NORWAY LIMITS BARENTS DEVELOPMENT, FOR NOW

UNCLAS OSLO 000462

SIPDIS

SENSITIVE

SIPDIS

STATE FOR EUR/NB RDALLAND, EB/ESC SGALLOGLY,
RGARVERICK
USDOC FOR 4212 MAC/EUR/OEURA
USDOE FOR PI DPUMPHRY, ZHADDAD, LEKIMOFF; FE FOR
EROSSI, JSLUTZ, GDEHORATIIS, JSWIFT
NOT FOR INTERNET DISTRIBUTION

E.O. 12958: N/A
TAGS: PREL SENV EPET ENRG NO
SUBJECT: NORWAY LIMITS BARENTS DEVELOPMENT, FOR NOW


1. (SBU) SUMMARY. The Barents Sea is home to one of
Europe's most productive fisheries and some of the most
significant offshore oil and gas reserves in the Arctic.
With the March 31 announcement of its new Integrated
Management Plan for the Barents region, the Norwegian
government has settled, at least for now, the ongoing debate
over how (or even if) the region's energy resources will be
developed. The plan, a compromise between pro- and
anti-development factions within the government, will serve
as the fundamental blueprint for Norway's High North
development strategy. It places a four-year hold on new
petroleum development activity within 50 kilometers from the
Norwegian coast and in areas close to permanent sea ice.
During this four year hiatus Norway will study the geology
and ecology of the coastal region, then revisit the
development versus protection debate in 2010. The limits on
petroleum development were no surprise. Though U.S. oil
firms strongly favor opening to exploration some
environmentally-sensitive areas the plan puts off limits,
they are resigned to the near certainty that the governing
center-left coalition will bar oil activity there for the
remainder of its term. The plan leaves it to the next
government to make the hard choice on whether to open these
potentially oil-rich waters, with their valuable fishing
grounds and unspoiled scenery, to exploration. The plan now
goes to the Norwegian Parliament, which will review and act
upon the recommendations this summer. END SUMMARY

LIMITS ON COASTAL ENERGY EXPLORATION, LOFOTEN AND BEAR ISLAND
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2. (U) Norway's new Integrated Management Plan for the
Barents region limits energy development activities for the
next four years in three areas: the Barents coast, the
Lofoten peninsula, and Bear Island. Along the Barents Sea
coast, petroleum activity is barred in a 35-kilometer
offshore zone extending from the Russian border south to Bodo
-- essentially covering one-third of the north Norwegian
coast. The rationale for the 35 km zone is to allow 24 hours
of drift time before any oil spill would hit the coast,
giving authorities more time to respond. From 35 to 50 km
from the coast, no new petroleum activities are allowed
except where concessions already have been granted. e.g. in
the Goliat field (the second commercially-viable strike in
the Barents after Snoehvit) and areas awarded in the 19th
petroleum concession licensing round. The 19th round
licenses were announced at the same time as the management
plan, and three of them fall partially within the 50 km zone.
(Note: Post will report septel on the 19th round. END NOTE.)


3. (U) The plan bars nearly all petroleum activity in the
sensitive fisheries and aviaries around the Lofoten
peninsula. In this area, no energy development is allowed in
a zone extending 300 km from the coast between 67 to 69
degrees north, encompassing the Nordland VI, Nordland VII and
Troms II development areas. Within Nordland VI, oil
operations may continue in two blocks where licenses were
previously awarded. Seismic activity will be allowed in this
area as well, but no impact assessments will be conducted in
the zone. In the Barents Sea, no energy development activity
will be allowed in a 65 km zone around Bear Island or
anywhere within 65 km of the edge of permanent sea ice.

EXPANDED RESEARCH AND ENVIRONMENTAL MONITORING
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4. (SBU) The plan calls for stepped-up research on the
geography and ecosystem in areas where petroleum activity is
put on hold. The Norwegian Petroleum Directorate will
undertake broader mapping of the seabed in the area around
Lofoten and will map the continental shelf north of Tromso.
Results from these studies will be fed into the next
iteration of the plan (due in 2010),when development goals
will likely be revised based on scientific and geologic
findings (and a new government will be in power).

5. (U) The nature reserve around Bear Island will be
extended to the 12 nautical mile territorial sea limit. To
further protect the coastline from the potentially harmful
effects of increased oil tanker and other sea traffic, Norway
will seek International Maritime Organization (IMO) approval
to establish defined sea lanes 30 nautical miles from the
Norwegian coast. Since Norway and Russia share Barents Sea
resources, Russia's cooperation will be required to ensure
sustainable fisheries management and environmentally sound
energy development. The Norwegians view the Management Plan
as a starting point for their broader Barents 2020 Program,
which seeks to forge closer cooperation with all countries
(including Russia) that have interests in the Barents.

COMMENT: A COMPROMISE THAT THE RULING COALITION (AND OTHERS)
CAN LIVE WITH
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6. (SBU) The Management Plan represents a compromise between
those in the ruling coalition who understand that Norway must
develop new oil and gas reserves to ensure its medium-term
economic health and those who oppose oil activity in the
Arctic at all costs. In one sense, this is a false debate,
as Norway's long years of producing petroleum offshore
without a major environmental incident amply demonstrates
that oil exploration and environmental protection are not
mutually exclusive. The industry must keep environmental
considerations uppermost in mind, however, as any incident
that damages fisheries or despoils scenic areas vital to the
tourism industry could set back efforts to develop Barents
energy resources for years.


7. (SBU) By delivering the plan on time, the Stoltenberg
government showed that it is able to balance the competing
political agendas that exist within its coalition to produce
a consensus document. Despite falling approval poll numbers
and internal divisions, Stoltenberg demonstrated he has the
political clout to force an agreement when it counts.
Mindful of the economic stimulus energy development can
bring, the pro-development Labor and Center parties can point
to the plan to show remote northern communities that they
care about creating jobs and spreading Norway's oil wealth.
The anti-development and environmental forces in the
Socialist Left Party can say they took a stand against
developing the most sensitive areas of the coast, and won.
The petroleum companies essentially got what they expected --
continued access to good acreage in the Norwegian and Barents
Seas, which will keep them occupied until they take another
run at opening up the potentially oil-rich waters in the
Lofoten area in 2010. Given the broad range of issues
involved, no document could have pleased every constituency
-- conservatives still say the plan places too many limits on
development while the left says the restrictions are not
strong enough -- but everyone can walk away with something.
The plan will be reviewed in four years time and is sure to
figure prominently in the 2010 elections.

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