The Arctic region has been earmarked as a major growth region for energy companies. But the firms who take risk management the most seriously will be the most likely to succeed commercially. This is according to a new report from Lloyd’s of London.
The reduction in Arctic sea ice, amongst other things, is opening avenues for oil and gas exploration. Some estimates suggest the reserves in the Arctic could account for 30% of the world’s undiscovered natural gas and 13% of total undiscovered oil. Potential new ice-free shipping routes are also opening. A new report from Lloyds argues that investment in the area could reach $100 billion (£62.7bn) over the next decade.
Companies entering this arena face major risks, suggests the report; because any environmental disaster in the Arctic could be worse than in other regions. Lloyds says comprehensive risk management will be essential for companies seeking to invest in the Arctic.
Richard Ward, Chief Executive of Lloyds said: “Risk management clearly has a critical role to play in helping businesses, governments and communities to manage these uncertainties and minimise risks.
“However, to do so effectively requires the most up to date information to analyse and control risks. There is a clear need for sustained investment in Arctic research.”