Arctic anxietyBP, British foreign policy and the rush for polar oil

In January 2011, BP signed a deal with Russian state oil company Rosneft to together explore for Arctic oil in an area the size of the entire UK North Sea. This report from PLATFORM and Greenpeace shows that no company is at present adequately prepared to drill offshore in the Arctic, given the current lack of regulation, knowledge, technology or research. It highlights BP’s persistent managerial failures to address safety risks in the Gulf of Mexico and its safety record in Alaska, and argues against its involvement in pushing new boundaries of fossil fuel development in conditions as treacherous as those to be found in the Arctic. The report also examines the role of the UK government’s foreign energy policy in supporting BP’s controversial activities abroad. Lobbying for oil deals is conducted behind closed doors with little public oversight or accountability. Using political will and spending public funds to promote British businesses’ exploitation of fossil fuel frontiers is a significant matter that should not be decided without public discussion.

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This report was researched and written by Anna Galkina with contributions by Mika Minio-Paluello and Adam Ma’anit of PLATFORM. The report also benefited from the comments and feedback of Mel Evans, James Marriott and Kevin Smith of PLATFORM, Francis Grant-Suttie, Clive Tesar and Aleksey Knizhnikov of WWF, Ben Ayliffe, Charlie Kronick, Truls Gulowsen and Ivan Blokov of Greenpeace, and Nina Lesikhina of Bellona. The report and research, which included trips to Arctic Norway and Russia, has been made possible by support from the Joseph Rowntree Charitable Trust. This is the second in a series of papers looking at the issue of domestic and foreign energy policy. The first paper, ‘Off the deep end: Foreign policy and the dash for offshore oil and gas’, can be downloaded from the PLATFORM website. The third publication in the series in Summer 2011 will be looking at the problems underpinning the frame of ‘energy security’. For all enquiries contact info@platformlondon.org Email info@platformlondon.org if you would like to receive occasional newsletters from us. You can also find Platform – activism, education and the arts on Facebook, and @platformlondon on twitter. Cover photo: Greenpeace / Will Rose Design by: Tim Ratcliffe

Image adapted from CIA factbook

the firm TNK-BP – to hold up the deal as they intend to sue BP over breach of their shareholder agreement.6

Furthermore, the Conservative-Liberal cabinet support for BP’s new deal with Rosneft has been criticised as reversing the government’s more critical position vis-à-vis Russia.7

Rosneft’s main assets were seized from the business empire of Mikhail Khodorkovsky, an imprisoned former oil tycoon who received an additional sentence in late 2010. Foreign Secretary William Hague condemned the court decision against Khodorkovsky, expressing concern for “how the law is applied in Russia”.8 His colleague Chris Huhne’s appearance at the BP/Rosneft signing ceremony could appear to be a reversal of this stance, but in reality it represents policy continuity: both Labour and Conservative governments have provided diplomatic pressure, support and validation for British oil companies breaking open new frontiers.

British Minister of State in the Foreign Office David Howell, Energy Minister Charles Hendry, former Business Secretary Peter Mandelson9 and former Prime Minister Gordon Brown10 have all supported BP in public and behind the scenes in Russia disputes. UK embassies in countries ranging from Norway to Uganda have specialised oil or energy teams for “market advisory”

On Friday 14 January 2011, BP called a last minute press conference at its St James’ Square headquarters in London. Journalists from UK papers and Russian TV were summoned with little indication of the content. As speculation raged, it emerged that BP CEO Bob Dudley had just returned from meeting Vladimir Putin at his country retreat.

In due course Dudley entered the briefing room alongside Eduard Khudainatov, his opposite number at the Russian state oil company Rosneft. The two announced the new “Global and Arctic Strategic Alliance” which had been finalised that morning: BP and Rosneft would together explore a vast area of the Russian Arctic for oil, and co-operate in breaking through frontiers elsewhere. The two signed the papers to applause from the gathered journalists and politicians including UK Energy and Climate Change Secretary Chris Huhne.

As a result of the deal 125,000 square kilometres of the Kara Sea is to be blasted with seismic tests and drilled in the search of new oil reserves. The three license blocks in the Kara lie just north east of the famously gas-rich Yamal Peninsula. Exploring this enormous area - equivalent in size to the entire UK North Sea – is a major undertaking, but BP and Rosneft are confident that reserves discovered will be

Introductionin the multiple billions of barrels. Drilling is expected to start in 2015.1

But with only two months a year of ice-free water, the companies will have a narrow weather window to drill.2 Moving rigs ever further north into more and more challenging climate conditions requires not only cutting edge technology but technology that does not yet exist. Delays and cost increases are common in the oil industry, as they have been with BP’s High North projects in Alaska.3 The company plans to invest $2 billion in exploring the Kara Sea over 10 years, but this could easily spiral upwards, and the risk of not finding the reserves hoped for is great.4

The new deal includes establishing a joint Arctic Technology Centre as well as a wider Arctic Protocol to cover further exploration and extraction across the polar region.5 BP hopes to extract crude from Russia for the next fifty years and knows it will need to focus on the technologically-difficult and hard to access reserves to do so.

Already this deal is heavily contested. As this report goes to press it is subject to a court case due to be heard in Sweden. The High Court in London has granted an injunc-tion to BP’s other Russian partners – co-shareholders in

or deal brokering work. Ministers, diplomats and civil servants have been enrolled into promoting British businesses in Arctic Norway, Russia, and Canada. When probed on the Khodorkovsky issue in relation to the BP/Rosneft deal, Energy Minister Charles Hendry said the government’s support for BP was “purely commercial”.11

Dissociating commercial interest from political, environmental and social impacts of policy is particularly dangerous with regard to frontier oil drilling. The Arctic Ocean is a new frontier for offshore oil extraction, and the risks have not been fully addressed or understood. The US National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling concluded in its final report in January 2011 that “detailed geological and environmental information does not exist for the Arctic exploration areas … and industry and support infrastructures are least developed, or absent”.12 Most standard solutions for dealing with spilled oil are made ineffective or difficult to use by polar temperatures and floating ice. The existing regimes of governance for the Arctic region are not designed to cope with a resource rush, which makes it easier for authorities to assert rights to drill for resources than to protect fragile landscapes from industrial use.

BP Chief Executive, Bob Dudley and his opposite at the Russian State oil company Rosneft shake

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Oil extraction in the High North poses significant financial risks and when set against the urgent need to radically reduce global greenhouse gas emissions, such development only adds to the risk to the climate posed by fossil fuel usage. Circumpolar countries are promoting non-renewable resource extraction as the primary way to develop a historically marginal region, but such extraction does not offer sustainable development over the long term.

At present no company is adequately prepared to drill offshore in the Arctic, given the current lack of regulation, knowledge, technology and research. BP’s persistent managerial failures to address safety risks in the Gulf of Mexico, highlighted in the National Commission’s report, as well as its safety record in Alaska, warn against allowing the company to push boundaries, particularly in Russia where the national oil industry is seen as irresponsible and non-transparent.

The UK’s foreign policy, particularly in relation to energy, tends to be conducted behind closed doors with poor public oversight or accountability. The government’s support for BP’s new alliance runs fully in this vein, with the lobbying process kept completely secret due to the sensitivity around BP as a company and the Arctic as a frontier. Using political will and spending public funds to promote British businesses’ exploitation of the Arctic is a significant matter that should not be decided without public discussion.

Until now no House of Commons, or Select Committee discussion has taken place on whether and how Britain should act in the Arctic, indeed act as an ‘Arctic State’. A House of Lords discussion in early December was poorly attended as well as patchily informed, particularly compared to heated and wide-ranging debate on the topic in the European Parliament.13

An earlier paper by PLATFORM entitled “Off the Deep End” explored the way the current promotion of a narrow concept of ‘energy security’ is used to deflect safety concerns and critiques of oil extraction in deeper waters and deeper risks.14 A UK Parliamentary committee has since demanded more thorough and comprehensive safety inspections on North Sea oil operations.15 The Arctic and the High North demand even greater caution. The UK government needs to take a more measured approach and stop its support for companies entering the Arctic without the necessary preparation and safety precautions.

Without public consultation and parliamentary scrutiny, there can be no informed and democratic decisions about the UK’s involvement in the Arctic. Energy policy with significant social and environmental impacts and serious human rights concerns should not be decided behind closed doors and purely on the basis of commercial interest. By providing an overview of Arctic resource politics, PLATFORM and Greenpeace aim to help launch this desperately needed public debate.

Contents1. Introduction

2. Waiting for accidents to happen..................................................................... 7-10The Arctic ‘Frontier’ Oil Spill Response

3. Arctic communities: pawns in the resource chess game? Pages............. 11-14Free, prior, informed consentFast changes

4. Why is it “too late”?.........................................................................................15-18Poles apart UNCLOS Arctic Council

5. The Keywords of Arctic policy........................................................................19-22 Precautionary approach Depletion ‘Energy Security’ Resource Sovereignty ‘Taming the Bear’ No Alternatives?

6. UK and EU Arctic policy: a choice..................................................................24-28 EU: Safety vs security Shifting Principles What business is it of Europe’s? UK: the non-debate Arctic oil as a business opportunity? The choice

7. Trusting the best?............................................................................................29-34BP’s frontier safety recordA lesser evil? The Western standards

8. Conclusions and Recommendations..................................................................35

Oil Spill ResponseIn Arctic conditions it would be impossible to rely solely on standard technologies of oil spill response. The use of chemical dispersants is all but impossible under ice; sea ice and high winds render using containment booms (temporary floating barriers) difficult, and in-situ burning of oil in low temperatures is much less effective.22 BOEMRE (the US offshore resource regulator ) estimates that mechanical containment and recovery methods are only effective on one to twnety percent of spilled oil in broken ice.23

Moreover, extreme weather and long periods of darkness limit the time periods when emergency response and rescue can be carried out. According to Nils Masvie, director of Norwegian offshore risk assessment firm Det Norske Veritas, “Sometimes search and rescue operations stop in the evening because it is too dark, resuming again at eight o'clock when the light returns. But if something happens on the Arctic Barents Sea in November it would be, “OK, we'll come back for you in March.”24

Industry consultancy Nuka Research and Planning Group has come up with a way to measure this problem using the concept of a ‘response gap’, meaning conditions where drilling or transport operations can be carried out, but emergency response cannot. For instance, research

The Arctic ‘Frontier’The Arctic is a true ‘frontier’ for the oil industry, with exceptionally challenging conditions. Seasonal ice cover means that there is a need to protect drilling equipment from floating ice in the warmer months, and then during Winter either to tow it away or leave it safely in a freeze. In places affected by drifting icebergs, oil drilling platforms need to be able to shut down and move aside in a matter of hours, if the iceberg is too large to be towed away itself. This means that oil wells in seasonal ice waters take longer to complete. Although climate change is causing the sea ice cover to retreat, according to current models seasonal ice will not disappear entirely from the Arctic Ocean in the 21st Century. Furthermore as the ice retreats it still leaves rough weather and storms, characteristic of high-latitude conditions.

In these conditions a potential oil spill would be much more persistent than in a warmer climate (low temperatures hamper the processes of evaporation and bacterial degradation),19 and the interaction between an oil slick and sea ice could have severe and unpredictable effects. Cambridge University professor Peter Wadhams explains

that oil released under sea ice would be trapped and “encapsulated through new ice growing under the oil layer. This preserves the oil in a toxic state. Months later and hundreds of miles away, the floe will eventually melt, releasing toxic oil, which has light fractions still present, in a location where it might be dangerous to birds and other wildlife”.20

The Arctic Ocean hosts a very diverse ecosystem thriving on the edges of the ice pack, as well as important migration corridors for whales and birds. The long life span and slow reproductive rates, as well as the dwelling habits, of a number of key species of Arctic animals mean that they would be particularly threatened by pollution.21 Plankton that form the base of marine food chains would also be affected, with long-lasting impacts on the rest of the ecosystem.

commissioned by the WWF showed that in Prince William Sound (the site of the Exxon Valdez spill 18 years ago), a response gap exists 38% of the time: that is, no emergency response work could be carried out 38% of the time on a yearly average (and 65% of the time in winter months).25 Prince William Sound is sub-Arctic and much more accessible than the remote areas of the Chukchi, Beaufort, and Kara Seas, where drilling concessions have been granted by Russia and the US. A study by the Norwegian Meteorological Institute, commissioned by the environmental group Bellona, found that containment booms can only be used in the Barents Sea roughly every other day.26

With sparsely populated shorelines and lack of established monitoring, it could be a long time before a spill is even noticed by environmental regulators. In Spring 2003 the staff of the Nenetsky National Park in Russia found traces of an oil spill around the island Dolgy after it had already caused the deaths of hundreds of birds. There has been no official record of the spill; according to Bellona it could have been caused by an accident on a test drilling site of one of Gazprom’s subsidiaries. To date, no company has taken responsibility.27 This national park, incidentally, belongs to the same district as Novaya Zemlya and BP and Rosneft’s new concessions.

1.Waiting for accidents to happenJust months before the Deepwater Horizon disaster, US Senator Joe Lieberman’s justificationfor keeping offshore drilling provisions in the climate and energy was that, “accidents happen.”17

The tragic event in the Gulf of Mexico in 2010 unfortunately proved the truth of his words, andre-emphasized the need for technical preparedness to deal with inevitable accidents as part andparcel of all offshore oil policies. Yet a number of recent scientific and policy papers18 suggestthat available drilling and spill response technology, and current understanding of the potentialrisks, are inadequate to the challenge of operating in the Arctic.

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BP’s publicised plans for collaboration with Rosneft include the establishment of an Arctic Technology Centre in Russia “which will work with leading Russian and international research institutes, design bureaux and universities to develop technologies and engineering practices for the safe extraction of hydrocarbon resources from the Arctic shelf”.28 But most current oil spill cleanup research is in small controlled tests or modeling that cannot adequately substitute for the real event, especially a catastrophic blowout like Deepwater Horizon in the Gulf of Mexico. It is a matter of concern whether this new research centre will have the funding capacity to invent new technologies which will be needed for the special circumstances in the Arctic. Given the greater risk of disaster and significantly more difficult response procedures, it would be logical to expect companies to prepare detailed contingency plans and invest in expanding the available rescue capabilities in Arctic areas. So far, plain disregard for safety measures appears to have been the norm for a range of oil companies operating in the High North or Arctic.

An analysis carried out by a number of US conservation groups29 shows that in the event of a spill in the Chukchi Sea, Shell would be able to mobilise:

• 13 emergency response vessels, only 8 of which would be self-propelled (as opposed to 32

vehicles deployed in the Gulf of Mexico during the Deepwater Horizon disaster),

• 6,000 ft of containment boom (417,320 ft in the Gulf of Mexico),

• 28,000 barrels of offshore storage capacity (against 122,000 barrels plus 175,000 on standby).

Moreover, WWF points out that “Shell’s 2010 contingency plan for a Chukchi spill identifies the village of Wainwright as the marine hub for a response effort—when Wainwright (population 494) doesn’t even have a dock.”30

The US Coast Guard (as noted by the National Commission’s Final Report) also currently does not have the capacity to respond to an emergency in the Alaskan Arctic: “The Coast Guard does not have sufficient ice-class vessels capable of responding to a spill under Arctic conditions: two of its three polar icebreakers have exceeded their service lives and are non-operational.”31

Cairn Energy refused to reveal information on its contingency plans for a spill during their drilling off the coast of Greenland, under the pretext that the spill response effort could be “sabotaged” should they do so. However, according to Dr Martin Preston at Liverpool University, the information available on Cairn’s plans gives no indication of the company having considered the specific risks associated with Arctic conditions, instead using “really rather standard techniques”.32

Chevron have admitted that relief wells are of “limited use” in conditions of a short ice-free drilling season – specifically in the Canadian Arctic – as completing a relief within the same season is unlikely and as a requirement to plan for relief wells “places significant economic penalty on both exploration and development drilling activities”.33 Chevron’s presentation further argues that regulators should instead require oil companies to have in place same-well safety measures “equivalent” to relief wells, but any of those would be rendered equally ineffective if a blowout were to make the well inaccessible.34

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Comparative quantities of cleanup equipment used during BP’s Deepwater Horizon disaster and those in Shell’s spill response plan for the Arctic.

Used for Gulf of Mexico Disaster

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Industry experts recognise that regulation, as well as financial and intellectual investment in safety technology, has failed to keep up with the development of offshore drilling. Retired Admiral Thad Allen, the commander of US federal response to both the Deepwater Horizon spill and Hurricane Katrina, noted in an interview in August 2010: “Oil spill response is all predicated on the lessons of the 1989 Exxon Valdez disaster. The legislation that came out of that disaster focused on tanker safety and phasing out single-hull oil tankers, on making sure the party responsible for the disaster meets its liability requirements, and on cleanup as directed by the Oil Pollution Act. […] In the 10 years after that accident […] oil drilling was moving offshore and going deeper underwater. So the technology changed, and the overall response structure didn't keep pace with those changes and the emerging threat.”35

In some cases this lack of financial and intellectual investment is beginning to be addressed, such as with the $2bn bonds as upfront payment for emergency response that Greenland now requires from any company wishing to drill in its waters.36 Officials in Russia have hinted at the potential establishment of a similar fund.37 However, this still is a unique measure among the Arctic states and also needs to be complemented by safety regulation.

Oddgeir Danielsen, oil and gas expert at the Norwegian Barents Secretariat, comments that even now, in the Barents Sea off the coast of Norway, drilling plans are well ahead of emergency response capability, and there is “a need to show decision makers that time and money need to be spent on safety”.38 He said, “I hope that a major accident is not what is needed before relevant action is taken.” (For more on the Norwegian safety dilemma see page REF.)

It is concerning that even after the Deepwater Horizon disaster, the Arctic States seem to be waiting for another accident to happen. Many commentators have said that any further Arctic expansion should be halted until the safety technology and emergency response systems are adequate and properly regulated.39 Section 3 reviews some of the concerns raised in this debate within indigenous communities.

“A peasant needs thunder to cross himself and wonder.”

– Russian proverb

“A large oil spill, such as a crude release from a blowout, is extremely rare and not considered a reasonably

foreseeable impact.” – Shell Alaska Chukchi Sea Exploration Plan16

2. Arctic communities: pawns in the resource chess game?

Attempting to summarise indigenous perspectives on Arctic oil drilling is fraught with difficulties. All too often, as Inuit Circumpolar Council president Jim Stotts put it, Indigenous Peoples become “pawns in a chess game” between those who advocate industrial development at any cost, and those who would like to prevent it.40 The estimated indigenous population of the Arctic region is over a million, a third of the total population,41 living in diverse conditions. The potential impacts of resource extraction are debated within and between these indigenous communities, a fact often ignored by the more powerful players in the resource chess game.

One of the spaces for such debate was the 2010 Arctic Leaders Summit (ALS) in Moscow. This annual conference of the six indigenous organisations that are permanent participants of the Arctic Council was focused on climate change and industrial development in the region. The following retraces some of the concerns raised by affected communities at the Summit, although by no means represents all sides of the discussion.

Free, prior, informed consent‘Free, prior, and informed consent’ of local communities to industrial development is the cornerstone of the UN Declaration of the Rights of Indigenous Peoples, and of the circumpolar indigenous organisations’ advocacy. It involves:

• information about and consultation on any proposed • initiative and its likely impacts• meaningful participation of indigenous peoples

representative institutions42

Russia has exhibited numerous violations of these rights. On the Kola Peninsula attempts to institute an elected Saami Parliament are being at best ignored and at worst thwarted by the local administration. Meanwhile a piece of land formerly used by a reindeer collective was reclassified by the local administration, with the effect of making it available for pipeline construction for gas extracting consortium Shtokman Development AG without consultation with the Saami.43 Lukoil (the country’s second largest oil company) is accused of denying multiple oil pipeline leaks occuring around River Pechora, and attempting to ‘hide’ them from the regulators and the indigenous population.44 (For more on Russia see p REF)

Development?While the Indigenous Peoples of other Arctic states have a better position in advocating for their rights, many issues and problems remain.

The impacts of oil exploration and production on the prospects of fishing and whaling are not fully understood and potentially destructive. Methods of seismic testing used in oil exploration produce intensive high-pitch sounds, which is very disruptive to whales and other wildlife. There has been international alarm over their use in Sakhalin (Russia) where grey whales feed in the summer,45 and residents of Barrow, Alaska, fear that whales may start avoiding their waters if exploration goes ahead next year.46

Both state and corporate oil exploration and production plans appear to lack exit strategies. Of the four corporate and numerous government presentations at the Arctic Leaders Summit 2010, not a single one even mentioned the issue. Oil development is claimed to bring many economic benefits, including jobs for the local population. Yet it is unclear what happens after the depletion of oil fields in terms of both employment and safe removal of industry infrastructure.

Oil extraction necessarily brings with it very abrupt social changes, related on the simplest level to a sudden influx of population to work for the industry. In Norway many point to Hammerfest, home to the Arctic’s first Liquified Natural Gas plant since 2007,47 as an example of how this could go wrong. The gas boom town is now known for its high crime rates and drug trafficking problems. Abrupt and unpredictable change is a key challenge.

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The Arctic is warming twice as fast as the rest of the world,48 and people sitting on the back rows of the Arctic Leaders Summit had experienced the most direct - and far from trivial - impacts. One delegate said he could not insure his reindeer that are dying in the unpredictable weather: there were no weather stations around and the insurance companies would not take any other proof of adverse weather conditions. The more common problem was that with temperatures oscillating more frequently across freezing-point, a layer of hard ice appears on top of groundcover plants, making it very difficult for reindeer to forage. Subsistence whaling and fishing are also under threat as the climate changes.

Technologies developed by reindeer herders and hunters are not only sustainable but also, importantly, adaptable and based on knowledge that, in the words of the Arctic Climate Impact Assesment, is sometimes “far in advance of scientific understanding, and in fact [was] used by scientists to make significant progress in ecology and biology.”49 The Arctic experienced a relatively warm period in the mid-20th century: and to withstand the current warming it is important now to gather the knowledge of those who dealt with it then, as noted at the ALS by Michael Pogodayev, head of World Reindeer Herders association.

Fast changes

"It is easier to adapt to a changing climate than to the onslaught of industry.”- Vice president of the Kola Saami Association, Lyubov Vatonen

Industrial change is different, and much faster. A Russian Saami delegate at the ALS 2010 said it was “easier to adapt to a changing climate than to the onslaught of industry.” In this sense, debating whether industrial development should come to Arctic communities distracts us from looking at how it would do so.

In current conditions, oil development carries several serious and poorly understood risks, and strides once again ahead of regulations that would secure meaningful engagement with local communities. In the words of Jim Stotts once more, “What’s the big rush? We can afford to slow down.”50

The potential environmental consequences of using inadequate technology, as well as the potential severe social repercussions, mean we indeed cannot afford to rush into Arctic oil extraction. But such a slowdown would mean overcoming a dominant discourse in Arctic governance: “it’s too late”. The following section questions this discourse more closely.

14Greenpeace / Will Rose13

UNCLOSThe main legal regime governing the Arctic Ocean is the United Nations Law of the Sea Convention (UNCLOS). It assigns every state sovereignty over the sea bed within 200 nautical miles (370 km) of the country’s shore: in the case of the Arctic Ocean, this leaves a patch of international sea bed including the North Pole, which several of the circumpolar states are vying for.

Under Clause 76 of the Convention, any claim for sea bed is limited to 350 nautical miles, and is to be approved (or rejected) by a special Commission on the Limits of the Continental Shelf (CLCS), with consideration given to the geology and geography of the sea bed, as well as the borders and claims of the neighbouring states.57 Importantly, these extensions only relate to the sea bed and its resources, not the rights to shipping or fishing.

Russia was the first to use its Clause 76 rights and in December 2001 submitted her claim to a large section of the Arctic Ocean up to the Pole, as well as an “enclave of continental sea shelf” in the Okhotsk Sea. A claim from Norway followed;58 Denmark and Canada are both preparing claims to CLCS, with the latter having invested $69 million in the preparation.59

Meanwhile, the US has not ratified the Convention, which would require a vote by 67 members of the Senate. Many politicians and army officials expressed fears that ratification would impede US sovereignty and even “open new avenues for traditionally anti-U.S. environmental groups to affect U.S. policies through domestic or international court actions.”60 According to a State

Poles apartIt might be obvious to try and draw a parallel between protecting the South and the North polar regions. The Antarctic Treaty, which first went into effect in 1961 with additional protocols agreed upon subsequently, ensures that the Antarctic continent is a demilitarised zone and cannot be mined for resources. Greenpeace – who led a concerted campaign for the Antarctic to be declared a “world park” – describe it as having achieved the impossible, where they went from being a marginalised outsider in the international arena, to a “respected player”. Following the Exxon Valdez disaster in 1989, confidence in the ability of the extractive industry to operate safely in fragile polar sites was shaken. In 1991, a new Environmental Protocol for the Antarctic Treaty was adopted, banning resource extraction from the region for 50 years.53

The Arctic debate so far appears to have gone in the opposite direction. In the 1980s, newly formulated proposals for a demilitarisation treaty had the high profile support of the Soviet leader Mikhail Gorbachev,54 and were fueled by the momentum for winding down Cold War tension. Currently, although a debate between ‘hard-law’ (binding treaty) and ‘soft-law’ (cooperation measures) proponents takes place in academic conferences, there appears to be almost no political will for a binding Arctic Treaty in any part of the world. At a NATO-sponsored workshop in Autumn 2010, the consensus between the gathered experts appeared to be that it was either “inappropriate” or “too late” to talk of such a regime.

The two regions differ dramatically: one is a continent, the other mainly an ocean (depending on the definition); one

3. Why is it “too late”?The only ‘hard’ international law covering aspects of Arctic governance is the 1973 Agreement on the Conservation of Polar Bears, signed by the five Arctic coastal states.52 Policy scholars and politicians repeat again and again that an international treaty on protecting the Arctic is either too late coming, or inappropriate in any case. Commonly the UN Convention on the Law of the Sea or the Arctic Council are named as the appropriate structures to resolve problems in the Arctic Ocean. Yet these frameworks lack the legal power, mandate, and resources to enforce common measures on any environmental protection, never mind a general slowdown of extractive activity to make time for environmental, social and safety risks to be addressed. We need to ask whether it really is too late for an effective international agreement to address the question.

remains uninhabited except for wildlife and science stations, the other has a population of over four million, many of them Indigenous People leading a ‘traditional’ lifestyle. As Antarctic Treaty co-instigator Oran Young notes,55 the complexity of already existing sovereignties and different issue-based legal regimes in the Arctic would be difficult to capture in one all-encompassing agreement. Importantly, Indigenous Peoples, who have representation secured in the Arctic Council (see below), might be more excluded from a potential international treaty – which is by definition a treaty between states.

Instead Oran Young’s suggestion is that policy should proceed outward, from initially securing protection for the already legally international central area of the Arctic Ocean to specific collaboration on the various ‘issues’. As Young himself admits,56 these arguments partly have the intention of countering “alarmism” and keeping Arctic issues out of “high politics”, preventing a new “great game”. But with heads of state and International Oil Companies already engaged in promoting risky Arctic oil drilling, there is a real danger that restricting the debate to boardrooms and specialist conferences will result in widespread risky Arctic resource extraction being assumed to be inevitable.

The Arctic is not the Antarctic, but this does not mean that new measures cannot or should not be demanded and adopted. Otherwise we rely on the existing legal regimes – crucially UNCLOS and the Arctic Council – which were not designed to cope with the developing resource rush.

Department official, the Convention would require the strongest support from the oil companies to be approved by the US Senate.61

The CLCS is in a difficult corner in the Arctic: it is a body of 21 scientists and can only make ‘recommendations’ rather than legally binding decisions.62 It is clearly not set up to arbitrate the forceful ambitions of competing states, less so in the Arctic Ocean - there is only one paragraph in UNCLOS on ice-covered waters.63 Non-ratification by the US further weakens its power.

In any case, most of the mineral resources of the Arctic are expected to lie within the individual states’ 200-mile-wide portions of the ocean. The convention highlights the sovereign right of states to the resources of their continental shelves. It stipulates the need to adopt ‘appropriate’ environmental protection laws,64 without specifying any source of standards for such legislation. Individual states can designate zones for environmental protection that need to be then approved by an appropriate regional body. In this way, even if fully ratified and implemented by the circumpolar states, UNCLOS may be an instrument for reaffirming seabed sovereignty, but not for dealing with a resource rush.

“UN Convention on the Law of the Sea ratification [by the US] will diminish our

capacity for selfgovernment, including, ultimately, our capacity for self-defense.”

- Former US Ambassador to the UN Jeane J. Kirkpatrick51

15 16

Arctic Council

UN Convention on the Law of the Sea “ratification [by the US] will diminish our capacity for self-government, including, ultimately, our capacity for self-defense.” - Former US Ambassador to the UN Jeane J. Kirkpatrick1

The Arctic Council (AC) was set up in 1996 as an intergovernmental forum to promote cooperation on “common Arctic issues”, in particular “sustainable development and environmental protection”.65 The member states are Canada, Denmark (representing Greenland and the Faroe Islands), Finland, Iceland, Norway, Russia, Sweden, and the US. Six Indigenous Peoples Organisations have the status of permanent participants, meaning in practice that they can attend and address the Council’s meetings, propose supplementary agenda points for meetings on a ministerial level, and propose projects for cooperation. These organizations do not influence the Council’s final instance decisions, which are made by consensus of only the eight member states.

Six European countries, including the UK, have the status of Permanent Observers, which allows them to be invited to most of the Council’s meetings, though not necessarily its projects or working groups. China, Italy, Japan, South Korea, and the EU, are all ‘Ad Hoc Observer States’, meaning they have applied to become observers but this has not yet been granted. At the time of writing the member states have not yet decided how to respond to the increased interest from non-Arctic states in the Council.

Some policymakers, such as the Finnish Foreign minister Alexander Stubb, argue for a stronger Council. The AC has no permanent secretariat or office; its decisions are not meant to be binding on the Arctic states or anyone else; its mandate excludes ‘hard security’ or dialogue on military operations. A number of officials complain that its meetings are not taken seriously enough even by the member states.

For the moment, the AC’s main output comes from its four-letter-acronym research working groups on various aspects of the Arctic environment, including the AMAP (Arctic Monitoring and Assessment Programme), the SDWG (Sustainable Development Working Group) and so on. As an example of these groups’ policy (rather than research) output, the Arctic Offshore Oil and Gas Guidelines illustrate the lack of resolve or obligation that persists in any of the policies that the Council has adopted to date. Many general clauses are blurred by undefined words such as ‘appropriate’, ‘adequate’, or ‘sufficient’. For instance, the Arctic States should “urge and, where appropriate, require industry to integrate cultural and environmental protection considerations into planning, design, construction and operational phases of oil and gas activities” (emphasis added). Guidelines like these leave

the onus to act entirely on the specific officials of the countries concerned, and so are of little help in creating enforceable regulations.

Crucially, the Arctic Council in its current shape provides no scope to enforce measures even on environmental issues within its mandate, or to hold governments (or companies) accountable. The conditions for creating environmental protection zones under UNCLOS also appear to make it easier for countries to ‘assert their resource sovereignty’ than to designate a no-extraction zone. Both regimes favour the decision-making power and the sovereign responsibility of the Arctic coastal states, making it difficult to voice concerns for outside actors and for much of the civil society within the Arctic states that aren’t formally represented in the Council.

17 18

All this means that protecting the Arctic from dangerous oil drilling requires both an international agreement that is more focused and stronger than any of the existing regimes, and use of the accountability structures within each participating country individually. The next section examines the powerful political logics that would need to be dealt with in order to achieve this.

Gre

enpe

ace

/ W

ill R

ose

DepletionThe Norwegian government has other reasons to be worried. With 6.68 billion barrels proven reserves of oil at the start of 2010, and 2.51 million barrels per day being extracted, the known reserves would barely last ten years at current rates of production. On the other hand, 2009 was a record year for new oil discoveries for Norway, but most of these were in the High North,75 under Arctic or nearly Arctic conditions. North Sea oil production peaked in 2001, and will have reduced by 50% by 2023 according to Oerjan Birkeland, StatoilHydro exploration manager.76 The government assumes oil wealth, the country’s main income source, will keep feeding the budget for the next 50 years.77 This limit has become a source of ‘panic’ over what to do when oil runs out, according to some Norwegian sources.

Russia’s oil reserves are less well reported on, but according to some estimates the current 60 billion barrels of proven reserves78 would last about 20 years.79 The country’s production peak is estimated to have occurred at some point between 2008 and 2011.80 Russian mass media gives little indication of government concern over the prospect of oil depletion, yet these estimates must have caused some worry given the emphasis recently placed on opening up offshore fields.

For oil exporting countries, a decline in production could potentially cause a significant shock to the national budget. This justifies pushing the industry further to its frontiers and weakening protective measures. Restructuring the economy to wean it off oil is doubly challenging in countries that both extract and consume crude. A Norwegian journalist commented, “We envy Sweden,” – for its relative independence from oil.81

Precautionary approachThe ‘Precautionary Principle’ borrowed from Principle 15 of the Rio Declaration on Environment and Development, appears in the Arctic Council drilling guidelines. It says: “Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.”66 A relatively new concept in international law, it generally means that where an action may have grave environmental or social consequences, one should prepare for the worst even if the risk is not certain (and according to some interpretations avoid the action altogether). This principle is crucial for international legislation on climate change. Applied to Arctic oil extraction, it would mean that oil companies need to completely satisfy regulators and the scientific community of their ability to drill safely and effectively contain any spill before commencing drilling.

In the US there is a strong business lobby against the legal adoption of this principle - the Chamber of Commerce has a specific project aimed at “educating” against it67 - yet the words have become common in connection with environmental issues such as fishery management in the Arctic.68

In this vein, the US National Commission report states that in order to address “serious concerns about Arctic oil-spill response, containment, and search and rescue,” the federal government must ensure that the oil industry has demonstrated that their oil spill containment and response plans are adequate for each “stage of development and that the underlying financial and technical capabilities have been satisfactorily demonstrated in the Arctic.”69

However, in a Commission hearing, William Reilly (commission co-chair and Environmental Protection Agency official under President Bush) called for a ‘precautionary principle’ that he explained slightly differently. According to Reilly, precaution meant industrial activity should not be halted, but "you do it in a certain way, with special concern and studies … It doesn't mean you cease operations until we're 100 percent sure of a satisfactory conclusion”.70

What the quotes above show is a slippage: from a principle that would demand no drilling until safety was guaranteed, via “cost-effective” protection measures in the Rio Declaration, through to almost the opposite of guaranteeing safety in Reilly’s words.

The Gulf of Mexico spill has prompted a number of improved protective measures that could have seemed improbable before. Apart from the high-profile Presidential Commission investigation, in the US a number of drilling concessions were suspended for a time, and a major part of the Alaskan shoreline was designated crucial polar bear habitat, with restrictions on resource development.71 Canada has designated Lancaster Sound a drilling free zone and has temporarily stopped granting Arctic drilling permits.72 But there is a risk of similar slippage here: the Alaska government has already threatened to sue the federal government for the polar bear regulation,73 and oil companies are appealing to the US to open up the suspended concessions,74 while BP has shifted its Arctic priorities to Russia, away from US scrutiny. If public concern dwindles, precaution may well become an empty word.

‘Energy Security’These concerns also make themselves felt in countries that import oil. Russia’s main exports of oil head to the EU, with Germany being the largest importer of Russian crude. Sweden, Denmark, the UK and Ireland together account for over 80% of Norway’s oil exports.82 And unlike oil from the other ‘frontier’ areas in Africa, the Caspian, or Latin America, Arctic oil is presented as relatively politically stable and forms part of the consuming countries’ understanding of ‘secure energy’. As ex-Energy Commissioner for the EU, Andris Piebalgs commented, “Otherwise, where will we get energy from?"83 This approach directly contradicts the EU’s ambition to lead a global shift towards a low-carbon economy.

The rhetoric of secure sources is crucial in the US. Commenting on the opening up of new areas (including Arctic) for drilling months prior to BP’s Gulf of Mexico disaster, US Department of Interior Secretary Ken Salazar said, "By responsibly expanding conventional energy development and exploration here at home we can strengthen our energy security, create jobs and help rebuild our economy."84 This was a remarkable case of bipartisan consensus in America, with Sarah Palin writing: “We need oil, and if we don’t drill for it here, we have to purchase it from countries that not only do not like America and can use energy purchases as a weapon against us, but also do not have the oversight that America has.”85

4.The Keywords of Arctic policyIf international frameworks leave circumpolar countries to their own devices in dealing with therisks of frontier oil, what are these countries doing about it themselves? This section reviewsfive powerful logics of Arctic oil politics: environmental precautions needed or already taken, oildepletion pushing the world to the frontier, the need for politically ‘secure’ energy, oil as thebasis of national independence, and perceptions of the “Russian bear”.

19 20

No Alternatives?A telling paragraph in Russia’s Strategy for the Development of the Arctic Zone reads: “the modernisation of the [regional] economy [will be carried out] by keeping a resource-oriented economy and shrinking the activities of non-key sectors, rationally improving the structure of the economy towards the development of a competitive resource industry.”88

That fossil fuels are the primary or even the only option of economic development for the Arctic region is sometimes a purposeful distortion, and other times an unacknowledged underlying assumption of all of the rhetoric that has been discussed. It dominates over voices advocating the development of alternative, less risky energy futures on both a global and a local level. Initiatives like the North-West Russia Renewable Energy Forum89 promote the use of the largely untapped renewable energy potential of the High North – but they remain largely unnoticed by governments bent on profiting from fossil fuel extraction. To review the particular character of this pervasive assumption in each country, and the critical or alternative voices, would take a different paper. Yet the need to challenge the inevitability and desirability of rapid oil-based development is clear.

Resource SovereigntyUnlike Norway and Russia, in Greenland Arctic resource development is not a matter of maintaining an oil economy, but creating one. Speaking at the 2010 NATO research workshop, deputy foreign minister Inuuteq Holm Olsen said: “We don’t welcome … the notion that there should not be any industrial development in the name of environmental protection. What the rest of you have been benefiting from should not be denied to us in the Arctic.” Underscoring the centuries of Greenland’s colonial dependence on Denmark, Olsen sketched out oil development as the major chance for the country to become financially independent.

Colonial domination is a grave issue, and some Western environmental concerns have a history of marginalising the people that they purport to save nature from. In this sense, the logic of resource sovereignty is powerful and difficult to refute. But this does not undermine the need to ask to what extent Olsen’s speech represents the interests and concerns of his country’s citizens – and takes into account the dangers of oil-based development. What structures and policies does Greenland have in place that would enable them to avoid the ‘resource curse’ that has beset many other oil-rich countries?

‘Taming the Bear’The most paradoxical narrative of an Arctic oil rush so far has been offered by a journalist from the Norwegian paper Finnmarken: “if we do not do it first, the Russians will”.86 Russia is perceived as having a dismal track record in safety issues, despite in fact having a number of strong, but poorly implemented, environmental regulations in place. This perception provides an ethical dimension to the race. Technology and infrastructure need to be provided for transporting the oil from the Barents Sea. With fewer procedural hoops to jump through, Russian-based companies will be able to get there faster – which means, according to the same journalist, that the comparatively stringent Norwegian safety regulations paradoxically begin to be seen as an impediment.

Appeasing, neutralising, or outperforming Russia has become a widespread logic in Western Arctic policy. Involving the country’s unpredictable authorities in dialogue or ‘cooperation’ is presented as a tangible achievement. In the grandest performance of this kind to date, on 15 September 2010 Norway and Russia signed an agreement that ended a long-standing dispute over the sea-floor boundary in the Barents Sea, putting it half way in between where either country wanted it to be.87 Swiftly ratified by both countries’ parliaments, the agreement allows exploration for fossil fuels to begin in the formerly disputed part of the Barents Sea in summer 2011.

In a similar way, voices both in and outside Russia support the involvement of Western oil companies in the Russian Arctic, such as BP and Rosneft’s new deal, ostensibly so as to positively influence the standards of a non-transparent national industry. Section 7 will elaborate on why this may well be convenient political justification for a much more problematic process.

21 22

In 2009, the UK High Commissioner to Canada, Anthony Cary gave a speech at a conference that he titled, ‘The Arctic: What Business Is It of Britain’s?’

Today, the question might be answered by reading the news of the BP-Rosneft collaboration. The ‘business’ purports to be, paraphrasing Energy minister Charles Hendry, “purely commercial”.91 In his 2009 speech, Cary spoke of the UK’s “interests in the Arctic” as part of the much wider “legitimate international interest”, best represented on the level of the EU.92 So far the EU line and the commercial line are the main official narratives used by UK diplomats. As well as the convenience of amplifying the voices of individual member countries, common EU foreign policy has in this case the added benefit of setting a useful example:93 In the EU, the member countries appear to have found a way of working together that is beyond sovereign interests, and this is what the EU is asking the Arctic countries to do too.

But the specific content of such a stance can be anything from advocating the sharing of expertise in scientific programs, environmental standards and promotion of sustainability, to arguing for concessions for European companies. This is being debated in the EU Parliament and Commission. On the other hand, the UK’s policy has so far been decided behind closed doors at the same time as the foreign policy machinery operates on the “purely commercial” principle.

5. UK and EU Arctic policy: a choice

EU: Safety vs securityEU Arctic and resource extraction policy is very much a work in progress, so completely contradictory opinions can be heard from different officials and politicians within quite a short space of time. In 2008, the then EU Energy Commissioner Andris Piebalgs justified polar oil exploration thus: “You even need to go into hostile environments […] You can't say 'this is a sanctuary' because it will not work […] Otherwise, where will we get energy from?”94 2010 saw an about-turn: following the Deepwater Horizon disaster, the current Energy Commissioner Gunther Oettingersuggested that “Given the current circumstances, any responsible government would at present practically freeze new permits for drilling with extreme parameters and conditions."95 In response to a parliamentary question on the implications of the spill for oil in the Arctic, Oettinger reiterated that the Commission would promote the precautionary principle and urge participating countries to suspend activities.96

Inside the European Parliament itself, the debate in the wake of the Gulf of Mexico disaster had some voices calling for a moratorium and others insisting a moratorium would “jeopardise our energy independence”.97 The EU’s current Energy Strategy is fundamentally built on this frame of ‘energy security’ narrowly defined by military and corporate interests, without mention of the risk associated with ‘frontier’ fossil fuel.98

In this way, safety and environmental concerns are posed as contradicting the ‘energy security’ concept. Two key documents clearly demonstrate the two sides of this debate.

23 24

UK Energy and Climate Change Secretary Chris Huhne, applauds as BP CEO, Bob

Dudley, shakes hands to seal the Rosneft deal. 2011 Bloomberg

In 2008 the European Commission adopted a ‘Communication’ document that outlined the EU’s main aims in the region, which were:

• Protecting and preserving the Arctic in unison with its population

• Promoting sustainable use of resources• Contributing to enhanced Arctic multilateral governance.99

The Communication emphasised the Arctic Ocean’s status as international space, and stipulated the promotion of dialogue with the region’s Indigenous Peoples, of research on the environment, and of adopting stringent standards for a “sustainable and environmentally friendly exploration, extraction and transportation of Arctic hydrocarbon resources.”100

The main practical measures to come out of EU’s Arctic policy to date have been science initiatives such as the new Arctic Information Centre, and the EU’s currently pending bid for permanent observer status in the Arctic Council. This bid was snubbed by the Council in 2009, ostensibly in connection with the EU’s ban on seal products.104 MEP Diana Wallis (Vice President of the European Parliament with responsibility for the “Northern Dimension” policy) explains that the history of the environmentally-motivated seal hunting ban has made it difficult for the EU to have an influence on other, perhaps more consequential, Arctic issues. One Norwegian official contended that the EU’s ambitions – whether for banning seal products or for stricter environmental regulation in resources – amount to “telling us what to do [and] how we should live in the Arctic.”105 Given this history, it is a challenge for the EU to assert environmental concerns as genuine and relevant.

EU Energy Commissioner Oettinger’s 2010 remarks calling for a deepwater drilling moratorium did not lead to any country adopting such a measure, and sparked further irritation in Norway, where it was partly seen as further ‘Euro-meddling’. Dissociating issues of resources and governance from the seal issue as well as legitimising the EU’s stake in these issues more widely is proving to be a challenging task for concerned European politicians.

In a U-turn on the 2008 Communication, Gahler’s report reduced the overall emphasis on safety and environmental protection, and offloaded responsibility for environmental standards fully onto the coastal states (paragraph 18). Interestingly, both documents insist on the concept of sustainable resource extraction. This is a confusing use of the term ‘sustainable’, given that the use of fossil fuels is by definition not sustainable in the long term.

However, a last-minute amendment added a very different perspective to the Gahler report:

“[The European Parliament] calls for further scientific studies within the framework of a multilateral agreement to be completed in order to inform international understanding of the Arctic eco-system and decision-making thereon before any further major development goes ahead.”

This call for “a de facto moratorium on the exploitation of Arctic resources”103 was applauded by the Green faction in European Parliament. But tucked away at point 57a, it could easily be dismissed in the shadow of the report’s general emphasis on industrial development. In effect, this contradiction leaves the EU’s policy options open.

Shifting Principles

UK: the non-debateArctic offshore oil only recently made headlines in the UK, first with Cairn’s exploration off the coast of Greenland, and now BP and Rosneft’s deal in Russia. 2011 has also seen David Cameron invite the heads of the Nordic states for a summit in London. According to speculation in the Financial Times, potential exploitation of Arctic resources may be a key issue in the summit.106 However, no actual public or parliamentary debate on the Arctic role of the UK and its companies appears to be happening.

The only parliamentary discussion on the topic to date has been a relatively poorly attended House of Lords debate on 6 December 2010, where the initiator of the discussion – Lord Jay of Ewelme – postulated the challenge thus: “[In Arctic oil] the opportunities for Britain, for British companies, used to operating in some of the world's most inhospitable zones, are great. My question is, what is being done now to maximise their chances of success?”

The minister most commonly representing the current government on these questions is Lord Howell of Guildford, Minister of State at the Foreign and Commonwealth Office responsible for International Energy Policy. Former Energy Secretary of State under Margaret Thatcher, Lord Howell chairs the Windsor Energy Group, that “brings together senior policy makers and energy executives to discuss energy geopolitics.”107 Speaking at a BP briefing on future energy trends, Lord Howell expressed the government’s “great admiration” for the Rosneft deal.108 Such potentially close ties to the industry might partly explain Lord Howell’s emphasis on “opening the way … for a vastly greater exploitation of the huge oil and gas resources … under the Arctic Circle.”109

Russia’s Arctic expansion has been cited by Gerald Howarth MP (then Shadow Defence Minister) as a security threat demanding response from the UK’s military,110 a fear

The next major development document in EU Arctic policy was a Commission report, prepared by the centre-right MEP Michael Gahler, and only recently adopted as a resolution by the EU Parliament.101 This document’s emphasis in priorities is markedly different from that of the Communication:

• The road to a sustainable socio-economic development and environmental protection• The potential of new world transport routes and their

vital importance to the EU member states• The potential of developing resources like hydrocarbons, minerals, fish and biogenetic resources.102

also expressed in bold form by Lord Greenway: “If a much larger amount of shipping was to go round the north of Russia, and if one was to believe from WikiLeaks' revelations that Russia is a mafia state, I can see various Russians becoming very interested in what was going around their shores and there is nobody there to help ships.”111

Unlike the European arena, in the UK Parliament this position based on “security” (military and fossil fuel) and on using business opportunities has gone practically unchallenged, although it has not been made into official policy. At the same time, the diplomatic and administrative machine of UK foreign energy policy is already aggressively promoting British oil business interests in the Arctic.

“[In Arctic oil] the opportunities for Britain, for

British companies, used to operating in some of the world’s

most inhospitable zones, are great. My question is, what is being done now to

maximise their chances of success?”

Lord Jay of Ewelme, 6 December 2010

“The UK is

committed to protecting the Arctic

environment while defending rights to fair access.”

Lord Henley (Parliamentary Under Sec-retary of State, Environment, Food and

Rural Affairs; Conservative),

18 October 201090

What business is it of Europe’s?

25 26

The choiceIf these current trends are to continue, the UK looks set to go on promoting the investment of funds and expertise into highly risky oil drilling, while supporting the official EU line on Arctic governance that advocates the opening up of Arctic issues to the influence of non-Arctic states like itself.

The future of the EU policy looks genuinely uncertain, played out between an ‘energy security’ approach that puts EU corporations and fossil fuel supply interests first, and a stronger focus on sustainability, safety and environmental protection. Should EU officials choose to prioritise the latter, they have the added challenge of proving their intention is to promote responsibility, not “tell the Arctic coastal states what to do.” One way of exhibiting such responsibility has been advocated by Commissioner Oettinger and by Diana Wallis: "EU companies operating outside the EU should export EU standards.”118 To take this idea further, with the precautionary principle properly applied, would mean that companies would need to fully satisfy the European regulators and scientific community of both their ability to

Arctic oil as a business opportunity?Lord Jay of Ewelme’s question on how to maximise UK companies’ chances of success is perhaps answeredbest by the image of Chris Huhne MP, UK Climate Change minister, standing behind BP CEO Bob Dudley, as the latter signed the agreement on collaboration with Rosneft, Russia’s national oil company. While the precise nature of DECC or FCO support for this deal is as yet unknown, Huhne’s appearance follows on a longer tradition of the UK state’s promotion of British oil interests in the Arctic and around the world.

The UK embassy in Norway has a dedicated Energy Team that does “a lot of paid market advisory work for UK companies”, according to one of its advisors.112 Promoting British oil business in Norway involves enrolling the support of top figures such as David Cairns, Minister of State in the Scotland Office in 2008,113 and more recently even Charles Hendry, UK Energy Minister. He is listed on the programme of the Norwegian conference “Offshore North Seas – 2010” as “giving [his] perspective on the challenges facing the industry, and the need to provide energy for an ever-increasing

sector of the world’s growing population”.114 Lord Moynihan, former UK minister for energy and Chairman of the British Olympic Association is on the conference organising committee.

Gareth Ward, UK General Consul in St Petersburg, (Russia), recently visited the northern town of Murmansk and expressed a particular interest in developing the city’s port facilities, as well as the Shtokman gas field.115 The website of UK Trade and Investment (UKTI) advertises the Shtokman project as providing “a number of opportunities, both offshore and onshore”.27 UKTI also lists opportunities for British companies in Canadian oil, both offshore in the Arctic and onshore in the controversial tar sands.117

This business diplomacy appears to show little concern for the risks posed by Arctic oil extraction. In effect, with scarce public exposure, the UK government has been pushing for a portion of the business in Arctic fossil fuels on behalf of UK based companies.

ensure the safety of oil extraction in the Arctic, and to effectively and swiftly contain any spill, before being allowed to drill.

This is a politically difficult option, but the European authorities have a real choice. It is important that this choice should also be made apparent in the UK, home to some of the largest players in the industry (BP and Shell) and some of the smaller, but high-profile participants of the Arctic resource race (Cairn). A UK Parliamentary committee formed following the Gulf of Mexico oil spill recently concluded the need for much more stringent oversight in the operations of UK North Sea drillers.119 Of course similar diligence cannot be exercised by UK authorities over every oil rig in the Arctic, but they can and should be questioning the companies’ safety provision – particularly so in Russia, where the implementation of environmental standards is patchy at best. The final section discusses this point, and the disproportionate faith that Western governments put in corporations’ safety practices.

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2011 Bloomberg

6. Trusting the best?

“[BP] has a great deal of experience, including in the Gulf of Mexico clean-up operation.”- Igor Sechin, Russian deputy prime minister and chairman of Rosneft, explaining the choice of BP as a partner for developing the Arctic120

At first glance, the odds would seem to have been stacked against BP’s deal with Russia’s national oil company.

First, the company has received a bad name internationally because of the Gulf of Mexico disaster, the largest accidental marine oil spill in history. But Russia was the first state to receive a visit from the then CEO Tony Hayward with assurances of the company’s good financial standing. Following the visit, Igor Sechin (Russia’s deputy prime minister, Rosneft Chairman, widely believed to be one of Putin’s close circle, and ex-secret services officer121) embarrassed BP by announcing to the press Hayward was stepping down while the company publicly claimed that Hayward was to stay.122

Second, with Tony Hayward having actually stepped down, the company got a new CEO in the shape of Robert Dudley, ex-head of TNK-BP, BP’s existing Russian Joint Venture. During a 2008 dispute between BP and the Russian shareholders of TNK-BP, Dudley’s office had been subject to raids, staff were refused visas, and Dudley himself had to leave Russia and run the company from an undisclosed location. According to documents from the US embassy in Moscow recently released by Wikileaks, Dudley as well as the embassy staff believed that the Russian government and Igor Sechin in particular were instrumental in organising the campaign against him.123

Third, a court in Moscow recently sentenced ex-oil tycoon Mikhail Khodorkovsky to an extra 14 years in prison for financial crimes, leading to outspoken criticism from the West, including UK Foreign Secretary William Hague.124

Rosneft’s most significant assets were acquired in a controversial move from the ruins of Khodorkovsky’s business empire. This has led to Chris Huhne being criticised in the Financial Times for lending support to BP’s deal with Rosneft and contradicting the UK’s line on Khodorkovsky.125

Despite all this in January 2011 BP and Rosneft clinched a high-profile deal, involving a swap of 5% of BP’s shares for 9.5% of Rosneft’s (in addition to the 1% already owned by BP), and plans to develop the Russian Arctic seas, starting with three exploration blocks East of the Novaya Zemlya archipelago.

When questioned by The Guardian about Khodorkovsky and Rosneft, Charles Hendry, UK Energy Minister said: “We recognise where there are government issues and we recognise where there are commercial issues. The two should rightly be kept separate."126 Declaring the deal and the government’s involvement ‘purely commercial’ strips the government of responsibility for any political and environmental risks associated with it, as if diplomatic support is unrelated to them.

Putting trust in BP’s expertise (much applauded by the Russian government) and its potential to improve environmental protection or corporate governance standards in Russia (celebrated by some in the business community) is not justified.

The reception: The deal was

welcomed by Russian, UK, and

Norwegian governments, but caused

controversy in the US, with Congressman

Ed Markey coining the phrase

“Bolshoi Petroleum”.

Several UK and Russian environmental

organisations (WWF UK, Greenpeace UK,

Friends of the Earth UK, Bellona and

WWF Russia) all issued statements against

BP and Rosneft’s plans.

Igor Sechin: Rosneft Chairman (2004-current),

has a reputation of one of the strongest ‘siloviki’

(men of the forces) in Russian government.

Reputedly he worked for the FSB

(Soviet/Russian intelligence service) in Angola and

Mozambique, where BP has long had significant

involvement and investments.

Deputy Chief of Staff and later Special

Aide to President during Putin’s presidency, Sechin is

now Deputy Prime Minister. Sechin also hired

Andrei Patrushev, son of the current FSB

director Nikolai Patrushev, as an

advisor in Rosneft.

Rosneft: Russia’s national

oil company,

75,16% state owned with 15,4%

shares in circulation previous to the

swap with BP (2010).

Associated with Putin (just as

Gazprom is associated with its

ex-chairman, now President Dimitry

Medvedev). Putin personally backed

the deal between

Rosneft and BP.

The national parks. According to a recent analysis by

WWF and Russian NGO

Transparent World, the ENPZ-1,2,3

drilling concession areas overlap

with two major nature reserves:

Russian Arctic National Park and

the Yamal Regional Wildlife Reservation.127

The Russian Arctic National Park in Novaya

Zemlya is an important site for populations

of polar bears,

walrus, narwhal and

Greenland whale, as well as

a migratory stop

for numerous bird species.

The offshore fields: the concessions East Pri-Novo-Zemskoye

(ENPZ) -1,2,3 contain 1.8 trillion

cubic meters of gas,

50 mln tonnes of oil, and 49 mln tonnes of gas condensate.

To exploit them, BP and Rosneft are

forming a Joint Venture

66,7% owned by Rosneft, 33,4% by BP.

EPNZ translates as ‘East next to Novaya Zemlya’,

Novaya Zemlya being an archipelago

which in Soviet times was home

to airforce bases and nuclear testing, and

has a population of just over 2 thousand

(100 self-identify as indigenous Nenets people).

It’s likely that the onshore oil & gas

infrastructure (e.g. an LNG plant)

will be based there.

Why does Russia need BP?Russian industry needs

external investment and technology

to drill in the Arctic Ocean. Since the early 2000s

there have been several shifts and some cross-purposes

policymaking from the Ministry for Natural

Resources and the Ministry for Energy.

Mostly, it has been assumed that offshore drilling concessions

would be shared out between Rosneft and Gazprom,

with the possibility of bringing in a foreign partner.

It became increasingly clear that Russian companies

lacked the funds or expertise to drill offshore in the Arctic:

in 2010, even a return to Production

Sharing Agreements was discussed. At the end of 2010,

ahead of the BP deal, Rosneft

was handed a number of

Arctic concessions.

BP/Rosneft deal: background

29 30

BP’s frontier safety recordBP’s Gulf of Mexico catastrophe has come to epitomise reckless frontier oil extraction. In its final report, the National Commission set up by President Obama to investigate the causes of the disaster identified a number of management decisions and cost-cutting measures that greatly increased the risk of a blowout, such as the failure of BP engineers to inspect a faulty cement job done by Halliburton.128 Judging by the commission’s report, if BP’s Gulf of Mexico disaster can be framed as “gaining experience” (as Igor Sechin claimed), it was only a lesson in the need to apply standards already expected of the company, and has by no means prepared it for the much tougher conditions of the Arctic.

BP’s Arctic-specific experience comes mainly from Alaska. The company controls or has lease-holdings over nearly half a million acres of land on the North Slope region of the state, some 250 miles north of the Arctic Circle. BP is the main operator of the Prudhoe Bay field and its satellite fields, as well as the first Arctic offshore field, Endicott (since 1987). It is the largest shareholder (46.93%) of Alyeska, the consortium that controls and operates the 800-mile Trans-Alaska Pipeline System (TAPS) that delivers oil from Prudhoe Bay on the North Slope to Valdez marine terminal in South Central Alaska.

The Endicott project has been plagued with problems since its inception. Endicott began production in 1987, and is touted by BP as the “first continuously producing offshore field in the Arctic.”129 In order to facilitate operations, BP created two artificial gravel islands 2.5 miles offshore in the US Beaufort Sea, some 15 miles northeast of Prudhoe Bay. Beginning in 1993, BP’s exploration arm in Alaska (BPXA), and its contractor Doyon Drilling, had been routinely injecting hazardous waste into the waters around Endicott Island including paint thinner and several toxic solvents containing lead, benzene, toluene, and methylene chloride. A joint FBI, DOJ and EPA investigation in 1998 lead to BP pleading guilty to one felony count of illegal disposal of hazardous waste and agreeing to pay $22 million in court fees, fines and civil liabilities.130 On 20 April 2010, the same day that BP’s Macondo well in the Gulf of Mexico suffered a blowout, the US Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) had sent letters to BP citing safety concerns with the Endicott pipeline.

A safety inspector in June 2009 found that BP’s pipeline showed worrying signs of corrosion and a general lack of oversight. In one letter from PHMSA Deputy Director Dennis Hinnah to Anthony Brock of BP Exploration Alaska, the regulators cite tests indicating that some pipes at Endicott

had already lost nearly 20% of their internal wall thickness, and that several sections of the pipeline were showing signs of severe weather damage. External corrosion of some pipes were said to be in the area of 40% wear. Lack of corrosion monitoring and poor management were singled out as the most major violations of safety protocol. Torn seals, standing water in what should be dry vaults and pumping stations that the pipes pass through, and water-soaked insulation were also highlighted as major concerns. The PHMSA warned BP that it would face “enforcement actions” if it did not address the issues.131

BP’s pipeline woes extend to the Trans Alaska Pipeline System which has suffered a number of accidents over the past decade. On 25 May 2010, the pipeline was forced to shut down after a series of mishaps including a power outage and a malfunctioning shutoff valve, led to several thousand gallons of crude spilling out into backup containers at a pumping station south of Fairbanks.

Workers at the station had to be evacuated and oil intake from North Slope was forced to be restricted for several days as low as 8% of normal flow rates. On 8 January 2011, just as the National Commission was presenting its final report on the Gulf of Mexico spill, the Trans Alaska Pipeline System had to be shut for all of nine days because of a leak at a pumping station on the North Slope.132 Pipeline operator Alyeska blamed the ever more frequent problems on “decreasing output” from Alaskan oilfields.133

Statoil - on the tracks of BP?Norway’s 67% state-owned corporation StatoilHydro generally has a better reputation than most oil companies, particularly in Norway itself. The expectation is that if Statoil does it, it will be done safer / with more care / with less corruption. As Norway’s North Sea reserves diminish, recently Statoil has been following in BP’s footsteps in risky and controversial behaviour.

Tar sands: In 2007 Statoil acquired a 275,200-acre concession in Alberta, Canada, for extracting tar sands, and faced major investor pressure to pull out.134 In 2010, the company sold 40% in its tar sands operation to Thailand's PTT Exploration and Production.135

A near blow-out: Statoil’s safety practice at home also faced criticism after the Gullfaks C rig narrowly avoided a blowout in May 2010, having experienced multiple well control problems since November 2009.136 The details are strikingly similar to BP’s Deepwater Horizon case. A government investigation brought to light failures to properly address a number of risks:137 most significantly, that the company had no contingency plan for drilling a relief well in the event of a blowout.138

Lofoten: The largest controversy was caused by the Norwegian government’s plans to open the seas around the Lofoten Islands to oil exploration. These islands are Northern Norway’s prime tourist resort and home to one of the world’s largest cod stocks. In 2010, Statoil received clearance to drill a well further offshore from the islands. The argument over the advisability of drilling closer to the islands is ongoing, with environmentalists, the local tourism and fishing industries on one side, and the ruling Labour party and oil companies on the other.

31 32

© Jiri Rezac / Greenpeace

A lesser evil?An argument commonly heard in Russia is that Western investors or financial institutions are a positive influence because they have higher standards and better accountability than companies based in Russia. Brook Horowitz, Executive Director of the International Business Leaders Forum (IBLF, an organisation connecting big business and international development) for Russia, wrote in the Moscow Times following the BP-Rosneft deal:

“In making an assessment of the benefits and risks ahead, it is instructive to look at the record of other extractive joint ventures in Russia. BP’s existing operation, TNK-BP, seems to have managed its environmental risks well. There has been special attention to the impact of exploration and drilling, for example, in environmentally protected areas such as the wetlands in Khanty-Mansiisk in West Siberia, one of TNK-BP’s major sites … Shell’s joint venture with Gazprom, Sakhalin Energy, has taken on board the environmental concerns of international nongovernmental organizations in a way that would have been unlikely had Gazprom worked on the project alone.”139 (emphasis added)

One would expect an official of an organisation that advocates the role of the private sector in “addressing development challenges” to make this kind of argument.140 But it is also commonly made by NGOs and members of indigenous communities. A senior official of RAIPON (the Russian Association of the Indigenous Peoples of the North) explained in an interview that they advocated the involvement of Western companies and financial institutions like the World Bank and the European Bank for Reconstruction and Development in oil operations, because these organisations had guaranteed standards for engaging with communities.

In one way, the argument makes sense. Judging by a Lukoil (Russia’s second largest oil producer) presentation at the Arctic Leaders Summit 2010, corporate social responsibility to them means superficial activities like publishing books in the Nenets language and organising scooter races. The Lukoil representative left immediately after the presentation, ignoring questions from an indigenous delegate whose village was plagued with toxins from Lukoil’s nearby operation. Even more bizarrely, a 2009 Lukoil promotional video shows seals sitting on the metal structures of a Barents Sea offshore pipeline terminal. The voiceover claims that “in this way, an entirely independent environmental assessment has been carried out [that is, by the seals], and showed our compliance with the highest standards in nature protection.”141 Against this background, environmental and social commitments of Western businesses may indeed look much more serious.

But just how stringent are these standards on the ground in Russian operations?

The Western standardsTNK-BP, owned half by BP and half by a group of Russian investors, has been important to its parent company: it accounts for about quarter of BP’s output.142 During a 2008 dispute between BP and the Russian shareholders, Peter Mandelson, then the EU Commissioner for Trade, pressured the Russian government on BP’s behalf.143

Yet Brook Horowitz’s insistence on TNK-BP as an exemplary enterprise in environmental terms is at best misguided. A 2006 fact-finding trip by the Russian NGO, the Grazhdanin Foundation, returned with images of long neglected oil spills at the gigantic Samotlor oil field, operated by TNK-BP, in the Khanty-Mansiysk Region (presumably the same field that Horowitz was referring to). New pipelines had been laid straight on top of disused old ones, left to corrode and leak crude. Large pools of crude were found in sight of several production facilities.144 According to the Grazhdanin Foundation, the area of the spills comprised about 4000 hectares, and no cleanup operation has been undertaken since 2006. Despite a visit to Samotlor from British MPs and media, BP issued no response to the criticisms.

The Shtokman field, until recently Russia’s flagship Arctic oil and gas project, is another example of the fate of Western investments. Run in its first stage by a consortium (Shtokman Development AG) of Gazprom (51% owner), Total (25%), and Statoil (24%), Shtokman has gigantic reserves of 3.8 trillion cubic metres of gas and 37 million tonnes of gas condensate.145 Similarly to Novaya Zemlya, the Kola Peninsula where the project’s onshore infrastructure will be based was home to several strategic Cold War military sites. The new infrastructure includes a port and an LNG plant, which will be situated in the port of Teriberka,146 and a pipeline across the whole of the Kola Peninsula.

Shtokman Development’s relations with local communities and the regional administration are problematic in several ways. According to Nina Lesikhina, a campaigner at the environmental group Bellona and participant in the public environmental consultations for Shtokman, the meetings “left practically no room for dialogue”, were closed to journalists, and the participants were not even allowed a copy of Shtokman Development’s presentation slides. Nina said that in 2010, WWF-Russia announced they would be carrying out an independent environmental assessment of the offshore part of the project, but Rostekhnadzor (the safety regulator) quickly approved the project documents before WWF’s expert group even had time to examine the relevant materials from Shtokman Development.147

Indigenous Saami organisations on the Kola Peninsula experience even more problems. The Murmansk regional administration has allegedly been thwarting attempts to institute a Saami Parliament in Russia (modeled on the existing Parliaments in Norway, Sweden and Finland),148 stopped subsidies to reindeer-herders and in 2010 arrested the President of the Kola Saami Association.149

It also ‘restructured’ the ownership of a piece of land used for reindeer pastures in favour of Shtokman Development AG.150

Vice president of the Association Lyubov Vatonenexplained that it was as if “there was not enough land for [both industry and] reindeer-herders”.151 The participation of Western partners in the Shtokman consortium appears to have done little to relieve these problems.

Christina Henriksen, the Barents Secretariat adviser on Indigenous Peoples’ issues, comments that Western companies taking part in oil extraction in Russia do allocate funds to spend on local projects such as schools or housing, but they avoid actual contact with Indigenous Peoples’ organizations or representatives. In an interview with Christina Henriksen, the former President of Yasavey (Nenets Indigenous People’s association) Vladislav Peskov confirmed that Yasavey had not received any response from Statoil regarding their operation in the Kharyaga field, and that other international corporations respond that they let the Russian companies deal with the dialogue with Indigenous Peoples’ organisations.152

Total, an investor in the Shtokman project, did send a representative to the environmental consultations. But the impression conveyed by the civil society participants is that both Total’s participation and the consultations themselves had a very superficial character. This means the effect of Western accountability or Western standards that Horowitz and RAIPON appeal to is minimal – especially so compared to the risks that BP is facing by taking part in frontier Arctic drilling.

33 34

7. Conclusions and Recommendations

EU-based companies should not be allowed to drill in the Arctic before they fully satisfy European regulators, scientific community and independent watchdogs of their ability to ensure no-risk oil extraction in the Arctic, and to effectively and swiftly contain any spill. Initiating large-scale research programmes into safety technology and environmental monitoring is necessary but not sufficient.

The UK foreign energy policy machinery has been unequivocally supporting UK-based corporations in bidding and lobbying for Arctic concessions. The role played by the British foreign policy apparatus regarding Arctic oil extraction has to be opened up to parliamentary and public scrutiny. Open debate on Britain’s future as a potential “Arctic state” should be conducted prior to any further promotion of Arctic drilling by public bodies.

Arctic oil extraction, particularly in the deep water, is risky and technologically complicated. No appropriate technology or emergency response capabilities exist to address the risks of oil spills and are unlikely to emerge in the short term. The influence of current drilling and exploration practices on marine life is potentially damaging and little understood.

In keeping with the precautionary principle, no drilling should take place at least until scientists and officials are completely satisfied that it will be done safely.

The implications of rapid, risky industry expansion for the livelihoods of Indigenous Peoples in the Arctic can be (and already are, in places like the Kola Peninsula) severe, perhaps even more so than those of climate change. Time is needed for communities to assess and discuss these, and the principle of free, prior, and informed consent, as enshrined in the UN Declaration on the Rights of Indigenous Peoples, must be upheld.

Plans for resource extraction as the main driver of future Arctic development are unsustainable in the long term and carbon-intensive, as well as potentially socially and environmentally damaging. Alternative energy and economic futures and longer-term plans need to be formulated.

The existing legal and policy regimes (UNCLOS and the Arctic Council) do not adequately address the risks of an aggressive rush for resources. Without a focused and strong international agreement on resource exploitation, dangerous drilling is unavoidable.

British and EU government institutions currently have a responsibility in Arctic issues as home to some of the largest extractive corporations vying for a stake in the region, as well as through their relations with the Arctic Council. If and when engaging their influence, they need to ensure the precautionary principle, free prior and informed consent of local communities, and the environmental importance of Arctic ecosystems are prioritised over corporate interests.

1.

2.

3.

4.

5.

6.

7.

8.

1. Upstream Online, “Rosneft and BP to drill Arctic in 2015”, 17 January 2011 http://www.upstrea-monline.com/live/article241746.ece2. Gerson Lehrman Group, “BP- Rosneft: bold petroleum” 15 January 2011 http://www.glgroup.com/News/BP---Rosneft--bold-petroleum-52225.html 3. See e.g. KTUU.com, “BP’s Liberty project delayed again”, 1 February 2010 http://articles.ktuu.com/2011-02-01/extended-reach-drilling_27098089 4. According to Valeriy Nesterov, Troika Dialog analyst. See Vedomosti, “Kholostoy hod” (“Blank shot”) 18 January 2011 http://www.vedomosti.ru/newspaper/article/253289/holostoj_hod5. BP press release, “Major Arctic Projects and Share Swap”, 14 January 2011 http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=70667106. Financial Times, “Injunction clouds BP dividend resumption”, 1 February 2011http://www.ft.com/cms/s/0/166a1b84-2e1b-11e0-a49d-00144feabdc0.html7. Financial Times, “Huhne under fire for blessing BP tie-up” 17 January 2011http://www.ft.com/cms/s/0/c8154164-2291-11e0-b6a2-00144feab49a,s01=1.html#axzz1BOwhuWFt8. The Telegraph, “William Hague expresses concern at Mikhail Khodorkovsky sentence”, 30 De-cember2010 http://www.telegraph.co.uk/news/worldnews/europe/russia/8232624/William-Hague-expressesconcern-at-Mikhail-Khodorkovsky-sentence.html9. The Telegraph, “Peter Mandelson warns Russians over BP-TNK joint venture dispute”, 20 June 2008http://www.telegraph.co.uk/finance/newsbysector/energy/2791964/Peter-Mandelson-warns-Russiansover-BP-TNK-joint-venture-dispute.html10. The Telegraph, “Expulsion reprieve for BP’s Russia boss” 18 July 2008http://www.telegraph.co.uk/news/worldnews/europe/russia/2435848/Expulsion-reprieve-for-BPs-Russiaboss.html11. The Guardian, “BP-Rosneft deal is separate from Khodorkovsky’s fate, minister says”, 20 January 2010 http://www.guardian.co.uk/business/2011/jan/20/minister-speaks-on-bp-and-khodorkovsky12. The National Commission on the BP Deepwater Horizon Oil Spill And Offshore Drilling, “Deep Water:The Gulf Oil Disaster and the Future of Offshore Drilling”, p. 301 http://www.oilspillcommis-sion.gov/finalreport13. See e.g. European Parliament: Debates: CRE 20/01/2011 - 4 “A sustainable EU policy for the HighNorth” http://www.europarl.europa.eu/sides/getDoc.do?type=CRE&reference=20110120&secondRef=ITEM-004&language=EN&ring=A7-2010-037714. See PLATFORM, “Off the deep end - Foreign policy and the dash for offshore oil and gas” http:// www.platformlondon.org/documents/offthedeepend.pdf15 Rigzone, “UK Increases North Sea Oil Rig Safety Inspections”, 11 January 2011http://www.rigzone.com/news/article.asp?a_id=102925

Introduction

16. As quoted in Pew Trust, “Oil Spill Prevention and Response in the U.S. Arctic Ocean: Unexam-ined Risks, Unacceptable Consequences” p7. The report can be found online onhttp://www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Reports/Protecting_ocean_life/PEW-1010_ARTIC_Report.pdf (Pew Trust report hereafter)17. As quoted in: Darren Goode, ‘Lieberman: Drilling Still Part Of Energy Bill’, National Journal, 4 May 2010.18. Pew Trust report; WWF “Drilling for Oil in the Arctic: Too Soon, TooRisky”,http://www.worldwildlife.org/what/wherewework/arctic/WWFBinaryitem18711.pdf (WWF report hereafter); The National Commission on the BP Deepwater Horizon Oil Spill And Offshore Drilling, “Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling” http://www.oilspill-commission.gov/finalreport (National Commission report hereafter)19. Pew Trust report p4420. Herald Scotland, “Regulator will supervise Cairn Energy drilling”, 13 June 2010http://www.heraldscotland.com/business/corporate-sme/regulator-will-supervise-cairn-energy-drilling-1.103441821. Pew Trust report, p5422. For details on the implications of Arctic climate conditions for oil spill response technology, see Pew Trust report, p65-6623. U.S. Dept. of the Interior, Minerals Management Service, Arctic Oil Spill Response Research andDevelopment Program, A Decade of Achievement at 14 (2009),http://www.boemre.gov/tarprojectcategories/PDFs/MMSArcticResearch.pdf.24. Financial Post “Oil and Ice: Worse than the Gulf Spill?”, 8 November 2010http://www.financialpost.com/news/Worse+than+Gulf+spill/3795134/story.html#ixzz178XYNfhB25. WWF report, p1726. Barents Observer, “Oil spill cleanup possible only every other day in Barents Sea”, 31 March 2006http://www.barentsobserver.com/index.php?cat=16282&id=316544&showforumform=1&find=27. “Gotova li Rossiya k dobyche nefti na shelfe?” (“Is Russia ready for oil extraction on the conti-nentalshelf?”), Bellona http://www.bellona.ru/russian_import_area/energy/renewable/3920228. Rosneft, “Rosneft and BP form Global and Arctic Strategic alliance”, 14 January 2010http://www.rosneft.com/news/pressrelease/15012011.html29. WWF report, p.2230. WWF report, p.1931. National Commission Report, p. 32032. BBC News “Cairn Energy refuse to publish full oil spill plan”, 21 November 2010http://www.bbc.co.uk/news/uk-scotland-1178812233. Chevron, “Arctic Offshore Relief Well Equivalency” http://www.neb-one.gc.ca/fetch.asp?language=E&ID=A1W4C634. See also Ecojustice and WWF-Canada, “Suggested Studies and Preliminary Response to CFI #1 & #2”, 29 November 2010 http://www.neb-one.gc.ca/fetch.asp?language=E&ID=A1W4C135. “Deepwater Horizon’s Enduring Lessons”, National Journalhttp://insiderinterviews.nationaljournal.com/2010/08/deepwater-horizons-enduring-le.php36. The Guardian, “Greenland wants $2bn bond from oil firms keen to drill in its Arctic waters” 12 November 2010 http://www.guardian.co.uk/business/2010/nov/12/greenland-oil-drilling-bond37. Bloomberg, “Russia May Demand Oil Spill Fund as BP Looks Offshore”, 26 January 2011http://www.bloomberg.com/news/2011-01-26/russia-may-demand-oil-spill-fund-as-bp-looks-offshoreupdate1-.html38. Personal communication.39. See e.g. New York Times blogs, “Arctic Drilling Poses Untold Risks, Study Concludes” 11 November 2010 http://green.blogs.nytimes.com/2010/11/11/arctic-drilling-poses-untold-risks-study-concludes/?partner=rss&emc=rss; France 24, “Inuit call for Arctic offshore oil drilling moratorium”, 21 May 2010 http://www.france24.com/en/20100527-inuit-call-arctic-offshore-oil-drilling-moratorium

Wiating for accidents to happen

40. Jim Stotts’s speech at the Arctic Leaders Summit 2010.41. UNEP-GRID Arendal, “Vital Arctic Graphics: People and Global Heritage on Our Last Wild Shores”, p9http://www.grida.no/_res/site/file/publications/vitalarcticgraphics.pdf,42. UN Department of Economic and Social Affairs, “International Workshop on Methodologies RegardingFree Prior and Informed Consent And Indigenous Peoples”www.un.org/esa/socdev/unpfii/documents/workshop_FPIC_IFAD.doc43. Personal communication with Kola Sami activist.44. Save Pechora action group, personal communication.45. BBC News, “Russia’s oil exploration threatens gray whales”, 24 June 2010http://www.bbc.co.uk/news/1040382046. BBC News, “Native Alaskans say oil drilling threatens way of life”, 20 July 2010http://www.bbc.co.uk/news/world-us-canada-1054910747. Petroleum Economist, “Hammerfest LNG starts producing”, November 2007 http://www.petroleumeconomist.com/default.asp?page=14&PubID=46&ISS=24329&SID=69724548. See e.g. Pew Centre on Global Climate Change http://www.pewclimate.org/arctic_qa.cfm49. Arctic Climate Impact Assessment. Scientific Report, p.66http://www.acia.uaf.edu/PDFs/ACIA_Science_Chapters_Final/ACIA_Ch03_Final.pdf50. Jim Stotts’s speech at the Arctic Leaders Summit 2010.

51. Jeane J. Kirkpatrick: “Military Implications of the UN Convention on the Law of the Sea”, 8 April 2004 http://www.aei.org/speech/2026252. Melissa A. Verhaag, It Is Not Too Late: The Need for a Comprehensive International Treaty to Protect the Arctic Environment, 15 GEO. INT’L ENVTL. L. REV. 555, 570 (2003)53. Greenpeace International, “World Park Antarctica”http://www.greenpeace.org/international/en/about/history/how-we-saved-antarctica/54. Ed Struzik, “As the Far North Melts, Calls Grow for Arctic Treaty”, Yale Environment 360, 14 June 2010 http://e360.yale.edu/feature/as_the_far_north_melts_calls_grow_for_arctic_treaty/2281/55. Oran R. Young, “Whither the Arctic? Conflict or cooperation in the circumpolar north”, Polar Record (2009), 45: 73-8256. Oran R. Young. “Whither the Arctic 2009? Further developments.” Polar Record (2009), 45: 179-18157. UN Commission on the Limits of the Continental Shelfhttp://www.un.org/Depts/los/clcs_new/clcs_home.htm58. List of submitted claims: http://www.un.org/Depts/los/clcs_new/commission_submissions.htm59. Natural Resources Canada: National Initiatives (2006-2009) http://ess.nrcan.gc.ca/pri/nat_e.php60. Lieutenant Colonel Alan L. Kollien, “Toward an Arctic Strategy”, U.S. Army War College StrategicResearch Project http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA497652&Location=U2&doc=GetTRDoc.pdf61. Personal communication.62. Clive Schofield and I Made Andi Arsana, “Beyond the Limits?: Outer Continental Shelf Opportunitiesand Challenges in East and Southeast Asia,” Contemporary Southeast Asia, vol. 31, no. 1 (2009): 37-3863. UNCLOS, Article 234 http://www.un.org/Depts/los/convention_agreements/texts/unclos/part12.htm64. UNCLOS Part 12: Protection of the Marine Environmenthttp://www.un.org/Depts/los/convention_agreements/texts/unclos/part12.htm65. Arctic Council, http://arctic-council.org/article/about

Arctic communities: pawns in the resource chess game

Why is it “too late”?

The keywords of Arctic policy66. The Rio Declaration, http://www.unep.org/Documents.Multilingual/Default.asp?documentid=78&articleid=116367. US Chamber of Commerce, http://www.uschamber.com/issues/regulatory/precautionary-principle68. The Pew Charitable Trusts, “Precautionary Management for Arctic Fisheries”http://www.pewtrusts.org/news_room_detail.aspx?id=4869669. National Commission Report, p. 30470. NewsObserver.com, “Oil spill commission examines Arctic drilling”, 3 December 2010http://www.newsobserver.com/2010/12/03/846711/oil-spill-commission-examines.html71. AFP, “US designates ‘critical’ polar bear habitat in Arctic”, 24 November 2010http://www.google.com/hostednews/afp/article/ALeqM5ji-9bw90WiQg6srl_y8_oDZ0kcbQ?docId=CNG.fec6f3aa9abd3e72e578e9dd700205c7.9a172. Investors Chronicle, “Arctic spat highlights deepwater dilemma”, 22 November 2010http://www.investorschronicle.co.uk/MarketsAndSectors/Sectors/article/20101122/cdea3116-f187-11df-8eaf-00144f2af8e8/Arctic-spat-highlights-deepwater-dilemma.jsp;73. The Wall Street Journal, “Alaska to Contest ‘Critical Habitat’ Designation for Polar Bears”, 21 December2010 http://online.wsj.com/article/SB10001424052748703581204576033883058987222.html74. CNN, “Oil industry calls on Congress to open more areas to drilling”, 4 January 2011http://edition.cnn.com/2011/POLITICS/01/04/oil.industry.jobs/75. US Energy Information Administration: Country Analysis Briefs: Norwayhttp://www.eia.doe.gov/cabs/Norway/Oil.html76. The Guardian, “Opposition grows to Norway’s Arctic oil search”, 20 March 2009http://www.guardian.co.uk/environment/2009/mar/20/oil-exploration-polar-circle-norway77. BBC News, “Norway prepares for dry North Sea”, 14 April 2004http://news.bbc.co.uk/1/hi/business/3622129.stm78. US Energy Information Administration: Country Analysis Briefs: Russiahttp://www.eia.doe.gov/cabs/Russia/Oil.html79. Gazeta.ru, “Neft derzhavnaya” (“Stately oil”), 12 September 2008http://www.gazeta.ru/comments/2008/09/11_a_2836604.shtml80. Sam Foucher, “Russia’s Oil Production is About to Peak”, The Oil Drum, 24 April 2008http://www.theoildrum.com/node/362681. Interview with report authors82. US Energy Information Administration: Country Analysis Briefs: Norwayhttp://www.eia.doe.gov/cabs/Norway/Oil.html83. Euractiv.com, “EU energy chief backs Arctic drilling”, 22 September 2008http://www.euractiv.com/en/climate-environment/eu-energy-chief-backs-arctic-drilling/article-17560184. CNN, “Oil industry calls on Congress to open more areas to drilling”, 5 January 2011http://edition.cnn.com/2011/POLITICS/01/04/oil.industry.jobs/85. Sarah Palin, ‘Domestic Drilling: Why We Can Still Believe’, Sarah Palin Facebook Page, 30 April 2010. http://www.facebook.com/note.php?note_id=38456033843486. Interview with report authors.

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87. BBC News, “Russia and Norway sign maritime border agreement”, 15 September 2010http://www.bbc.co.uk/news/business-1131643088. “Strategy for the development of the Arctic Zone and ensuring national security up to 2020”, emphasis added. A version of this document is available on http://www.city-strategy.ru/UserFiles/File/strategar.doc89. Bellona, North-West Russia Renewable Energy Forum http://www.bellona.ru/subjects/energy_forum

The keywords of Arctic policy90. Lords Hansard Text for 18 Oct 2010: Column WA120. http://www.publications.parliament.uk/pa/ld201011/ldhansrd/text/101018w0001.htm#101018800015291. The Guardian, “BP-Rosneft deal is separate from Khodorkovsky’s fate, minister says”, 20 January 2010http://www.guardian.co.uk/business/2011/jan/20/minister-speaks-on-bp-and-khodorkovsky92. British High Commission Ottawa, “The Arctic: What Business is it of Britain’s? Remarks by Anthony Cary to the Arctic Circle in Ottawa, 10 November 2009” http://ukincanada.fco.gov.uk/en/news/?view=Speech&id=2122066293. E.g. also a speech given by MEP Diana Wallis at the NATO Advanced Research Workshop onEnvironmental Security in the Arctic.94. Euractiv.com, “EU energy chief backs Arctic drilling”, 22 September 2008http://www.euractiv.com/en/climate-environment/eu-energy-chief-backs-arctic-drilling/article-17560195. Euractiv.com, “Oettinger proposes deepwater drilling moratorium”, 8 July 2010http://www.euractiv.com/en/energy/oettinger-proposes-deepwater-drilling-moratoriumnews-49610696. Parliamentary Questions E-7440/2010 http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=E-2010-7440&language=EN97. European Parliament: Debates: CRE 06/10/2010 – 11 “EU action on oil exploration and extrac-tion in Europe (debate)” http://www.europarl.europa.eu/sides/getDoc.do?type=CRE&reference=20101006&secondRef=ITEM-011&format=XML&language=EN98. See for example European Commission “Stock taking document Towards a new Energy Strategy forEurope 2011-2020”http://ec.europa.eu/energy/strategies/consultations/doc/2010_07_02/2010_07_02_energy_strat-egy.pdf99 EU External Action, “EU Arctic Policy” http://eeas.europa.eu/arctic_region/100. European Commission, “Communication from the Commission to the European Parliament and the Council - The European Union and the Arctic region“ http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0763:FIN:EN:HTML101. European Parliament, “European Parliament resolution of 20 January 2011 on a sustainable EU policy for the High North” (P7_TA(2011)0024) http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-2011-0024+0+DOC+XML+V0//EN&language=EN102. Arctic Portal, “A sustainable EU Policy for the High North draft report presented and debated this week in Brussel” http://arcticportal.org/news/a-sustainable-eu-policy-for-the-high-north-draft-report-presentedand-debated-this-week-in-brussel103. The Greens / European Free Alliance, “EU Arctic policy: EP calls for freeze on exploitation of Arctic resources” 20 January 2011 http://www.greens-efa.org/cms/pressreleases/dok/367/367966.htm104. EUBusiness.com, “Arctic Council snubs EU as observer over seal dispute”http://www.eubusiness.com/news-eu/1241016421.74105. Interview with the report authors.106. The Financial Times:”Cameron woos Nordic nations”, 23 November 2010107. SMi Group: Event Media http://www.smi-online.co.uk/event_media/supporters.asp?is=5&ref=3197108. The Guardian, “BP defends Russian oil deal”, 19 January 2011http://www.guardian.co.uk/business/2011/jan/19/bp-defends-russia-deal109. Lords Hansard text for 18 November 2010, c841,http://www.publications.parliament.uk/pa/ld201011/ldhansrd/text/101118-0001.htm#10111864000051110. House of Commons Hansard text for 20 April 2009, c57http://www.publications.parliament.uk/pa/cm200809/cmhansrd/cm090420/debtext/90420-0009.htm#09042018000227111. House of Lords Hansard text for 6 December 2010, c92http://www.publications.parliament.uk/pa/ld201011/ldhansrd/text/101206-0002.htm#10120634000064112. British High Commission Mauritius, “The Offshore Northern Seas Exhibition”http://ukinmauritius.fco.gov.uk/en/news/?view=News&id=5656716113. Ibid114. ONS-2010 programme: http://www.ons.no/index.cfm?event=downloadfile&famid=129091115. Murmansk Press “Gubernator Murmanskoi oblasti vstretilsa s delegatsiey iz Velikobritanii” (“Murmansk governor met British delegation”) http://murmanskpress.ru/section/main/politics/808116. UK Trade and Investment, “Shtokman project offers major opportunities for UK companies”http://www.ukti.gov.uk/uktihome/search.html?x=0&x=0&sort=ByScore&y=0&y=0&search=shtokman&x=0&y=0&sector=-1&country=-1&focusOn=-1117. UK Trade and Investment, “Oil & gas opportunities in Canada”http://www.ukti.gov.uk/uktihome/sectorbriefing/116892.html118. European Parliament: Debates: CRE 06/10/2010 – 11 “EU action on oil exploration and extraction in Europe (debate)” http://www.europarl.europa.eu/sides/getDoc.do?type=CRE&reference=20101006&secondRef=ITEM-011&format=XML&language=EN119. Wall Street Journal, “UK Increases North Sea Oil Rig Safety Inspections”http://online.wsj.com/article/BT-CO-20110111-706811.html

Trusting the best?120. The Moscow Times, “BP, Rosneft in Landmark Swap”http://www.themoscowtimes.com/mobile/article/428957.html121. E.g. Kommersant, “Prishli v cabinet” (“New arrivals in the Cabinet”), 31 October 2001http://www.kommersant.ru/doc.aspx?DocsID=289656122. Interfax “Sechin zayavlyayet, chto glava BP Heyward pokidayet svoi post, kompaniya otrit-sayet etuinformatsiju” (“Sechin claims BP CEO Heyward is leaving his post, company refutes this information”) 28 June 2010 http://www.interfax.ru/business/news.asp?id=143066123. The Telegraph, “WikiLeaks: BP boss Bob Dudley blamed new Rosneft partner Igor Sechin for ‘black’plot against him,” 1 February 2011http://www.telegraph.co.uk/news/worldnews/wikileaks/8294082/WikiLeaks-BP-boss-Bob-Dudley-blamednew-Rosneft-partner-Igor-Sechin-for-black-plot-against-him.html124. The Telegraph, “William Hague expresses concern at Mikhail Khodorkovsky sentence”, 30 December 2010 http://www.telegraph.co.uk/news/worldnews/europe/russia/8232624/William-Hague-expressesconcern-at-Mikhail-Khodorkovsky-sentence.html

125. Financial Times, “Huhne under fire for blessing BP tie-up” 17 January 2011http://www.ft.com/cms/s/0/c8154164-2291-11e0-b6a2-00144feab49a,s01=1html#axzz1BOwhuWFt126. The Guardian, “BP-Rosneft deal is separate from Khodorkovsky’s fate, minister says”, 20 January 2010 http://www.guardian.co.uk/business/2011/jan/20/minister-speaks-on-bp-and-khodorkovsky127. Reuters, “BP, Russia oil plans encroach on Arctic parks - WWF”, 1 February 2011http://www.reuters.com/article/2011/02/01/russia-arctic-oil-idUSLDE7100XF20110201128. The Commission’s Final Report can be downloaded from http://www.oilspillcommission.gov/final-report129. ‘BP in the Arctic and Beyond’, BP,http://www.bp.com/liveassets/bp_internet/russia/bp_russia_english/STAGING/local_assets/down-loads_pdfs/g/BP_in_Arctic_eng.pdf130. US Environmental Protection Agency,http://www.epa.gov/compliance/resources/cases/civil/mm/bpexplor.html131. Eye on the Arctic, ‘Inspectors say BP’s Alaska Pipeline Needs Attention’ 20 May 2011http://eyeonthearctic.rcinet.ca/en/news/usa/100-business/211-inspectors-say-bps-alaska-pipe-line-needsattention132. Guardian ‘BP shuts Alaska pipeline after leak’ 10 January 2011,http://www.guardian.co.uk/business/2011/jan/10/bp-shuts-alaska-pipeline-after-leak133. Reuters, “Analysis: Alaska oil line facing increased risks as output falls”, 21 January 2011http://www.reuters.com/article/2011/01/21/us-alaska-pipeline-idUSTRE70K4KW20110121134. CanadaViews.ca, “Statoil in trouble with major investors over its tar sands involvement: Green Peace”http://www.canadaviews.ca/2009/05/13/statoil-in-trouble-with-major-investors-over-its-tar-sandsinvolvement-green-peace/135. Oil Sands Truth, “Thailand’s oil giant buys stake in Statoil Canada tar sands project”http://oilsandstruth.org/thailand039s-oil-giant-buys-stake-statoil-canada-tar-sands-project136. “Comments on the report of Statoil’s investigation into the loss of well control on Gullfaks C on 19 May 2010”, Petroleum Safety Authority Norway http://www.ptil.no/getfile.php/Tilsyn%20p%C3%A5%20nettet/P%C3%A5legg_varsel%20om%20p%C3%A5legg/2009_1626_Kommentarer%20til%20Statoils%20granskingsrapport%20etter%20br%C3%B8nnkontrollhendelse%20-%20Gullfaks%20C%20-%20engelsk.pdf137. “Comments on the report of Statoil’s investigation into the loss of well control on Gullfaks C on 19 May 2010”, Petroleum Safety Authority Norway http://www.ptil.no/getfile.php/Tilsyn%20p%C3%A5%20nettet/P%C3%A5legg_varsel%20om%20p%C3%A5legg/2009_1626_Kommentarer%20til%20Statoils%20granskingsrapport%20etter%20br%C3%B8nnkontrollhendelse%20-%20Gullfaks%20C%20-%20engelsk.pdf138. “Hadde ingen plan for å drepe brønnen” (“There was no plan to kill the well”), Teknisk Ukebladhttp://www.tu.no/olje-gass/article268577.ece139. The Moscow Times, “BP Can Improve Rosneft’s Corporate Culture”, 20 January 2011http://themoscowtimes.com/mobile/article/429271.html140. International Business Leaders Forum http://www.iblf.org/en/who-we-are/aboutus.aspx141. The video can be found at http://rutube.ru/tracks/2594005.html142. Bloomberg, “BP Reinstates Dividend After Profit Increase, Plans to Sell Two Refineries”, 1 February 2010 http://www.bloomberg.com/news/2011-02-01/bp-reinstates-quarterly-dividend-after-fourth-quarterprofit-increases-30-.html143. See ‘The Eurocrats go bear-baiting - the EU & TNK-BP’ by PLATFORM.http://www.platformlondon.org/carbonweb/showitem.asp?article=349&parent=339144. Grazhdanin Foundation, 2006. “Ekologicheskaya Katastrofa v Zapadnoi Sibiri: the results of a public environmental inspection of the Samotlor oil field”145. Reuters, “Russia’s Gazprom ups Shtokman reserves to 3.8 tcm” 15 November 2007http://www.reuters.com/article/idUSL1589543420071115146. Barents Observer, “Gazprom changed site for planned Shtokman LNG plant”, 14 August 2007http://www.barentsobserver.com/index.php?id=527709&cat=16149&xforceredir=1&noredir=1147. Interview with the report authors148. See e.g. Sergey Gavrilov. “Sjezd Saamov – vzglyad delegata” (“Saami congress – a delegate’s view”), Indigenous Portal, 4 March 2009 http://www.indigenousportal.com/es/%C3%81mbito-pol%C3%ADtico/%D0%A1%D0%AA%D0%95%D0%97%D0%94-%D0%A1%D0%90%D0%90%D0%9C%D0%9E%D0%92-%D0%B2%D0%B7%D0%B3%D0%BB%D1%8F%D0%B4-%D0%B4%D0%B5%D0%BB%D0%B5%D0%B3%D0%B0%D1%82%D0%B0.html; Argumenty I Fakty, “Saami sdelali shag ksamoopredelaniyu” (“The Saami make a step towards self-determina-tion”), 16 December 2008http://www.yar.aif.ru/society/article/1262149. Lybov Vatonen’s comments at Arctic Leaders Summit 2010.150. Personal communication with a Kola Sami activist151. Comments at Arctic Leaders Summit 2010.152. Interview with the report authors. See also Henriksen, C. “Indigenous peoples and industry. Complex co-existence in the Barents Euro-Arctic Region” in Talking Barents: The Barents Review 2010 Available online at http://img0.custompublish.com/getfile.php/1124271.900.aqeddsxqyr/Barents_Review_2010.pdf?return=www.barents.no

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Arctic anxietyBP, British foreign policy and the rush for polar oil

In January 2011, BP signed a deal with Russian state oil company Rosneft to together explore for Arctic oil in an area the size of the entire UK North Sea. This report from PLATFORM and Greenpeace shows that no company is at present adequately prepared to drill offshore in the Arctic, given the current lack of regulation, knowledge, technology or research. It highlights BP’s persistent managerial failures to address safety risks in the Gulf of Mexico and its safety record in Alaska, and argues against its involvement in pushing new boundaries of fossil fuel development in conditions as treacherous as those to be found in the Arctic. The report also examines the role of the UK government’s foreign energy policy in supporting BP’s controversial activities abroad. Lobbying for oil deals is conducted behind closed doors with little public oversight or accountability. Using political will and spending public funds to promote British businesses’ exploitation of fossil fuel frontiers is a significant matter that should not be decided without public discussion.