GlobalData’s latest thematic report, ‘Arctic Exploitation’ evaluates the competitive position of different Arctic countries in tapping the hydrocarbon reserves of the region.

The Arctic region is largely under-explored, owing to its cold, harsh climatic conditions, frozen seas, and lack of investment in infrastructure development. However, this picture is gradually changing. According to separate estimations from the US and Russian agencies, the Arctic region is likely to hold around 20-25% of the world’s untapped hydrocarbons – potentially amounting to a $35 trillion opportunity. Dwindling oil and gas reserves elsewhere is also raising the case for exploration and production (E&P) companies to venture into this region in search of hydrocarbons.

E&P activities in the Arctic are primarily concentrated in the onshore and shallow water regions of Russia, Norway, and the US. Arctic operations of Russia and Norway are aimed at improving their hydrocarbon reserves to overcome the anticipated decline in output from ageing fields in other regions. However, for operators in the US, the productive shale patches in the Lower 48 region continue to gain preference over oil and gas fields in the Alaska North Slope. Perhaps, the major incentive for the US in exploring the Arctic is to protect its maritime boundaries and counter the growing influence of Russia and China in the region.

Russia has the natural advantage of having the longest coastline along the Arctic giving it the territorial right to explore its continental shelves. With incentives from the Russian government and financial support from China, Russian oil and gas companies, such as Gazprom/Gazprom Neft, Rosneft and Novatek are looking to develop the Arctic region into a new oil and gas hotspot. These companies are also benefiting from global warming as the shrinking ice cover is enabling maritime activities in the region.

By integrating strategic planning with resource development, Russia is working towards converting the Northern Sea Route as a cost-efficient alternative to the Suez Canal and profit from trade and industrialization in the Arctic. Environmental groups have repeatedly opposed E&P activities in the Arctic countries in an attempt to safeguard the sensitive ecology of the region. Lately, these groups have received substantial backing with the adoption of the United Nations’ Climate Change Framework of 2015.

The framework has also prompted several financial institutions, including Royal Bank of Scotland, Societe Generale, Goldman Sachs, and ABN Amro to discontinue their exposure to oil and gas projects in the Arctic. The call for limiting industrialisation in the Arctic is bound to get severe in this new decade and might dictate the future direction of E&P operations in the region.

GlobalData’s thematic research identifies oil and gas companies, such as Gazprom, Rosneft, Novatek, Equinor, and Hilcorp Energy as the key companies in the Arctic exploitation theme based on their recent activities in the region. Top companies in the Arctic exploitation theme.