union to end the controversy and open up new energy sources.

Russia and Norway in 1976 established 200-mile (320-kilometre) exclusive economic zones but this agreement did not address the so- called grey zone by the border, which Russian media have recently dubbed the 'gold zone' in view of its possible riches.

According to a 1978 Grey Zone Agreement, the two countries can use the 155,000-square-kilometer area for fishing. Interest in the area is high, not the least against the backdrop that the Arctic may have some 25 per cent of the world's gas and oil reserves.

On the Norwegian side, patience is urged.

'The talks have lasted ... some 30 years,' Deputy Foreign Minister Kjetil Skogrand said, adding that Norway will happily sit it out as the Russians appear to reappraise their position.

'Both Norway and Russia have oil and gas so we are in no hurry,' Skogrand said.

Jakub Godzimirski, senior researcher at the Centre for Russian Studies at the Norwegian Institute of International Affairs, also said the dispute was 'unlikely to be solved in the near future.'

However, he noted a positive side in that it was a bilateral issue and no outside actors were needed.

By comparison, the Spratley Islands dispute that involves among others China, Vietnam, the Philippines and Taiwan was much more complicated, and finds of oil appeared to have raised the stakes there, Godzimirski said.

Both he and Skogrand said there was a 'gentleman's agreement' not to explore the disputed area. Nonetheless, with increasing need to find new oil and gas reserves, outside attention is growing.

Two Norwegian oil companies, Statoil and Norsk Hydro, are waiting on the sidelines. Both have lobbied to take part in Russia's development of its offshore Stockman field in the Barents Sea - but Russia's decision on partners has yet to be announced.

Norsk Hydro's ace is a 1,200-kilometre-long gas pipeline under construction that is part of the Ormen Lange project. The pipeline stretches from Nyhamna on the Norwegian west coast to Easington in Britain.

Rival Statoil has invested massively in a production facility for liquified natural gas (LNG) from the Snohvit gas field off Hammerfest, northern Norway, which may pave the way for similar facilities off Russia.

Meanwhile, there is no difference in stance in Norway between right or left wing governments and the matter appears to be of 'national concern,' Godzimirski said.