The scramble for Arctic riches is turning friends into foes as northern neighbours begin to arm themselves in a new Cold War for oil.

Only days after a Russian submarine planted a flag on the seabed at the North Pole, Stephen Harper, the Prime Minister of Canada, announced plans for new military bases in Canada’s Northwest Territories. Mr Harper’s aggressive move – in August in Resolute, an Inuit community 372 miles from the North Pole – came just as a Danish expedition embarked on a mission to survey the Arctic seabed.

The ominous conjunction of a melting Arctic ice-cap and very expensive energy is focusing interest on a forgotten landscape and bringing to the fore unresolved issues regarding the demarcation of territorial seas.

The bizarre Russian flag-planting and Mr Harper’s plans to kit out the Canadian navy with new icebreakers and put 1,000 soldiers in the Arctic can be regarded as the firing of the first shots.

Canada was on the front line of the last stand-off between the US and Russia, maintaining Arctic early warning stations for incoming Soviet missiles, but this latest conflict promises to have many fronts, including one with Canada’s ally and neighbour, the United States.

Canada claims sovereignty over the North West Passage, a sea route that links the North Atlantic with the Pacific through Canada’s Arctic archipelago. However, Washington insists that the Passage is an international waterway and rejects its neighbour’s claim.

Meanwhile, Russia is negotiating with Norway over the demarcation of the Barents Sea, a region rich in gas and where Gazprom is already developing the massive Shtokman field. Canada is at odds with Denmark over Hans Island, a small and uninhabited shelf of rock lying between Greenland and Ellesmere Island. Both nations claim sovereignty and, unsurprisingly, the underlying issue is what minerals may lie beneath the barren surface.

The Arctic is the last oil frontier but there is disagreement over the potential resource.

An American geological survey has estimated that a quarter of the world’s undiscovered oil and gas is within the Arctic but in a recent review of the evidence, Wood Mackenzie, the consultancy firm, reckoned it was more likely to be a fifth.

The total known resource, says Wood Mackenzie, is 233 billion barrels with a further 166 billion barrels yet to be discovered. About 69 per cent of the resource is Russian gas.

A low-ball estimate of the cost of recovery is $1 trillion (£505 billion), which implies very significant profits for investors. The quest for energy security is making everyone a little bit more nervous.

Times Recommends

• B&B hit by £18m fraud charge
• Mortgage rescue fund at the ready
• Zoom airline collapses and halts all flights