Petrodevelopment 2030
Total Page:16
File Type:pdf, Size:1020Kb
Petrodevelopment 2030 Socio-economic consequences of an extensive oil and gas development in the Barents Sea A report prepared for StatoilHydro by a group of researchers from Norwegian College of Fishery Science, University of Tromsø, Norut - Northern Research Institute, Alta, and Institute for Economic Studies, Kola Science Centre Title: Petrodevelopment 2030 Socio-economic consequences of an extensive oil and gas development in the Barents Sea Authors: Peter Arbo, Vladimir Didyk, Bjørn Hersoug, Inge Berg Nilssen, Vigdis Nygaard, Larissa Riabova, Jan Yngve Sand and Stein Østbye Joint report: Norwegian College of Fishery Science, University of Tromsø Norut – Northern Research Institute, Alta Institute for Economic Studies, Kola Science Centre Commissioned by: StatoilHydro Project leader: Peter Arbo Quality assurance: Bjørn Hersoug Summary: The theme of this report is the regional socio-economic consequences of an extensive oil and gas development in the Barents Sea. The regional focus area includes Finnmark County and Murmansk Oblast. The introductory chapter explains the purpose of the study and the way the work has been done. The next two chapters provide a detailed account of the region and its basic characteristics. The general finding is that the region strongly needs a new stimulus to growth, but that it is badly prepared for receiving a coming oil and gas boom. The following chapter gives a brief overview of the oil and gas sectors in Norway and Russia and introduces the baseline scenario, which indicates the expected scale and scope of future petroleum activity in the Barents Sea. After this three scenarios are presented. They all have 2030 as their time horizon. The first scenario depicts the frontier - the Arctic vanguard – which is a flourishing region by 2030. The second scenario tells the story of the Arctic outsider; a region becoming more and more marginalized. The third scenario foresees a shifting balance, where oil and gas development mainly takes place on the Russian side of the border, leaving the whole region in the shadow of the new energy superpower. The final chapter sums up the key challenges of the region, discusses the scenarios, and highlights the basic preconditions for an extensive oil and gas development to benefit the region. Key words: Oil and gas, Barents Sea, socio-economic consequences, scenarios Date: October 2007 Number of pages: 103 Disclaimer This report represents the views of the authors only and does not necessarily reflect the position of StatoilHydro ASA. 1 Preface This report on socio-economic consequences of an extensive oil and gas development in the Barents Sea has been commissioned by StatoilHydro and undertaken by a group of researchers from the University of Tromsø, Norut Alta and Kola Science Centre. The report is based on several unpublished working papers. StatoilHydro ASA has commissioned four parallel scenario reports for the Barents Region on respectively climate change, socio-economic consequences, environmental issues and reindeer husbandry. The joint project was initiated as part of StatoilHydro's preparations for a strategic action plan for future oil and gas developments in the High North. We would like to thank the stakeholders in Murmansk Oblast and Finnmark County who have shared their information and views with us. We would also like to acknowledge the contribution of StatoilHydro and the other participants of the joint project. 2 3 Contents 1 Introduction .................................................................................................. 5 1.1 Focus on the Barents Sea ................................................................................5 1.2 Regional socio-economic effects ....................................................................6 1.3 Sources ............................................................................................................6 1.4 Outline of the report ........................................................................................6 2 The northern periphery – historical lines .................................................. 7 2.1 Terra incognita ................................................................................................7 2.2 Colonization ....................................................................................................7 2.3 State expansion and consolidation ..................................................................8 2.4 Porous borders.................................................................................................9 2.5 Arctic hunting and polar expeditions ..............................................................9 2.6 Industrialization and war...............................................................................10 2.7 Assimilation of the Saami people..................................................................12 2.8 The Cold War and the development of the welfare state ..............................13 2.9 Farewell to old liturgies.................................................................................13 3 Characteristics of the region ..................................................................... 15 3.1 Finnmark fylke ..............................................................................................15 3.1.1 Population, settlement structure and migration............................................ 15 3.1.2 Industrial structure and employment............................................................ 19 3.1.3 Educational level and knowledge infrastructure .......................................... 24 3.1.4 Physical infrastructure.................................................................................. 28 3.1.5 Political-administrative organization ........................................................... 29 3.1.6 Basic living conditions................................................................................. 31 3.1.7 The Saami situation...................................................................................... 32 3.2 Murmansk Oblast ..........................................................................................34 3.2.1 Population, settlement structure and migration............................................ 35 3.2.2 Industrial structure and employment............................................................ 39 3.2.3 Educational level and knowledge infrastructure .......................................... 43 3.2.4 Physical infrastructure.................................................................................. 46 3.2.5 Political-administrative organization ........................................................... 49 3.2.6 Basic living conditions................................................................................. 52 3.2.7 The Saami situation...................................................................................... 53 3.3 The regional paradox.....................................................................................57 4 Oil and gas in the High North ................................................................... 59 4.1 Setting the scene............................................................................................59 4.2 Development perspectives for the Barents Sea .............................................64 4.3 Underlying assumptions and limitations .......................................................66 4 5 Three scenarios for the High North.......................................................... 69 5.1 Looking into the future..................................................................................69 5.2 Oil and gas as a driver for regional development..........................................70 5.3 The frontier....................................................................................................73 5.4 The marginalized region................................................................................83 5.5 The shifting balance ......................................................................................91 6 Conclusions ................................................................................................. 99 6.1 The challenges of the region .........................................................................99 6.2 Assessment of the scenarios........................................................................101 6.3 Lessons and strategic implications..............................................................102 5 1 Introduction In this chapter we introduce the topic of the report and the main purpose of making scenarios for the High North. The chapter also indicates which data sources that have been used and gives a brief outline of the report. 1.1 Focus on the Barents Sea There is an international race going on for oil and natural gas resources. Petroleum is the dominant global source of energy and the lubricant of the world economy. At the same time, available reserves are highly concentrated to a few regions of the world. Booming Asian economies now put strong pressures on energy supplies. According to the U.S. Geological Survey, a quarter of the world’s remaining undiscovered petroleum reserves are to be found in the Arctic. Many actors are therefore looking to the riches of the north. One of the spots attracting increasing political and economic attention is the Barents Sea. The Barents Sea makes up a large area with a significant resource potential and is, in addition, an important gateway to further exploration