The Fiercely Contested Russian NGO Bill – Russia

On the 13th of July, 2012 a Russian draft law, setting out to label all politically affiliated NGOs with activities funded from abroad as ‘foreign agents’, passed through the State Duma with barely any opposition.  Russian activists are now in strong opposition along with foreign governments.  Said NGOs would have to register as foreign agents and include this label on all publications and web-portals.  Apart from being labelled ‘foreign agents’, NGOs would be subject to frequent audits and spot checks.

Many human rights proponents insist that such a bill would work to suppress opposition to the current Russian state of affairs.  The bill now needs to be passed through the Federation Council, and then onto the Russian president’s desk for Putin’s signature.

Those in Favor of the Bill

Putin’s party, United Russia or Единая Россия,  finds the bill to be inline with democratic standards as it forces NGOs to be open about their sources and funding.  The party advocates that such openness will be in the best interest of citizens.  Those that favor the bill also recognize the current social-network and NGO movements as forces that often override the opinions of Russian citizens.  It is quite true that much of the social-network publicity concerning the December elections has been strongly opposed to the current Russian state of affairs.  These views were also often projected as the views of the overwhelming majority whether or not that was actually true.  Coincidentally, this mechanism does not work in Putin’s favor.  It is worth adding that last year, Putin accused foreigners of funding those NGOs in Russia that were in opposition to his party.

Many in Opposition to the Bill

The General Secretary of the Council of Europe, Thorbjørn Jagland, former prime minister of Norway, found the NGO bill to be reminiscent of the Stalin era.  Jagland elaborated on the term ‘foreign agent’ and it’s historical use in defining those that were executed during the [Joseph] Stalin era.  He found the term to be ‘unfair [and] inappropriate [in that there is no use for such a term] in modern lawmaking [and that] it belongs to the past and does not belong [in] a democratic society.’  He went on to say that the term is also ‘often used in other authoritarian regimes against everybody that has different views.’  (Jagland)

From a U.S. Department of State press briefing, spokesman Patrick Ventrell spoke on the topic of the Russian NGO legislation.

[T]he United States is deeply concerned by the Russian Duma’s consideration of legislation that would potentially limit the activities of Russian nongovernmental organizations receiving foreign financing. The legislation would require NGOs engaged in civil society activities broadly defined as political to register as foreign agents. It differs from U.S. foreign agent – it differs from the U.S. Foreign Agents Registration Act, because registration would be required regardless of whether an NGO works directly on behalf of a foreign entity or not.  Unlike under US legislation, where [some US personnel] are actively working on behalf of a certain government register as foreign agents, which means that they disclose their funding source, NGOs that may be nonpartisan and receive funding from all sorts of different sources and are working in a transparent and nonpartisan manner are being asked to register all as foreign agents. … [The United States simply wants] NGOs to be allowed to ‘work in a nonpartisan fashion and work with members across the political spectrum in a number of different countries’. (Ventrell)


In an objective sense, it is true that the youth can be impressionable, if not more-so than can be the older age groups.  The youth tend to have the strongest influence over social-media.  More so, many advocate-web-portals contain purposefully subjective views with a lack of balance in terms of subject material (in either direction).  A democratic society strives to encompass the views of all age groups, but the spill-over of Russian social-media into other countries presents the world with an image that could potentially only be representative of the younger generations.  This effect then has the ability to feed-back into Russia with the support of foreign youth.  Older groups in opposition may not find this process to be economical for them, and may require alternative mechanisms (data that I do not have would be required to verify this).  The same issue is, naturally, present within other countries including the United States, for example as social media has at times been, collectively, in opposition to the views of the majority.  With this said, one can still be suspicious of any law put into place by a party that the law then serves to benefit.  This could be akin to the American ‘Super PAC’ regulations that may coincidentally benefit the party that worked to put them (said regulations) in place.

On the note of NGO funding, some Canadians could be sympathetic to Putin’s approach due to the way in which the Canadian NGOs in opposition to Canadian oil sands activities were being funded by foreign sources.  Funding was supported by those that were in opposition, but was found to be undemocratic by those that were in favor of the oil activities.

Arctic Economics does not set out to be a proponent of any particular stance, but has the intention to analyze on an objective level.


The Nord Stream Pipeline – Bringing Russian Natural Gas to Europe

Nord Stream Route Map

Nord Stream Route Map – From Nord Stream AG (

Built and operated by Nord Stream AG, the Nord Stream subsea offshore natural gas pipeline system runs 1224 kilometres from Vyborg, Russia, to Lubmin, Germany.  The twin pipeline system aims to maintain one of Russia’s long-standing objectives, which is to supply Europe with a secure and reliable source of natural gas.  On the Russian side, the Nord Stream is connected to Gazprom’s Gryazovets-Vyborg pipeline, while on the German side, the Nord Stream is connected to the OPAL and NEL pipelines.

  • The first of two parallel lines was put into operation in November, of 2011 with an annual transport capacity of 27.5 bcm of natural gas.  The second line was completed on the 28th of June, 2012, and will enter operation in Q4 of 2012.  The ‘twin pipelines will have the capacity to transport a combined total of 55 billion cubic metres (bcm) of gas a year to businesses and households in the EU for at least 50 years’ (“The Pipeline”).
  • ‘The Nord Stream route crosses the Exclusive Economic Zones (EEZ) of Russia, Finland, Sweden, Denmark and Germany, as well as the territorial waters of Russia, Denmark, and Germany’ (“The Pipeline”).  International law affects EEZ’s and territorial waters differently (see the “International Law” section below).
  • The Nord Stream Pipeline will be remotely monitored and controlled from the Nord Stream headquarters in Zug, Switzerland.
  • The Nord Stream consortium is owned by OAO Gazprom (51%), Wintershall Holding GmbH (15.5%), E.ON Ruhrgas AG (15.5%), N.V. Nederlandse Gasunie (9%), and GDF SUEZ (9%).

Price Economics

The western-European market is willing to pay a price that is much higher than that of the substantially subsidized natural gas that is sold to Russians on the Russian market.  In a very basic sense, to have Russian natural gas production in excess of what is currently exportable to ‘high-paying’ countries is to have a decrease in the potential revenue for Gazprom, among other firms.  The incentive is there for Russia to ensure maximum Nord Stream pipeline capacity utilization, and to build upon the Nord Stream system in the future to allow for greater capacity.

One problem that may surface stems from the domestic Russian natural gas market.  Gazprom has been pushing, for a while now, to increase prices due to the fact that the current average, per unit costs of production tower over the per unit prices that are seen domestically.  Russian exports are the sole profit-makers here.   Since the government has actually granted Gazprom the right to increase the price point by a certain percentage annually, Gazprom stands to slowly lose the incentive to prefer exports over imports assuming, naturally, that domestic prices rise at a higher rate than those in Europe.  As more natural gas is extracted from increasingly northern, Arctic-marine areas, the average costs of production are going to be on the rise as well.  These could all impact Russia’s future willingness to supply Europe with natural gas down the road.

The Nord Stream Route is Important for European Confidence

Much of the current European uneasiness toward Russian natural gas imports stems from the ongoing conflict that exists between Russia, and the pipeline-transit states of Belarus and Ukraine.  It is important to recognize that Ukraine has blocked the transit of Russian gas to Europe in the past.  The Nord Stream system thus stands to become an alternative delivery method that can be relied upon to deliver natural gas to Europe.

Gazprom CEO Aleksei Miller said it best when addressing both the Nord Stream and South Stream pipelines at the European Business Congress (EBC) in Portorož, Slovenia;

These pipelines would eliminate the dangerous dependence on transit monopoly by
Ukraine, which in 2006 and 2009 respectively blocked access to the export gas en
route from Russia to European markets. After the new pipelines come into
operation our exports will gain more reliable delivery routes and, no less important,
additional flexibility. This will enable to significantly increase the security of
supply of natural gas to European consumers, to which our company attaches
the greatest importance. Once and for all Gazprom will be relinquished of
arbitrarily imposed responsibility for the consequences of others’ decisions, which
resulted in blocking exports of our gas. (Miller, A. 2012)

The flexibility that Miller speaks of may come in the form of pipeline extensions.  The current line touches Germany where a future branch might touch both Scandinavia and Britain who have already expressed interest.

International Law

The following is a non-exhaustive list of the main articles and provisions of international law that apply to the construction, maintenance, and use of the Nord Stream pipeline system.

Pipelines within a state’s territorial waters

  • Article 76 of the United Nations Convention on the Law of the Sea (UNCLOS) defines the ‘continental shelf of a coastal State [as] the sea-bed and subsoil of the submarine areas that extend beyond its territorial sea’ (UN 1982).
  • Article 2 of the UNCLOS dictates that ‘[t]he sovereignty of a coastal State extends, beyond its land territory and internal waters and, in the case of an archipelagic State, its archipelagic waters, to an adjacent belt of sea, described as the territorial sea’ (UN 1982).

From these articles, one can see that a state has sovereignty over it’s territorial sea.  Nord Stream AG therefore requires a different legal process in dealing with Russia, Denmark, and Germany than it does in dealing with Finland, and Sweden.  As can be seen from the map above, it is very fortunate that there happens to be a space between the territorial seas of Finland and Estonia.  This will have saved Nord Stream AG a great deal of time and money.

Pipelines within a state’s EEZ

  • Article 79 of the UNCLOS grants all states the right ‘to lay submarine pipelines … on the continental shel[ves] [of other states].’  An affected (transit) ‘coastal State may not impede the laying or maintenance of … pipelines’, but is reserved the right to consent to ‘the delineation of [transit] pipeline[s]’ and to ‘take reasonable measures [for the] prevention, reduction and control of pollution from pipelines’ (UN 1982).

Service stations built within a state’s EEZ

  • Article 60 of the UNCLOS grants the coastal state ‘the exclusive right to construct and to authorize and regulate the construction and operation and use of … installations and structures’ and ‘exclusive jurisdiction over such … installations and structures’ (UN 1982).

Initially, there was to be built an intermediate service station platform within the EEZ of Sweden.  Due to Article 60 of the United Nations Convention of the Law of the Sea (UNCLOS), Sweden would have had exclusive jurisdiction over the station, along with the right to construct and operate it.  In 2008, attempting to minimize bureaucratic and legal issues, Nord Stream confirmed that specially-designed inspection tools were available that would have been able to inspect the entire pipeline span without a need for the service platform.  The intermediate service station was thus no longer needed and Article 60 needed not apply.

Environmental impact assessments

  • The Convention on Environmental Impact Assessment in a Transboundary Context dictates the requirement of an Environmental Impact Assessment (EIA) for proposed activities ‘that [are] likely to cause a significant adverse transboundary impact’ (UN 1991)


Barents Sea Oil / Gas License Blocks and Fields – Norway – 2012 Map

Norway Barents Sea Active License Block Map

Above is a map of the Barents Sea, Norway.  Active and inactive production licensing blocks are shown along with the illustrated Norway – Russia maritime delimitation agreement that entered into force on the 7th of July, 2011.

Norwegian Production Licensing Rounds – Currently in Round 22

The next licensing change, with the exclusion of relinquishments and share transfers, will take place in Q1 of 2013 as Norway awards production licenses as part of the 2012 APA (Awards in Predefined Areas), for which the application deadline is the 6th of September, 2012.  The APA round applies to mature sections of the continental shelf that are both understood geologically and situated near developed infrastructure.

The succeeding change will take place in mid-2013 as the Norwegian Government awards new production licenses for the general 22nd licensing round, for which the application deadline is the 4th of December, 2012.

For a licensing round history dating back to 2000, visit ‘Licensing Rounds on the Norwegian Continental Shelf‘ from the Norwegian Ministry of Petroleum and Energy.

Fields – Oil, Gas, and Condensate

Snøhvit – Discovered in 1984 and on stream in August, of 2007, Snøhvit is the only developed field within the Barents Sea, Norway.  The field encompasses seven different production licenses, and is lumped in with two other deposits, the Askeladd and Albatross structures.  Gas from the Snøhvit field is piped through a pipeline (see map) to the Melkøya Island LNG liquefaction plant in Hammerfest, Norway.  The resultant liquid natural gas (LNG) is transported to markets around the world via LNG tankers.

  • Under sound production levels, a loaded 150,000 m3 LNG tanker will depart from Hammerfest every 5 to 6 days.
  • Separated CO2 is transferred back to the Snøhvit field to be re-injected into a porous sandstone layer called the Tubåen formation located 2.5km below the seabed.  It is worth noting that this carbon capture program is being financed, in part, by the EU as all is carefully being monitored to assess the viability of similar projects for the future.
  • As of 31.12.2010, recoverable reserves were estimated to be 149.8 billion sm3 gas, 5.8 million tonnes natural gas liquids (NGL)*, and 16.1 million sm3 gas condensate.
  • Ownership – Statoil (36.79% operating share), Petoro (30% share), Total E&P Norge (18.4% share), Gaz de France (12% share), and RWE Dea (2.81% share)

Goliat is currently being developed with production set to begin in Q4 of 2013.

  • Recoverable oil reserves are estimated to be 28 million Sm3 (174 million barrels), while recoverable gas reserves are estimated to be 8 billion Sm3.  Field life is estimated to be 15 years.
  • Ownership – Eni Norge AS (65% operating share), and Statoil Petroleum AS (35% share)

*Natural Gas Liquids (NGL) are mixtures of liquid hydrocarbons such as butane, condensate, ethane, and propane.  This is not to be confused with Liquid Natural Gas (LNG).


  • Statoil – Snøhvit –
  • Norwegian Petroleum Directorate – Snøhvit – 04, July, 2011 –
  • Ministry of Petroleum and Energy – Licensing Rounds of the Norwegian Continental Shelf –

Map Sources

  • Norwegian Petroleum Directorate – Production License Block Information – July, 2012 –

Faroe Islands Maritime Boundary / Oil and Gas Licenses 2012 Update

A lot has changed since my last Faroese post in Dec, of 2011 (read Faroe Islands Exclusive Economic Zone / Oil and Gas Licenses).   Many licenses have been relinquished by several oil & gas firms.  These include the south-eastern L002, L005, L007, L012, L015, and L017 blocks.

Of the firms that are left, Statoil remains dominant with the rights to 100% of L010, and 50% of L006, L008, L009, and L011 (view map above).  Valiant Petroleum holds 100% of L013, and 60% of L014.  ExxonMobil holds 49% of L006, and 50% of L009 and L011.  Atlantic Petroleum, Dong Energy, and OMV are minority players.

Open Door Licensing

The Faroese government has taken on a new strategy with the intent to secure the interest of foreign operators.  The new ‘Open Door’ policy seems to be an attempt to break down one of the current barriers to entry.

From Jarðfeingi, of the Ministry of Industry – The Faroe Islands

Areas which previously have been open for licensing, including relinquished licenses, are included in the area where it is possible to apply for licenses out of round.

The ‘Open Door Area’, now literally up for grabs, follows the current south-eastern maritime boundary contour that circles the mainland  ending at 10 degrees W.  What is unique about the open door policy, is that there need not be competing bids to win a block.  A lower offer ‘could’ take it all.

Any Potential Down the Road?

There has only been one real oil discovery within Faroe waters to date.  This took place in 2001, but was deemed uneconomical.  Drill data from the ‘Marjun” prospect has been re-evaluated, and has been taking on new light.  It would be a far stretch to deem this the  mother lode oil equivalent, but it is certainly a prospect.

Now ten years later the Jarðfeingi people together with foreign experts have looked at the Marjun drill data once again and it has emerged that the reservoir capabilities may not be all that poor as previously thought after all.
This could possibly reinvigorate the only discovery made in Faroe waters to date.

Heri Ziska – Head of Geoscience Dept. at Jarðfeingi – 12 of May, 2012