The Arctic Energy Initiative
1. Objective
The Arctic is considered to be the repository of considerable undiscovered oil and gas reserves. To access those reserves requires a high level of technology and large amounts of capital, often beyond the reach of individual corporations and even that of some governments. In addition energy exploration and extraction is assumed to have considerable environmental impact.
The proposed Arctic Energy Initiative is an open public-private partnership providing a common framework for energy exploration and extraction in the region. It would include:
- Partial government funding to reduce the cost of capital and provide some risk mitigation
- Technology sharing to reduce cost and improve efficiency as well as safety
- A common framework for environmental protection
- A common framework for safeguarding the rights of native populations and preventing major disruption of their way of life
The overall objective would be to open Arctic locations, both on- and off-shore, to energy exploration and production under controlled conditions and a predictable business climate.
2. Participation
Participation would be voluntary for both concerned governments as well as interested entities from the energy sector. Specific conditions as well as contract templates would be jointly negotiated and uniformly applied, with allowance for different circumstances.
3. Funding
It is recommended that the interested governments provide partial funding, particularly for the exploration phase when the risks are highest. Once a prospect has been located and tested, joint funding from the industry and the state would be used for development, infrastructure and production.
4. Revenue From Exploitation
It is recommended that a long-term production sharing contract be implemented between the state and the participating entities from the energy industry. This will provide the needed motivation for the industry to bring adequate capital as well as the most advanced technology, as ventures that will be costly, demanding and carry substantial risk.
5. Initial Implementation
We suggest that initial negotiation over the Initiative be carried out between the United States and Russia, the two partners with the greatest potential for mutual interest and cooperation. Other states could participate as observers and/or consultants. The initial negotiation would bear on a known prospect or area, and its goal would be to establish a mutually satisfactory framework.
Once that particular project has been initiated and the framework adapted, the Initiative would be opened to other interested parties.
April 26th, 2010 at 12:51 pm
[...] portion of yet undiscovered oil deposits lies (a) in the Russian Federation and (b) in the Arctic. The needed exploration and production development requires advanced technology as well as considerable capital, both of which can be [...]
April 26th, 2010 at 5:41 pm
I agree that the USA should enter into cooperative energy development initiatives with its immediate neighbors. Russia is one of our three immediate large neighbors, the other two being Canada and Mexico.
Too many Americans still think of Russia as a cold war enemy. Maybe the oil companies encourage that view in order to hold back competition. Russian oil is a state run enterprise. The USA has no equivalent.