Green activists arrested, shots fired at Russian Arctic rig protest

By Vladimir Soldatkin MOSCOW (Reuters) - Russian coast guards fired warning shots and arrested two Greenpeace activists who scaled the Prirazlomnaya Arctic oil platform in a protest over the potential threat to the environment from operations slated to start this year. Production at the rig, owned by state group Gazprom and Russia's first such project in the Barents Sea, was delayed last year after similar actions. Gazprom said the delay was down to "technical reasons". The Arctic holds 13 percent of the world's undiscovered oil and 30 percent of its undiscovered gas according to industry estimates. However, its economic viability, as well as its environmental safety credentials, remain a matter of debate. The arrested activists were from the Greenpeace icebreaker Arctic Sunrise. After they scaled the platform, a coast guard boat fired the warning shots to force the ship to withdraw from the base of the rig. Before the withdrawal, Greenpeace photographs of the scene showed a group of boats - both coast guard vessels and inflatables from the Arctic Sunrise - jostling for position at the base of the rig. "Due to the refusal of the Arctic Sunrise captain to halt the unlawful activity, the administration took a decision to stop the ship. The coast guard was forced to fire warning shots four times from an artillery cannon on board a vessel," Russia's Federal Security Service said in a statement. Greenpeace said it received a threat that the ship itself would be fired at if it did not leave the area immediately. The group said it had sent five boats to the Prirazlomnaya rig. It was unclear where the four other boats were located. "Despite massive financing for Prirazlomnaya, it is not able to guarantee safe production of Arctic oil," Greenpeace said. Gazprom Neft, the oil arm of state gas export monopoly Gazprom, and Gazprom declined immediate comment. INFANCY Onshore drilling is well established, but significant offshore work is in its infancy despite numerous attempts to make it work and relatively shallow waters. A decade of high oil prices, scarcity of opportunities elsewhere, relatively low political risk and a shrinking ice cap has led companies to look to unexploited parts of the Arctic in recent years. Global majors including ExxonMobil, Eni and Statoil have agreed deals with Russia's state-owned Rosneft to enter Russia's Arctic offshore waters. Most of these projects are due to begin extracting in the 2020s, and are seen as crucial to maintaining the 10 million barrels a day of oil flow from the world No. 1 producing nation. Environmental campaigners, worried about the impact on a fragile ecosystem and about how a spill clean-up could work in such remote places, have stepped up their campaigns to match the increasing business interest. There is now greater hesitation among companies as high costs, mishaps, a weaker oil price outlook and determined anti-drilling campaigns take their toll. Offshore safety concerns have grown after BP's Deepwater Horizon oil rig exploded in 2010, killing 11 workers and spewing millions barrels of oil into the Mexican Gulf. LICENCES An incident at the end of last year, where Royal Dutch Shell's offshore Alaska rig Kulluk broke free in a storm from the vessel towing it and ran aground became the latest slip for its drilling program and has been seen industry wide as a turning point for Arctic. Shell later shelved its plans for this year and looks increasingly unlikely to put a 2014 drilling season in place. "The reality is that going forward, the obvious demonstration of climate change in the Arctic will affect policymakers and boardrooms for years to come, and I see that more clearly now than five years ago or three years ago," Harald Norvik, a former CEO of Statoil and an Arctic pioneer, told Reuters in an interview earlier this year. Plans are not entirely on hold though. As well as the Russian projects, in August Norway invited bids for licenses to drill in its eastern Arctic waters after settling a border dispute with Russia. Prirazlomnoye is the first Arctic offshore oil deposit to be developed by Russia and is located in the Pechora Sea, a part of the Barents Sea, 60 km (40 miles) from the northern coast. Its operations are slated to start by the end of 2013 is expected to reach peak production of 6 million tonnes per year (120,000 barrels per day) in 2019. Gazprom Neft is expected to obtain a license from Gazprom to develop the field. It expects investment in the project to be around 200 billion roubles ($6 billion), of which half has been spent. (Reporting by Vladimir Soldatkin; Writing by Andrew Callus; Editing by Pravin Char)