Reducing oil production barriers in Alaska is dangerous for markets

20 february 2017

"In the medium term, lowering the barriers to oil production in Alaska may again pose a threat to markets," said Alexander Kurdin, an expert for the Analytical Center, in his speech at the second international conference "The Arctic: Shelf Projects and Sustainable Development of the Regions". The two-day conference was held at the Analytical Center and was dedicated to the key issues of socio-economic development of the Arctic and Far Eastern regions, prospects of the Russian shelf deployment, experience in geological exploration and drilling in the Arctic, and the creation of a favorable investment climate.

In his report "Prospects of the US Arctic oil and gas production policy change and their influence on the development of Arctic projects in Russia and in the world", Alexander Kurdin stressed the concentration in the United States of good conditions for the development of breakthrough technologies in the oil and gas sector. That is its largest financial system and high mobility of capital and labor, its developed oil and gas services, as well as the combination of its powerful IOCs and the competitive environment of independent companies. "The United States has a strong potential for the development of oil and gas technologies, including the development of Arctic deposits," Mr. Kurdin said. "But the situation was exacerbated by the country's former president, Barack Obama, who on December 20, 2016 put an absolute moratorium on the exploitation of hydrocarbons on the vast areas of the Chukchi Sea and Beaufort Sea, which makes for a total of 98% of the federal Arctic shelf ". According to lawyers, Donald Trump will have to change the law itself to reverse Obama's oil drilling ban, the expert explained.

In the medium term, lowering the barriers to oil production may again pose a threat to markets, he said. However, at present, the Arctic part of Alaska experiences an increase in the barriers, and the companies are being quite skeptical about development of such projects. This, according to the analyst, may slow down the development of Arctic technologies in the world and in Russia, and can as well make international cooperation difficult.

During the conference, the experts discussed the issues of environmental security of the Arctic, energy and utilities beyond the Arctic Circle and developing telecommunications infrastructure in the Arctic. Special attention was also given to the issues of transport and logistical support for arctic projects and personnel training in the Arctic. According to Sergey Romanov, Deputy Director of the Department for State Energy Policy of the Ministry of Energy of the Russian Federation, the development of the Arctic opens up prospects for the country's economic growth, in particular — for the industrial and shipbuilding sectors. The development of the Arctic should be a comprehensive process and we need to interact with all the market players," the expert believes.