Strident nationalist resource politics are increasingly lowering world oil production creating a dangerous global energy emergency.

There's Not Enough Free enterprise.

On May 8th 2006, Viktor Khristenko. Russia's industry and energy minister said; ..."At a time when energy increasingly affects the wellbeing of billions of people around the world, it is imperative that the world's leaders establish a serious plan for achieving energy security..... Almost two billion people worldwide lack modern-day energy services and many do not have electricity. This blocks their access to the many benefits and advances of civilization....".

The global oil patch is an "opportunity-constrained market."     In short, politics is curbing oil company ambitions and the world's need for more energy.   There aren't a lot of places left in the world where the big oil companies can spend a lot of money and expect to find the types of large oil and gas reserves they need to meet growth and production targets.

In those countries where government runs the oil and gas industry, production is generally stagnating because government run energy groups typically do not have the technical, capital, and market expertise of major international oil companies. Its a sad but obvious fact that bureaucrats as a breed generally do not embody the incentive to produce anything efficiently. Corruption also tends to be rife in government run oil businesses.

When national governments and their often inefficient bureaucracies strengthen their grip on oil, the outcome is more often than not a deterioration in the country's industry and a drop in output - a trend the world community can ill afford right now. "The rise of nationalism is a concern for future [oil and gas] production," warns William Ramsay, deputy director of the International Energy Agency, the western oil watchdog.

Nationalization of resources dries up international investment fast, as Bolivia and Venezuela are about to find out.  Oil and Gas Companies responsible to shareholders are strangely increasingly unwilling to commit the vast amounts of capital needed to find and develop oil and gas resources while the threat of nationalization (expropriation, or theft by governments) hangs over them.

By reneging on legally binding oil and gas development contracts negotiated in good faith by international oil companies, who are risking hard won shareholder's capital, which could be deployed anywhere, based on binding promises made in the resource contracts, brings expropriating governments down to the level of state sponsored thievery.

Governments are strangling the world's energy markets. 

Not just the nations involved but consumers worldwide suffer when governments take over oil and gas production. Julian Lee, of the Centre for Global Energy Studies in London, estimates that factors involving geopolitical crisis and nationalism in Iran, Iraq, Nigeria, Russia, Kuwait and Venezuela have reduced oil supply since 2000 by as much as 7.8m barrels a day - equivalent to the combined consumption of Germany, France, Italy and Spain. This is the primary reason oil prices are rising today. If oil and gas was left to free enterprise instead of often corrupt inefficient governments, there would be enough oil today for everyone and worldwide exploration would be finding additional reserves at a much higher rate.

As an example of the effect of governments in oil, Russia's oil production, which is now controlled by a heavy government hand, is increasingly in question. Until two years ago Russia oil production enjoyed double-digit growth as a result of privatization. But the country's ageing fields, together with Moscow's dismantling of Yukos - once Russia's most dynamic energy group - its sudden increase in oil export taxes and its decision to limit international oil companies' involvement have dramatically slowed that trajectory.  Russia's production growth fell last year to 2.3 per cent from 9 per cent in 2004 and 10.7 per cent in 2003.

“Resource nationalism” is currently back in vogue.  But for gas suppliers in particular, it usually ends badly as burnt big end users switch to other more reliable suppliers. Algeria tried and got burnt itself, and now Bolivia is about to find out how the real world works all over again.    Investors need to know that what are seen to be increasingly duplicitous governments will actually uphold legal contracts, and abide by the agreed rules of the game.  Oil company management needs to know whether the host government is likely to cheat you out of the company's newly discovered resource assets before they waste shareholders' money looking for them.

The End Result: Energy Wars.

Many believe that the Iraq war and Iran disputes are really flimsy covers for an ongoing energy war between the nations that is already well underway.   Humanity can no longer afford all these ruinous wars, which, if they suddenly involved nuclear weapons, could wipe out entire regions of humanity.   In the 21st century, with all the instant communications, increasingly highly educated people and the will to work together, there must be a better way for mankind to find ways to cooperate on securing and sharing the world's energy resources and supplies. 

The Arctic Commons development Regime will show the world a better way to cooperatively develop the earth's resources in an environmentally responsible and commercially viable way. It will point the the way for humanity to develop the Earth's other common resource regions and it might just help stop energy-inspired wars.

The Arctic Environment Needs Special Care.

The Arctic environment is fragile and hostile to humans and equipment. Only a very well capitalized consortium of companies could provide the resources to properly protect this sensitive environment.

The Arctic Operating Environment Requires Massive Capital Pools and International Oil and Gas Expertise.

The extreme arctic temperatures and hostile environment can only be surmounted with the most well capitalized expert teams. The deep water covered in shifting frozen ice represents probably the most challenging operating environment ever faced for oil and gas exploration and production. Only a multinational consortium of major oil and gas companies can muster the people and technical expertise to safely explore and develop the Arctic oil and gas resources and finance such a massive multi-decade long effort.

Don't let Governments Strangle Arctic Oil and gas Production.

Consumers will be doomed to pay much more at the pump. If governments are allowed into the Arctic Oil and Gas play, the world may never see the much needed production from the region.

Governments of the five countries surrounding the Arctic Ocean Commons area each control vast highly prospective continental shelf areas in shallow Arctic waters within their Exclusive Economic Zones.   Russia has by far the largest continental shelf EEZ area.  Thus far Arctic Region governments have been woefully short in developing these large areas under their own control. Thus they have no legitimate argument in demanding control of the Arctic Commons region's oil and gas potential.

Governments should stick to the things governments do best and oil and gas is not one of them.

Many governments are embarking on the questionable practice of requiring payments of ever-increasing fees by auction for the rights to promising exploration areas within national boundaries.  This practice is very damaging to the oil and gas industry and the future energy security of the planet as it is "dead money".   Money that does not go into finding or developing future oil and gas production. The recent payment by CNOOC of US$4 billion for exploration rights to various offshore Nigerian Oil fields is an extreme example of a "resource access tax", which makes it even harder for companies to deploy the capital to find and develop actual oil and gas fields. The end result, consumers pay more for less.


A Strong private consortium will develop the Arctic oil and gas resources safely and promptly.

Governments have competing national and political priorities. These national priorities will be most likely incompatible with what would ideally be a very capital-intensive, comprehensive and environmentally responsible Arctic oil and gas exploration and development regime.  The United Consortium approach gently puts all the incompatible nationalistic interests aside and moves forward with a carefully thought out and very comprehensive environmental, exploration and development regime that puts the best interests of humanity and the environment at the forefront.

United's cooperative "Consortium of the willing and capable" approach will best serve the Arctic environment and the interests of the governments, Arctic peoples and humanity as a whole.  Only a new global Responsible Private-Public Consortium, made up of the best Oil and Gas Companies, Government Agencies and Environmental Groups can safely and quickly develop the Arctic Oil and Gas resources in a safe and responsible manner.

In a now famous speech in 1987 at Murmansk, Mr Gorbachev suggested that Arctic countries should join together to create a nuclear-free zone, to work out a common plan for using natural resources and protecting the environment, as well as for guaranteeing the rights of Native peoples. The climate of this international co-operation, he said, should be 'determined by the warm Gulf Stream of general European development and not by the polar breath of accumulated suspicions and prejudices.'

United's plan is a blueprint for a more stable Arctic Ocean Commons development order, promoting greater use and cooperative management of the Arctic ocean's oil and gas resources and generating stability, harmony and goodwill among surrounding States.

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