KIRKENES: When the Norwegian government’s new surveillance vessel Marjata berthed at its home port here this month, many locals hoped it signalled the arrival of the first of many new and different kinds of vessels in the future. Officials in this far northern city in Norway’s Arctic are arguably the most hopeful about prospects for new offshore oil and gas activity, because of the jobs and economic development it can bring.
The Marjata will be mostly sailing in the Barents Sea, keeping an eye on Russian military activity in the Arctic that’s been on the rise in recent years. More vessels, especially offshore supply ships and others tied to the oil business, are likely to be even more welcome.
While the Norwegian government’s recent decision to open up new areas of its offshore Arctic territory to oil and gas drilling has sparked protests from the environmental movement and climate researchers, it was warmly greeted in this otherwise chilly part of the country. “This is the start for real (economic) repercussions in the north,” Kjell Giæver, director of the supply network Petro Arctic, told The Independent Barents Observer last week (external link).
Giæver called the opening of the new exploration areas “an historic moment,” adding that it was “realistic” to believe in oil or gas production from the areas by 2030. Since some of the prospective oil and gas fields are located relatively close to Kirkenes, in the newly opened southeastern sector of the Barents and along the offshore border to Russia that was agreed by former Norwegian Prime Minister Jens Stoltenberg and former Russian President Dmitry Medvedev six years ago, the city could be their natural land base.
“In the southeastern sector of the Barents Sea, we see some large (oil and gas) structures, large enough to hold billions of barrels of oil, if we’re lucky,” Halvor Jahre, exploration chief for oil company Lundin, told newspaper Dagens Næringsliv (DN) on Friday. Lundin is among the firms winning licenses from the Norwegian government, so Jahre’s comments are music to the ears of local politicians like Kirkenes Mayor Rune Rafaelsen of the Labour Party, who went so far as to claim that the new licenses could also promote new energy cooperation with Russia.
“In a peace perspective, it is of significance for both countries to develop this kind of energy projects,” Rafaelsen told The Independent Barents Observer, which headlined its article “Arctic oil for peace” (external link). Rafaelsen, a former head of The Barents Secretariat in Kirkenes, sees potential for new “energy partnerships” with the Russians, similar to the long-standing fisheries cooperation between the two countries.
Jacob Stolt-Nielsen, part of the prominent Norwegian shipping family who also serves as head of Norterminal in Kirkenes, reportedly was jubilant over the decision to open new areas of the Barents north of Kirkenes. “We’ve been looking forward to this for a long time,” Stolt-Nielsen told Kirkenes newspaper Sør-Varanger Avis. “We of course hope that the development will bring great activity to Sør-Varanger (the area where Kirkenes is located).”
Norterminal wants to build an oil terminal at Gamneset, on the western side of the peninsula just west of Kirkenes itself, but out of view from the city. Stolt-Nielsen said Norterminal has had “dialogue” with most of the companies involved in prospective oil and gas exploration in the Barents, and called the licensing awards “a step closer to the oil terminal.”
Civic boosters in Kirkenes, which has faced a series of economic challenges lately, are hoping for the type of economic development in their city that has occurred in Hammerfest, another small Norwegian city in western Finnmark that has become a base for gas from the Snøhvit field and, more recently, Johan Castberg. Hammerfest has established itself as a receiving station of sorts for gas from the western Barents, while the new fields opening up now are closer to East Finnmark and Kirkenes. The city also has long and friendly ties with neighbouring Russia, with the border located just a 20-minute drive out of town.
Målfrid Baik, regional director of Norwegian employers’ organization NHO in Finnmark, told Sør-Varanger Avis that NHO was very pleased so many companies “have faith in operational discoveries in the Barents Sea.” The licenses granted bode well, she said, for “continued high actitivity on the Norwegian shelf for a long time forward,” despite all the environmental and climate concerns.
Nearly a dozen businesses in Sør-Varanger have already formed an organization (Petro Kompetanse/ Petro Competence) in cooperation with the Pro Barents incubator group in Hammerfest. The goal is to help companies in the Kirkenes area take advantage of a new oil era, by learning what oil and oil supply companies would need and how they can provide it.
“Increased petroleum activity in the southeastern Barents will create new jobs and value creation in Northern Norway,” Baik said. “Perhaps East Finnmark can now experience some of the same strong development we have seen in the Hammerfest region.”