The European Union's Potential Contribution to Enhanced Governance of Offshore Oil and Gas Operations in the Arctic

AuthorNengye Liu
Date01 July 2015
Published date01 July 2015
The European Union’s Potential Contribution to
Enhanced Governance of Offshore Oil and Gas
Operations in the Arctic
Nengye Liu*
This article focuses on the potential contribution of the
European Union (EU) to an enhanced legal regime for
Arctic offshore oil and gas operations. It first briefly
describes existing international law for the regulation
of offshore oil and gas operations in the Arctic. The
article then discusses the development of the EU’s
Arctic policy and the EU’s competence to regulate
Arctic offshore oil and gas activities. Subsequently, it
analyses potential actions and initiatives that could be
taken by the EU to promote high safety standards for
offshore oil and gas operations in the Arctic.
According to a widely cited United States Geological
Survey report, about 13% of the world’s undiscovered,
technically recoverable oil and up to 30% of global gas
reserves are in the Arctic, of which 84% is offshore.1
This may not be good news for the Arctic marine envi-
ronment. As demonstrated by the Deepwater Horizon
disaster in the Gulf of Mexico,2there are significant
risks associated with offshore oil and gas activities in
marine ecosystems. The release of oil through accidents
or operations of offshore platforms could cause signifi-
cant damage to a fragile marine ecosystem like the
Arctic. This could occur through spills from accidental
blowouts at the well; accidents involving tankers trans-
porting oil and gas; operational pollution from offshore
installations, harbours and from oil tankers; accidental
releases from storage or during offloading; or dis-
charges from pipelines.3
Exploration and development in the Arctic requires
expensive, tailored technologies as well as safeguards
adapted to the extreme climatic conditions.4The lack of
existing infrastructure and the likely high cost of any
development in geographically remote and climatically
harsh conditions mean that the economics of any new
project will depend to a large extent on the size of dis-
coveries and the oil price, which, in turn, will be
impacted by the development of other sources of oil
supply (for example, United States (US) unconven-
tional oil) and alternative energies.5
However, as long as global energy demand continues to
increase and fossil fuels remain the world’s primary
energy source,6it appears inevitable that humans will
start drilling in the Arctic for oil and gas.7In fact, a
number of companies have already been pursuing
exploration projects in Arctic waters. Examples include
Shell in the Chukchi and Beaufort Sea; Cairn in offshore
Greenland; Rosneft/ExxonMobil in the Kara Sea; and
Rosneft/ENI in the Russian Barents Sea.8Therefore,
the key issue for offshore oil and gas operations in the
Arctic is to create a legal regime that strikes a balance
between possible adverse environmental consequences
(e.g. oil spills) in the offshore Arctic and the economic
benefits from hydrocarbon development.9
There is no doubt that the EU has become a global
actor. The global or international context in which the
* Corresponding author:
1K.J. Bird et al., ‘Circum-Arctic Resource Appraisal: Estimates of
Undiscovered Oil and Gas North of the Arctic Circle’ (United States
Geological Survey, 2008), found at: <
2United States Coast Guard, Report of Investigation into the Circum-
stances Surrounding the Explosion, Fire, Sinking and Loss of Eleven
Crew Members aboard the Mobile Offshore Drilling Unit Deepwater
Horizon in the Gulf of Mexico, April 20–22, 2010 (United States Coast
Guard, 2011).
3Arctic Council, ‘Arctic Guide: Information on Emergency Systems
and Contact Points, Overview of Environmental Risks, and Applicable
Agreements’ (2008), found at: <
4Wilson Center, Opportunities and Challenges for Arctic Oil and Gas
Development (Wilson Center, 2014), at 3.
5J. Henderson and J. Loe, The Prospects and Challenges for Arctic
Oil Development (Oxford Institute for Energy Studies, 2014), at 1.
6It is projected that global energy demand will increase by one third
from 2011 to 2035. Demand grows for all forms of energy, but the
share of fossil fuels in the world’s energy mix may fall from 82% to
76% by 2035. See International Energy Agency (IEA), ‘World Energy
Outlook 2013 Factsheets, How Will Global Energy Markets Evolve to
2035?’ (IEA, 2013).
7A. Neslen, ‘Europe Rejects Ban on Arctic Oil Drilling’, The Guardian
(10 October 2012).
8M. Luszczuk et al., ‘Developing Oil and Gas Resources in Arctic
Waters’, in: A. Stepein, T. Koivurova and P. Kankaanpaa (eds.),
Strategic Assessment of Development of the Arctic (Arctic Centre,
University of Lapland, 2014), 71, at 76.
9K. Hossain and T. Koivurova, ‘Hydrocarbon Development in the
Offshore Arctic: Can it be Done Sustainably?’, 10:1 Oil, Gas and
Energy Law (2012), 3.
Review of European Community & International Environmental Law
RECIEL 24 (2) 2015. ISSN 2050-0386 DOI: 10.1111/reel.12111
© 2015 John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.

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