Energy Security, the High North of Europe and NATO.

Ræða á 52. ársfundi Atlantic Treaty Association í Aþenu, 7. desember, 2006.

A map of the globe with the North Pole at its center explains how a rise in temperature at the top of the world and a polar thaw are starting to unlock treasures such as new oil and gas fields, commercial fishing grounds, lucrative shipping routes and new cruise ship destinations.

If the climate trends persist, there are likely to be a number of new national and international policy issues that must be addressed by North Atlantic nations. These issues include the availability and production potential of oil and gas reserves, fisheries and other resources, access to new sea routes and new claims under the Law of the Sea. These are issues that may create conflicts and call for cooperation and the adoption of a new security policy in the North Atlantic and there NATO is bound to play a role.

The Arctic is a new energy frontier.  The Arctic region is one of the places where new energy discoveries are now commonplace, but these resources are difficult to extract - physically, economically and politically.


Energy has become one of the defining issues of this century, since “the Era of Easy Oil for Everyman” is now over. Demand is soaring as never before as economies take off, requiring increasing amounts of energy. Everybody is in favor of energy security, but what does the term ‘energy security’ really mean?


The concept of energy security should be expanded to include the entire supply chain and the whole infrastructure. This widening of the definition raises pressing questions and calls for greater attention to detail. How are the requirements of energy security to be coordinated? Who will pay for greater energy security? How will responsibility be allocated in the grey area between the public and private sectors?


The price will ultimately be paid by the consumers, since they will want “energy reliability” to be a full part of the package when they buy their energy in the years to come.


With growing oil and gas shipments from Russia and Norway to the United States through the Norwegian Sea, and the Greenland – Iceland – UK gap, maritime security and safety issues must be discussed to determine what new series of maritime security and safety measures must be adopted by NATO. Additional mandatory security-related requirements and guidelines may have to be introduced, as well as new legislation and the necessary administrative and operational provisions.


The pivotal role that shipping plays in the conduct of world trade is beyond dispute. Shipping is the single most important mode of transport in terms of volume and will continue to be the most important transport mode in developing world trade for the foreseeable future.


The goal must be to strengthen maritime security and safety in North Atlantic waters and prevent and suppress acts of terrorism against shipping. All those involved in the operation of ships and ports should continue to be aware of the dangers to shipping through acts of terrorism and the need to be vigilant and alert to any security threats they might encounter in port, at offshore terminals or when underway at sea.


It is obvious that oil supplies and supply lines are vulnerable to natural disasters, wars and terrorist attacks that can disrupt the lifeblood of the international economy.


NATO has an important role to play in energy security, as was confirmed by a unanimous resolution by the U. S. Senate Foreign Relations Committee last June calling for a discussion within the Alliance on the growing importance of energy security for NATO member countries. Senator Richard Lugar, chairman of the committee, made the remark on this occasion that increased competition for finite supplies of oil and gas on a global scale could lead to conflict that would directly or indirectly involve NATO states.



Iceland is in many respects in a unique position as an energy producer and consumer. The country is a large producer of primary energy, both in the form of electricity and of heating water. About 80% of its electricity comes from hydroelectric dams and the remainder from geothermal plants. Importantly, all of the domestic primary energy is from renewable and environmentally friendly sources.

Relative to its size and reflecting its advanced economic development, Iceland is a heavy energy user. About 70% of its primary energy requirement is produced domestically and only 30% is imported, mostly in the form of oil and petrol. A considerable proportion of the energy used in Iceland is consumed by power-intensive industry, primarily aluminium smelting. There is also a high level of oil consumption by the fisheries and transport sectors. Per capita emissions of CO2 in Iceland are similar to those of most European countries.

Discussing energy security and the situation in the High North of Europe, one is bound to take note of what is happening in the Barents Sea, both in Norwegian and Russian waters and the Grey zone, the disputed area between the two. In the Barents Sea, the future potential for fossil energy exploitation  is enormous. North of Norway’s northernmost town, Hammerfest, lays the Snohvit or “Snow White” development, where liquefied natural gas – or LNG – will be processed as from next year. The gas will be piped from sub-sea reservoirs some 140 km off the coast, and will be shipped to North America some 5,300 miles away, passing through Icelandic waters in the Greenland, Iceland, Faroe Isles gap.


It is likely that approximately 40% of the Norwegian Statoil production or 2.4 billion cubic metres of gas per year will be transported to North America in ships of up to 290 meters long and capable of carrying up to 140,000 cubic metres of liquefied natural gas.


For us in Iceland, the term ‘energy security’ refers to the need to secure the sea lanes for these huge tankers, and with this in mind we are modernizing the Icelandic Coast Guard and expanding our search and rescue capabilities. This is a task we take more seriously than before due to the recent departure of US forces from Iceland, having been at the Keflavik Base since 1951. We consider secure transport capability a fundamental premise for this growing transfer of energy and an engine of economic growth on both sides of the Atlantic.


The Russian Government considers it one of its priorities to develop an Arctic transportation system, taking into consideration the limited traffic capacities of the Baltic and Black Sea straits. Old transit terminals in the harbours on the Russian Arctic shelf are being modernized and new ones are under construction.


Over 10 million tons of oil and oil-derived products are currently processed through the Russian ports of the western sector of the Arctic each year, and by 2015, annual oil traffic is expected to reach the level of 40 to 45 million tons.


Murmansk, Russia’s only all-year ice-free arctic port, is now called “Russia’s northern energy gateway” by Russian diplomats and has been chosen to become the key element in the entire transport system in the Russian North. According to the General Plan for the development of the Murmansk transport junction, cargo traffic on the eastern shore of the Kola Bay is expected to reach 60 million tons per year by 2015, and by the same date, traffic on the western shore is expected to rise to as much as 43 million tons per year as a result of the development of the railroad network. This means the total volume of cargo traffic through Murmansk will be over 100 million tons by 2015.


In 2003 the OECD issued a report on maritime security, looking at it from an economic point of view. This stated that the maritime transport system is vulnerable to being targeted and/or exploited by terrorists. A major attack, especially a well-co-ordinated one, could result in the entire system being shut down as governments scramble to put the appropriate security measures in place. These measures could be drastic, including, for example, the complete closure of ports, and inefficient, for example duplicative and lengthy cargo checks in both originating and receiving ports. The cost of such an attack would probably be measured in the tens of billions of dollars (e.g. up to USD 58 billion for the United States alone). It is precisely for these reasons that governments have sought to strengthen their security dispositions vis-à-vis maritime transport.


Senator Lugar has said that the US dependence on imported oil has put the United States in a position that no great power should tolerate. US economic health is subject to forces far beyond US control, he says, including the decisions of hostile countries. The US has maintained a massive military presence overseas, partly to preserve its oil lifeline. With this and the growing importance of the oil lifeline from the Barents Sea to North America in mind, it is surprising that the US has now withdrawn all its forces from Iceland.


Energy and sea trade are giving the High North of Europe a new geopolitical significance. It is obvious that the gas trade card is being played there for a political purpose.


The Russian energy giant Gazprom intends to construct the world’s largest offshore gas field, Shtokman in the Barents Sea. Through years of negotiations, Gazprom said it would cooperate with international partners by establishing a Shtokman consortium. Last October it indicated, however, that it would go ahead alone.


In addition, Gazprom signalled in October that the United States would be denied gas supplies, which it had been expected would be shipped in liquefied form in super-tankers from Murmansk. Instead, it is likely that the Shtokman gas will be pumped across the Kola Peninsula to the Baltic Sea. There it could link up with the planned 1,200-km Northern European pipeline, which will bypass all Russia’s neighbours before plugging into the German, and thus the European Union’s, gas pipeline network.


Gazprom’s unilateral decision came as a surprise. The BBC described the international reaction as one of dismay, and referred to a German banker in Russia who said that there was a general perception that increasingly politics were driving these big energy deals. The BBC also reported that President Vladimir Putin had milked the Shtokman project for what it has been worth, having used the promise of participation in the project as a carrot in negotiations on a broad range of subjects – including talks about Russia’s entry into the Word Trade Organization (WTO).


Before hosting the G-8 summit this summer, Russia said that all countries needed stable deliveries and predictable energy prices to ensure a high quality of life for their people. If this is the Russian view, why did Russia cut off gas supplies to the Ukraine?


These are just two examples of how oil and gas exporting Russia uses energy supplies as lever in a geopolitical game. We are bound to see more of this in the future.


Mr. Peter Mandelson, the EU Trade Commissioner, said recently that the overriding concerns of governments in producing and consuming countries were the same: we can not afford to have energy become a geopolitical bargaining chip. More international rules could provide stability and fill the legal vacuum that is currently a source of international tension and insecurity.


Within the so-called Northern Dimension leaders of the European Union, Iceland, Norway and Russia have recently declared their firm commitment to cooperate actively on the basis of good neighbourliness, equal partnership, common responsibility and transparency.  In their political declaration issued on 24th November in Helsinki the leaders also indicate their intention to let senior officials examine the desirability of a Northern Dimension Partnership on Transport and Logistics, and to examine enhanced cooperation in the field of energy efficiency and renewable energy, inviting for this purpose also experts and international financing institutions.


Energy is the new political and security factor. Energy security, in various interpretations, should become a standing issue on the NATO agenda.  In my view, it is of vital importance that the NATO nations on both sides of the Atlantic work together on energy security as a central part of the alliance’s security policy.


From an Icelandic point of view, energy security is the new dimension that is reintroducing the northern reaches of the North Atlantic region to the political and military scene in NATO.


The Arctic and the Barents Sea are fast becoming one of the most important energy provinces of NATO Europe, and it will soon be meeting a significant share of the world’s future energy needs - in particular those of the United States. NATO and the European Union therefore have a strong and permanent interest in the High North of Europe.  


What I want to underline here today is that the energy resources of the northern reaches of the High North of Europe will make this part of NATO Europe a natural short-cut between two economic powerhouses, just as the Mediterranean today is a cross roads of energy transportation routes, and this reaffirms the maritime identity of NATO. The Mediterranean region is the epicenter of major international developments, from the enlargement of the European Union to the development of the energy resources of the Caspian Sea and Central Asia.


Oil and gas production, processing and transportation are pushing their way to the top of the political and military agenda of the North–South dialogue within the European Union and within NATO.


In their Riga Summit Declaration of 29th November NATO’s heads of state declare that they support a coordinated, international effort to assess risks to energy infrastructures and to promote energy infrastructure security. They direct the NATO Council to consult on the most immediate risks in the field of energy security, in order to define those areas where NATO may add value to safeguard the security interests of the Allies and, upon request, assist national and international efforts.



With its vast energy resources and new East-West energy transport corridors, the High North of Europe will become one of the key regions in the global economy. The Arctic and the Barents Sea will become one of the most dynamic economic development areas of NATO, and an area of crucial importance to the European Union, the United States and Canada.  The interests of this region, both locally and globally, are a transatlantic issue that can only be dealt with as part of a strong and realistic security policy on the part of NATO.