The opening up of the Arctic provides enormous potential for oil and gas development. Exploitation of these resources will be important to meet the EU’s increasing energy demands. However, this carries with it technological, environmental and geopolitical risks. Exploration in the Arctic Circle has to date uncovered more than 400 oil and gas fields, representing some 40 billion barrels of oil, over 1,100 trillion cubic feet of gas and 8.5 billion barrels of natural gas reserves. A US government geological survey from July 2008 suggested that the Arctic holds some 13% of the world’s undiscovered oil, 30% of undiscovered natural gas and 20% of undiscovered natural gas liquids. Of these, 84% are believed to be offshore.

Significant technological obstacles exist since exploration and drilling would occur in some of the most inhospitable areas on Earth. Arctic conditions, which include the risk of icebergs and extreme weather, would need to be managed. The European Commission emphasises the need to promote further research and development in offshore technology and infrastructure. Being a global leader in technology and research, the EU should expand on the experience European industry has accumulated in offshore oil and gas exploration. The Commission has also expressed its willingness to help other countries develop the necessary technology for Arctic energy exploitation, which could help supply the EU’s future energy needs.

Any exploitation of resources has to take into account the environmental consequences. There are risks, such as damaging fragile ecosystems and their biodiversity, as well as increased air and water pollution. In a 2008 communication on the Arctic, the Commission emphasised the need to respect the highest possible standards and introduce binding international norms building on the guidelines of the Arctic Council and other international conventions. The environmental damage that can be done by offshore drilling was recently witnessed in the Deepwater Horizon oil spill in the Gulf of Mexico. Environmental groups, such as the WWF, the European Environmental Bureau and the Bellona Foundation, have lobbied MEPs to support a ban on drilling in the Arctic, arguing that a similar leak there would have even more disastrous consequences. In response, the Commission noted that drilling in the Arctic is done at shallower sea depths and in less extreme weather conditions than in the Gulf of Mexico. However, the EU must still properly assess the risks of potentially similar accidents in the Arctic and their impact on the environment if the region is to become a major supplier of energy for Europe.

The 2008 Commission communication mentioned that the Arctic’s oil and gas resources could enhance the EU’s security of energy supply. This is not straightforward, however, since most of the resources lie outside the territory of any EU member state. Greenland is a self-governing Danish territory but is not part of the EU, having left the then European Economic Community in 1985. Cooperation with both Norway and Russia is essential for developing hydrocarbon resources. The Northern Dimension partnership between the EU, Russia, Norway and Iceland may thus become an important platform to exploit the Arctic’s hydrocarbon resources and could have a positive effect on the wider EU-Russia relationship. However, the risk of increased competition for resources could also put a strain on relations between the two neighbours. Much will depend on how politicians and businesses on both sides approach the issue. It is unlikely that the Arctic would help reduce the EU’s energy dependency on Russia in the short term and the need for further cooperation on the matter should be anticipated.

Exploitation of Arctic hydrocarbon resources will arguably be slow, but progress should be made. A coherent EU policy must address all the risks and challenges involved in developing them. The resources must also be exploited in a way that preserves the natural environment and ensures their sustainability.