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13.04.2012

Arctic Likely To Attract $100 Billion Investments In Coming Decade-Report

The Arctic region is likely to attract investment of $100 billion or more over the coming decade, according to a report by independent policy institute Chatham House and the Lloyd's of London insurance market.

Interest in the Arctic region has intensified in recent years as a boom in commodities has seen companies scramble for precious resources to satisfy growing demand from China, among others.

A melting ice cap hasn't only opened up new shipping routes that significantly cut transport times and distances between Europe and Asia, it has also made the region's estimated rich deposits of oil, gas and minerals more accessible.

The report, published Thursday, notes that oil and gas, mining and the shipping industries will be the biggest drivers and beneficiaries of Arctic economic development in the coming years, but it says the Arctic's economic future depends principally on local investment conditions and global commodity prices.

"One thing that stands out most clearly from this report is the significant level of uncertainty about the Arctic's future, both environmentally and economically," said Richard Ward, chief executive of Lloyd's. "Some of the technologies that will help to shape that future, such as those involved in deepwater drilling and ice management are already tried, while others are still in their infancy or yet to be developed."

Growing interest in four key sectors--mineral resources, fisheries, logistics and Arctic tourism--could, according to the report, generate substantial investment in the region over the next decade, especially in the minerals sector.

The region is estimated to hold extensive hydrocarbon reserves adding to its allure despite harsh climate and environmental concerns. The region--which spans Alaska, Russia, Norway and Greenland--may contain as much as 30% of the world's undiscovered gas and 13% of the world's undiscovered crude oil, according to the U.S. Geological Survey.

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