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17th Aug 2022

Banks fuelling expansion of oil-and-gas Arctic extraction

  • Between 2016 and 2020, banks channelled over €267bn to companies expanding their gas and oil production in the Arctic (Photo: NN - norden.org)
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Oil and gas firms are planning to ramp up their fossil-fuel extraction in the Arctic by more than 20 per cent over the next five years, partly thanks to the financial support they receive from the banking sector, according to a new report by Reclaim Finance.

France's Total is listed as the leading European energy firm when it comes to oil and gas expansion in the fragile polar region - with its production expected to increase by 28 percent over the next decade.

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But the Russian energy giant Gazprom is considered the biggest Arctic predator, since 74 percent of its reserves are based there.

Other energy companies with short-term expansion plans in the Arctic are the US's ConocoPhillips, Norway's Equinor, Spain's Repsol and Dutch Shell.

The investigation by Reclaim Finance, published on Thursday (23 September), found that the large majority of Arctic operations are bankrolled by some of the world's largest banks - including JPMorgan Chase, Citigroup and BNP Paribas and VTB group, Russian Sberbank and Gazprombank.

From 2016 to 2020, banks have channelled over €267bn to companies expanding their gas and oil production in the Arctic.

European banks are responsible for 25 percent of global underwriting and loans.

While most top financial institutions have some sort of Arctic-restriction policies in place, the vague definition of 'the Arctic' allows them to bypass their own exclusion policies, the report points out.

Two European banks - BNP Paribas and HSBC - even increased their contributions to gas and oil companies with extraction activities in the region, after adopting Arctic exclusion policies.

But other financial players, such as investors, are also complicit in the oil and gas boom in the Arctic, holding €232.1bn in companies developing Arctic oil and gas projects, the report says.

The findings come just a few weeks ahead of the highly-anticipated UN climate change conference (COP26) in Glasgow, Scotland - when leaders are expected to step up their climate pledges.

It is estimated that the Arctic lost, between 1979 and 2020 ,a sea-ice area about six times the size of Germany.

The report issued by the UN Intergovernmental Panel on Climate Change in the summer clearly stated that "human influence is very likely the main driver of the global retreat of glaciers and the decrease in Arctic sea ice".

"The Arctic is a climate bomb, and our research shows that the oil and gas industry is hellbent on setting it off, thus blowing up our chances of avoiding runaway climate breakdown," said Alix Mazounie from Reclaim Finance.

"But they are not the only culprits: financial institutions have bankrolled these companies, making a mockery of their own climate commitments," he added.

The French NGO examining fossil-fuel spending is now calling on financial institutions to strengthen their corporate policies to stop oil and gas expansion in the Arctic.

Earlier this year, the Paris-based International Energy Agency said that to limit global temperatures rises to 1.5 degrees there cannot be new oil and gas fields.

According to the report, there are 599 oil and gas fields in the Arctic, either in production, under development/evaluation or discovered.

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