Arctic Offshore Development: Global Economic and Regulatory Challenges
|Lead Author||Andrey, Krivorotov|
|Institution Contact||Shtokman Development AG Malaya Pirogovskaya ulitsa 3 119435 Moscow RUSSIA|
|Theme||Theme 2: Vulnerability of Arctic Societies|
|Session Name||2.5 Geopolitics and Security of the Arctic|
|Datetime||Fri, Sep 16, 2016 11:00 AM - 11:05 AM|
|Abstract text||Over the past decade, international approaches to offshore Arctic prospects have become sufficiently more realistic and reserved.
Global macroeconomic turmoil, pertaining low oil prices and structural transformations (shale development, emerging shelf areas, etc.) affect marginal hydrocarbon provinces worldwide. Arctic policy stakeholders shift their focus towards the numerous challenges in the global South and creation of giant trade blocks. Western sanctions on exports of Arctic and deepwater drilling and production equipment to Russia have further hit the industry by splitting the international market for advanced offshore technologies and thus jeopardizing return on investments in the relevant R&D.
Besides, after the Macondo oil spill in 2010, offshore HSE regulations have globally turned more stringent, and are pursued rigorously. There’s no return to ‘oil vs nature’ dichotomy, but reconciling sustainability and industry goals seems complicated for any Arctic nation. As our country-by-country analysis shows, each government has to weigh the potential gains of Arctic offshore development (enhancing energy security, foreign policy effects, regional and industrial spin-offs) against complex considerations like Paris Agreements, domestic policy agenda, budgetary impacts and environmental risks.
As the result, Arctic licensing and exploration do go on, but actual development is largely pursued by national champions or risk friendly medium-size companies. If left to private investments only, contemporary oil rush may turn into yet another ‘tidal wave’ (like former quests for furs, whales, gold or military presence) which hit the Arctic and then retreat, leaving few remnants.
This situation represents a challenge to both oil&gas companies, central and local governments, urging them to improve their mid-term planning, enhance mutual cooperation and maximize ripple effects of any offshore project.
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