North Sea oil and natural gas reserves are expected to become a major financial asset for Scotland on independence, Scottish Finance Secretary John Swinney said late last month. “North Sea oil and gas is a fantastic natural asset which has a great future for many decades to come,” Swinney said, adding that there may be as much as 24 billion barrels of oil and natural gas reserves left in the North Sea. Scotland holds a referendum for independence from the UK in September.
The Scottish government’s declared ambition to finance itself in part through oil and gas revenues highlights the importance of energy in geopolitics.
Although acquiring Crimea’s oil and gas reserves may have not been the primary reason for Russian President Vladimir Putin’s annexation of Crimea, the peninsula has vast offshore oil and gas resources in the Black Sea, estimated between 4-13 trillion cubic metres of natural gas. Russian gas monopoly Gazprom, which has nationalised the Crimean branch of Naftohaz Ukrainy, Chornomor Naftohaz, will now manage the peninsula’s energy resources. Russia could also potentially claim large parts not just of Crimea’s, but also of Ukraine’s continental shelf and Exclusive Economic Zone.
“With the Crimea reportedly on the shelf of the Black Sea, there is Chornomor Naftohaz, which is an old enterprise that has rights to develop oil and gas fields in the area but now it’s technically a Russian enterprise since it belonged to Ukraine,” Slava Smolyaninov, chief strategist at UralSib Financial Corp in Moscow, told New Europe on June 6, adding that Ukraine threatened to sue Russia over Chornomor Naftohaz and over underground storages of natural gas in Crimea.
“People like to think that Russia was also trying to get all the energy benefits that were possible out of Ukraine. Was it the primary reason for Russia to move into Crimea? I seriously doubt it because I believe that if there were no events overthrowing [Viktor] Yanukovych in Kiev, Russia probably would not have moved into Crimea at all,” he opined.
“Is it the same with Donetsk and Lugansk?” he asked. Ukraine is now concerned about losing one of the two largest shale gas fields in the Donetsk and Kharkiv regions. The regions are also rich in coal reserves. “There’s potentially an energy spin to this story,” Smolyaninov said. “It’s probably not the top one, but it’s one of the potential benefits that Russia could get out of that situation altogether,” he added.
Some Ukrainian officials in Kiev have suggested that energy was one of the reasons for the Crimean annexation and Ukrainian separatists are fighting over cities like Slavyansk. But Smolyaninov reminded that Poland also reportedly has large shale reserves “but has not yet proceeded into any meaningful way to develop them. It makes me a little suspicious that Ukraine would outpace Poland in terms of technological breakthrough to get shale out off the ground and Poland is as dependent on Russia energy as Ukraine”.
“Before there are tangible results like in United States - and almost nowhere else to be fair - there will be theories that Ukraine or Scotland may be energy independent but before the results are seen it’s pure speculation,” Smolyaninov said.
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Previously on Energy Insider:
Poland Spearheads EU Quest For Energy Independence