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Benefit sharing in the Arctic energy sector: Perspectives on corporate policies and practices in Northern Russia and Alaska


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Many transnational energy companies are engaged in the exploration and development of oil reserves in the Arctic, and are facing policy challenges in respect to benefit sharing with the local communities. Benefit sharing arrangements between oil and natural gas companies and indigenous communities were investigated in Nenets and Khanty-Mansi Autonomous Districts, Irkutsk and Sakhalin regions in Russia and the North Slope of Alaska. We argue that Indigenous communities are not equally benefitting from oil and gas extraction, and no one benefit sharing policy model seems to ensure a sustainable local development. This may stem from the mismatch between benefit sharing policies and local institutional frameworks. Thus, as a part of benefit sharing obligations, companies and the state must work with Indigenous peoples and other affected communities to build local capacities and human capital. There is an urgent need to improve our knowledge base about benefit sharing in the Arctic energy sector, and we urge the Arctic Council Sustainable Development Working Group and/or the Arctic Economic Council to conduct a synthesis study aiming at finding best practices, identifying lessons learned, and initiating an inclusive, multi-stakeholder process of developing guidelines for companies on benefitsharing in the Arctic.
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Energy Research & Social Science
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Benet sharing in the Arctic energy sector: Perspectives on corporate
policies and practices in Northern Russia and Alaska
Maria S. Tysiachniouk
, Andrey N. Petrov
Environmental Policy Group, Wageningen University, Hollandsweg 1, Wageningen, The Netherlands
Centre for Independent Social Research, Ligovsky 87, St. Petersburg, 197022, Russia
ARCTICenter and Department of Geography, University of Northern Iowa, Cedar Falls, IA 50614-0406, United States
Benet sharing
Indigenous peoples
Energy sector
Oil and gas
Many transnational energy companies are engaged in the exploration and development of oil reserves in the
Arctic, and are facing policy challenges in respect to benet sharing with the local communities. Benet sharing
arrangements between oil and natural gas companies and indigenous communities were investigated in Nenets
and Khanty-Mansi Autonomous Districts, Irkutsk and Sakhalin regions in Russia and the North Slope of Alaska.
We argue that Indigenous communities are not equally benetting from oil and gas extraction, and no one
benet sharing policy model seems to ensure a sustainable local development. This may stem from the mismatch
between benet sharing policies and local institutional frameworks. Thus, as a part of benet sharing obliga-
tions, companies and the state must work with Indigenous peoples and other aected communities to build local
capacities and human capital. There is an urgent need to improve our knowledge base about benet sharing in
the Arctic energy sector, and we urge the Arctic Council Sustainable Development Working Group and/or the
Arctic Economic Council to conduct a synthesis study aiming at nding best practices, identifying lessons
learned, and initiating an inclusive, multi-stakeholder process of developing guidelines for companies on benet-
sharing in the Arctic.
1. Introduction
Since the last century, the Arctic has become an important arena for
energy resource extraction, and this activity is expected to grow in the
decades to come [1,2]. Many transnational energy companies (TNC) are
actively engaged in the exploration and development of oil and natural
gas reserves in the high latitudes, and are facing serious policy chal-
lenges in respect to dealing with the local communities and state actors.
Oil and natural gas extraction in remote regions, including the Arctic,
brings opportunities for development, but also inicts costs to local
communities and Indigenous peoples. It aects the subsistence
economy and removes land from traditional resource use. The costs of
resource extraction to local communities may outweigh the benets,
which, in turn, aect the social and environmental security in the Arctic
The majority of oil and gas companies in the Arctic have declared
their commitment to benet-sharing arrangements that assist local and
Indigenous communities and protect local and Indigenous rights to land
and traditional resources [4]. Benet sharing generally refers to an
exchange between actors granting access to a particular resource and
actors providing compensation or reward for its use [5], as well as the
distribution of the monetary and non-monetary benets produced by a
resource-based project [6].
The implementation of these commitments varies considerably
among the regions, companies, and communities. Large surveys of lit-
erature have been undertaken in respect to benet sharing in mining
industry (see [79]), including remote regions [1013], but only re-
cently the discussion has evolved to focus on the energy extractive
sector in the Arctic and sub-Arctic regions [1418]. The analysis and
systematization of Arctic experiences is still in its beginning stages,
although there is enough empirical material and case studies to present
a classication and initial assessment of the benet sharing modes and
policy models, as we attempt below.
The review of benet sharing arrangements in dierent Arctic
countries and regions is based on our eld case studies in Russia and
Alaska, as well as, on literature review. Field work took place
20142017 in Nenets Autonomous District, Khanti-Mansi Autonomous
District, Sakhalin Island, Irkutsk Region, and the North Slope of Alaska.
Qualitative methodology using semi-structured interviews, participant
observations, and document analysis has been used. In addition,
Received 10 July 2017; Received in revised form 13 October 2017; Accepted 13 October 2017
Corresponding author at: Environmental Policy Group, Wageningen University, Hollandsweg 1, Wageningen, The Netherlands.
E-mail addresses: (M.S. Tysiachniouk), (A.N. Petrov).
Energy Research & Social Science 39 (2018) 29–34
2214-6296/ © 2017 Elsevier Ltd. All rights reserved.
literature on the topic of benet sharing has been analysed. Research
indicates that there is seemingly no ideal blueprint, or a single set of
best practices leading to benet sharing conditions satisfactory to local
and Indigenous-nomadic communities. By examining the typology of
benet sharing governance modes and corresponding company policy
models, we argue that some modes are more advantageous for meeting
community needs and fostering sustainable development in remote
regions. Concurrently, we explain why, despite company-community-
state cooperation dating back to at least the 1970s, we have not seen
the emergence of a successful benet sharing model. We analyse what
elements of Alaskan and Russian experiences could be used to build
more locally-responsive and sustainable Arctic benet sharing frame-
works. Finally, we present our policy perspective and suggest new re-
search directions to ll existing knowledge and policy gaps.
2. Background
The concept of fair and equitable benet sharingrepresents a
legal phenomenon, which originates from several international con-
ventions, e.g. the biodiversity, international human rights, law of the
sea and human right to science ([19];). It became a normative concept
in connection with natural resources. Despite the International Labor
Organization (ILO) Convention 169, which species Indigenous peo-
plesrights, is not directly using benet sharing terminology, experts
are widely exploring it [20] to frame benet sharing principles that
would close the gap between extractive industries, global beneciaries
and local residents ([2123]).
Benet sharing is dened as the distribution of monetary and non-
monetary benets generated through a resource extraction activity (e.g.,
[6,9]). Benet sharing is understood to be a part of the social licenseto
operate, i.e. of a societal acceptance of companys activities in addition
to and in concert with fullling obligatory licensing and permit re-
quirements for resource extraction [24].
Dierences in benet sharing arrangements depend on international
expectations imposed on the companies by investors, existing legisla-
tion, prevalent practices, regional contexts, and the level of empower-
ment of Indigenous and local communities [18]. Benets from oil and
natural gas extraction can be shared by energy companies with local
communities in a number of ways: taxes, community investment, in-
frastructure development, jobs creation, sponsorship, compensation for
damage, dividends, socioeconomic agreements, etc. [25,9]. For ex-
ample, compensation payments may take a form of cash transfers,
subsidies, purchases, and in-kind support directed at the local in-
dividual or collective beneciaries. Community investment may include
grants to local businesses and organizations, support for schools, and
social services, etc. Dividends may be paid to local beneciaries from
investment funds created as a result of the extractive activity. Ideally,
the concept of benet sharing has to incorporate fairness, equitability
(procedural, i.e. an ability to participate in benet-related decision
making, and distributive, i.e. ability to receive equitable benets) and
justice, which extends beyond compensations for loss [26,19,20] and
increase well-being and fate control of local communities [27].
Recent literature on benet sharing, including our past research, has
focused on the energy companies and local communities in the Russian
North and the North Slope of Alaska [17,18,2831]. Multiple eld
studies showed mixed types of benet sharing arrangements in these
regions, resulting in dierent outcomes for local communities and In-
digenous peoples. Several Arctic and sub-Arctic benet sharing gov-
ernance modes have been identied (e.g., [17,18]).
In this paper, we identify, describe, and compare benet sharing
modes and corresponding benet sharing policy models found in the
energy sector in the Russian and U.S. Arctic. In this context, a mode
refers to a general manner or approach in which benet sharing is
executed, while a policy model represents a specic institutional ar-
rangement that supports a given mode. We discuss their advantages and
shortcomings in respect to the two key points of this paper: (1) the (in)
ability to meet community needs and foster sustainable development,
and (2) potential characteristics of and impediments to a successful
benet sharing policy model for the Arctic.
3. Evaluating modes of benet sharing in the Arctic
Below we describe four modes of benet sharing. This classication
emphasizes governance and distribution mechanisms and divides all
benet sharing arrangements into paternalistic, company centered so-
cial responsibility (CCSR), partnership, and shareholder modes [17,18].
Although we introduce these idealtypes and provide their stylized
descriptions using examples from the eld, we must note that in all case
studies we see a mix of several modes. Most regions of interest have two
co-existing modes, with Alaska bolstering three. To reect this com-
plexity we created a mixed mode category for Alaska. Another cau-
tionary note is that in some instances it is challenging to clearly identify
the mode as benet sharing arrangements as it may incorporate fea-
tures from two modalities. We attempted to distill the examples we are
using here to illustrate our point most vividly. Finally, we discuss not
only features and pitfalls of each mode, but try to connect them with
policy models and sustainability process and outcomes. The latter is
done using the notions of procedural and distributional equity of ben-
et sharing [26].
3.1. Paternalistic mode
The state usually dominates in this mode: it denes, monitors, and
intervenes in companiespolicies and practices. In some cases in Russia
it represents both sides of stakeholders: a state-run company and a re-
gional government. The company either (partially) takes a role of the
state or contributes signicantly to some elements of state support to
local communities and Indigenous peoples. The latter parties have a
very limited ability to control the nature, types, and delivery of bene-
ts. In Russia, the paternalistic mode is rooted in the Soviet legacy and
often results in the Indigenous peoples dependency on energy com-
panies, which sometimes de facto represents the state. Since the 1990s,
the Russian Arctic has been undergoing a transition from state pa-
ternalism to corporate paternalism [28]. In Alaska, paternalism is per-
ceived by scholars and Indigenous people as rooted in colonialism, but
it also is embedded in some distributional practices by municipal and
tribal governments.
For example, the paternalistic mode of benet sharing arrangements
can be exemplied using communities in the Nenets Autonomous
District [30]. As a part of the socio-economic agreements between oil
companies and the regional government, the oil-generated funds were
distributed to Indigenous communities without control by Indigenous
people. Non-transparent negotiation and top-down execution of the
programs resulted in substandard services, such as inadequate housing
provided to Indigenous reindeer herders.
In addition to the regional-level agreements, prior to 2013 the direct
socio-economic agreements were also concluded between energy
companies and Nenets reindeer herding enterprises. The amount and
nature of the included benets depended on reindeer herdersleader-
ship negotiation skills, but most were in-kind. If the management of
funds was delegated to the Indigenous enterprises, they were obliged to
submit reports on their spending. In addition to colonialism, de-
pendency, and ineciency in respect to local communities, according
to our observations, such top-down system is prone to persisting in-
equity based on the unequal access to distributed benets.
After partial transition from socio-economic agreements to com-
pensations in 2013, increased self-suciency of reindeer herding en-
terprises and depletion of state resources diminished the level of pa-
ternalism in the Nenets region. Concurrently, strengthening local
institutions represented by reindeer herding enterprises were able to
partially capitalize on compensation payments to become more eco-
nomically mature, self-sucient, and independent compared to the
M.S. Tysiachniouk, A.N. Petrov Energy Research & Social Science 39 (2018) 29–34
early post-soviet years. This marked a shift from paternalistic to pre-
dominantly company-driven mode of benet sharing arrangements (see
Similarly, the North Slope Borough of Alaska distributes multiple
benets to Indigenous people using money coming from taxes on oil
infrastructure in a paternalistic way. The Borough is the largest regional
employer, has its own hospitals and police, builds houses, and funds
schools. The Inupiat residents often expect multiple benets, such as
housing and infrastructure given for granted.
As part of their benet sharing policy model, oil companies
(Surgutneftegaz and Lukoil) in the Khanty-Mansi Autonomous Districts
sign annual socio-economic cooperation agreements with the regional
government and municipalities. These agreements normally include
support for social infrastructure in towns and villages, such as schools,
kindergartens, recreation centers, road construction etc. The decisions
are made based on the determination of local needs by the authorities
without much consultation with residents. De facto this means that the
companies assume some government functions and expenses creating
another instance of the state-company paternalist model. Additional
compensatory payments to Indigenous groups without designated tra-
ditional territory, are simply allotted by companies to local adminis-
tration that, in turn, distributes it with only few consultations with the
locals and little transparency.
A major aw of the benet sharing policies based on paternalistic
mode is their failure to ensure the satisfaction of local residents. Benet
sharing policies are typically associated with relatively weak local in-
stitutions that do not provide a fertile environment for community
development. Paternalistic mode creates a situation when residents
express exceedingly high, unrealistic expectations of energy companies
or of benet-distributing local authorities, as they are perceived to re-
place functions abandoned by the national, regional, or local state, but
often receive limited, unsatisfactory, or misdirected benets in return.
On the other hand, the companies fall victim to the various levels of
government (usually national and regional), which, in turn, place un-
reasonable expectations on companies to help them in delivering ser-
vices to communities. Under paternalistic mode both procedural and
distributional equities are typically low.
3.2. Company centred social responsibility (CCSR) mode
Here we refer to a narrowly denedcorporate social responsibility
mode where a company plays a central role in setting benet sharing
arrangements by adopting globally developed standards or standards
imposed by various international organizations, funding agencies, or
legislation. Companies pursuing the CCSR mode rely on global stan-
dards and local practices, but frequently tend to full only a bare
minimum required by both local and global stakeholders. In many cases
the CCSR-based benet sharing programs are designed to please the
investors and shareholders and to address the needs of local commu-
nities only to the extent needed for earning the social licenseto op-
erate. Companys contributions to local communities under this mode
often take forms of compensations or targeted investments.
For example, in the Khanty-Masnsi Autonomous District of Russia,
in cases where Indigenous people reside on ocially designated tradi-
tional territories, Surgutneftegaz and Lukoil conclude standardized
compensatory household agreements with the registered Indigenous
family enterprises. The content of a standardized agreement is sug-
gested by regional authorities. Thus, little attention is typically given to
the individual household needs and to what extent their traditional land
is damaged by oil operations. Resultantly, heavily and lightly aected
households receive the same benets.
In the case of Nenets Autonomous District, since 2013, the ad hoc,
limited-term agreements have been substituted by formal compensa-
tions for damage to the pasture lands calculated using federally ap-
proved methodology. With this new arrangement, the amount of money
channelled to Indigenous peoples increased as much as 510 times.
However, both socio-economic agreements and compensations are ne-
gotiated by the local leaders leaving most Indigenous herders in an
inequitable position outside the negotiating table. In the case of the
villages of Verkhnemarkovo, and Tokma in Russias Irkutsk region, the
regional Irkutsk Oil Company adopted standards prescribed by com-
panys creditors, the European Bank of Reconstruction and
Development (EBRD), and the Russian legislation. In Verkhnemarkovo,
the company primarily follows national standards by arranging pay-
ments to the municipal governments and, occasionally, local organi-
zations. In Tokma, with a large Indigenous population, the EBRD
standards are followed and a compensatory agreement is negotiated
with the local Evenk hunting enterprises (although only leadership is
The CCSR mode is driven by companies, although often is mediated
by outside entities, such as banks, shareholders, investment funds, and
the state. In the cases we surveyed, the companies, however, im-
plemented rather limited benet sharing practices, sometimes only to
meet a required or expected minimum. The CCSR mode is a business
strategy that is prone to external control and changing rules following
the decisions made by the companies (or investors, or international
organizations), not the local residents. Although the agency of local
stakeholders is elevated compared to the paternalistic mode, both the
process and distribution of benet sharing may be highly inequitable.
Procedural and distributional equities could vary depending on com-
pany and regional context, but in our cases, with the exception of North
Slope, they are medium or low.
3.3. Partnership mode
This type of benet sharing builds tripartite partnerships among the
energy companies, government, and Indigenous communities. In
theory, the partnership mode is better positioned for promoting de-
velopment and self-reliance in the Indigenous communities. Such
partnerships have been a characteristic of oil extraction on the Sakhalin
Island. Sakhalin Energy and Exxon Neftegaz Limited operating in the
region developed partnerships with the regional state and Indigenous
peoples through tripartite agreements, which set up procedures for
distributing funds to Indigenous communities, organizations, and fa-
mily enterprises [29]. The success of benet sharing practices in the
two cases in highly dependent on the corporate policies and on whether
loans from global investment institutions were received [15].
Sakhalin Energy, through loans and investments, is inuenced by
the standards of international nancial institutions (such as the World
Bank and the International Finance Corporation) in respect to dealing
with the environment and Indigenous people. Sakhalin Energy adopted
global standards, including free prior and informed consent, and annual
third party evaluations [15]. The companys Indigenous Minorities
Development Plan includes the participation of Indigenous people in
decisions about allocating grant funding to NGOs and indigenous family
enterprises. Although this approach was initially popular, it generated
tensions and conicts among community members around the dis-
tribution of funds.
Exxon Neftegaz Limited was not signicantly inuenced by inter-
national nancial institutions. The benet sharing arrangement in-
corporated grant funding available to communities where drilling oc-
curred, but not for other island communities. Implementing benet
sharing programs at a smaller scale than Sakhalin Energy [29], Exxon
distributed funds only to organizations, not individual households. In-
digenous residents also receive occasional employment from oil com-
panies. Both benet sharing policies utilized the investment mechanism
(e.g., Sakhalin Energysdevelopment plan), that is not designed to
directly address or compensate the damages (environmental degrada-
tion and cultural losses) suered because of oil extraction. More so, the
partnerships exclude non-Indigenous local stakeholders, who remain
outside of the current benet sharing arrangements.
Although the partnership mode seemingly leads to more desirable
M.S. Tysiachniouk, A.N. Petrov Energy Research & Social Science 39 (2018) 29–34
benet sharing processes and outcomes, it still lacks granting
Indigenous people full control over funding. While civil society and
local institutions in Sakhalin Indigenous communities substantially
strengthened as the partnership was unfolding, this benet sharing
arrangement was not devoid of considerable problems, such as internal
tensions among beneciaries. Under this mode, procedural equity is
relatively high, but distributional equity remains at a lower level.
3.4. Shareholder mode
Shareholder mode involves dividend funds, shares from regional
and village corporations. Under the shareholder mode in the North
Slope of Alaska there are several layersof benet sharing. First of all,
every Alaska resident receives the Permanent Fund dividends.
Secondly, the Indigenous people of the North Slope are almost always
shareholders of the for-prot Arctic Slope Regional Corporation (ARSC)
and usually hold shares of one of the village corporations, thus re-
ceiving dividends from both. ASRC contracts with many oil companies
and receives royalties from oil extraction on Native-owned land. Village
corporations own the surface title to the land, receive royalties through
surface-use agreements, and contract oil eld services from oil com-
panies. However, not all village corporations are equally successful.
Although Alaska Natice Claim Settlment Act (ANCSA) created
strong Indigenous institutions, such as regional and village corporations
[32,33], the shareholder mode has a number of serious limitations [34].
The main shortcoming is the distribution of shares. There are multiple
conicts in the North Slope communities around benet sharing.
Shareholder eligibility requirements often exclude younger Indigenous
residents creating a bitter inter-generational conict. Therefore, ten-
sions occur between those who are born before and after 1971. ASRC
and several other native corporations give fewer rights to afterborns,
while others distribute dividends only for those born before 1971, or
who have inherited shares, or received them as a gift. Tensions continue
within Indigenous families around gifted and inherited shares.
In addition, dividends are collected by beneciaries who may not
reside in the community creating a leakage of capital. Lastly, by di-
versifying their investment portfolios Alaska native and village cor-
porations contribute to reducing resource dependency, but create an
outow of capital, partially oset by the inow of dividends. Despite
tensions, it is important to acknowledge that income from oil extraction
is shared between companies and Indigenous communities, and
Indigenous peoples have broadened opportunities for economic devel-
opment. The shareholder mode leads to elevated procedural equity, but
may not improve distributional equity (medium).
3.5. Mixed modes
Table 1 summarizes our discussion and indicates the levels of pro-
cedural and distributional equities [35,26] and economic benets ex-
perienced by local communities under each mode. Equity and economic
opportunity are two of the key pillars of sustainable development, and
Table 1 illustrates the degree to which each mode promotes sustain-
Although the four stylized modes of benet sharing represent a
convenient classication framework for systematizing various ar-
rangements, in most regions we found two to four co-existing modes.
The Alaska North Slope represents the most vivid example of a mixture
among the three benet sharing modes. The shareholder mode exists
alongside with CCSR and paternalistic arrangements. In addition to
state, regional, and village corporation dividends, companies, such as
Conoco-Phillips, provide support to communities, which may include
fuel, scholarships to students, sponsorship of events, and community
infrastructure. Multiple benets come to Indigenous people through the
State of Alaska and the North Slope Borough, both of which receive
taxes from oil infrastructure. They subsidize hospitals and police, build
houses, and fund schools. Conoco-Phillips and Exxon-Mobil benet
Table 1
Benet sharing arrangements.
Nenets District Knanty-Mansi District Sakhalin Island Irkutsk Region Alaska North Slope
Paternalistic Socio-economic agreements with regional
governments and reindeer herding
enterprises (before 2013)
Socio-economic agreements
with regional and municipal
Socio-economic agreements
with regional and municipal
Distribution of tax dollars by North Slope Borough
Compensatory payments through NPR-A
mitigation strategy
Procedural equity: low Procedural equity: low Procedural equity: low Procedural equity: low
Distributional equity: low Distributional equity: low Distributional equity: low Distributional equity: high
Company centered social
Compensation payments to indigenous
reindeer herding enterprises calculated
using government approved methodology
Standardized agreements with
registered indigenous family
Compensatory agreements with
indigenous communities, ad hoc
Companies provide support to communities (fuel,
scholarships, infrastructure and events
sponsorship, etc).
Procedural equity: low Procedural equity: low Procedural equity: low Procedural equity: high
Distributional equity: medium Distributional equity: medium Distributional equity: low Distributional equity: high
Partnership ––Tripartite partnership between companies,
state and indigenous communities.
Investment in communities via grants/
development programs.
Procedural equity: high
Distributional equity: low
Shareholder ––– –Alaska Permanent Fund dividends, ANCSA
regional and village Native corporations distribute
dividends to eligible shareholders, investment in
local businesses
Procedural equity: high
Distributional equity: low/medium
M.S. Tysiachniouk, A.N. Petrov Energy Research & Social Science 39 (2018) 29–34
sharing arrangements meandering between the CCSR and partnership
modes. The shareholder mode appears to be the most dominating part
of the mix, although it also experiences multiple pitfalls due to internal
tensions and the lack of distributional equity among Indigenous re-
Compensation payments are also a part of the mix. In Alaska, the
Northeastern National Petroleum Reserve Regional Mitigation Strategy
was negotiated by the Bureau of Land Management with Conoco-
Phillips in 2015 as a compensation for adverse impacts of oil and gas
extraction at the newly opened Greater Mooses Tooth Unit One project
[36]. In 2016 rst $7 million were allocated. This strategy will become
a new policy tool used as a template for further compensation agree-
ments for new extractive projects in the Reserve [36].
Tensions emerge between the city administrations, tribal govern-
ments, village and native corporations around the distribution of funds
as these three entities have dierent interests. Tribal governments are
not benetting from oil extraction directly and tend to be more en-
vironmentally oriented. They are often not in favour of future oil de-
velopment. The city government is usually neutral or pro-development,
while regional and village native corporations are typically pro-devel-
4. Policy perspective
Benets shared by extractive energy sector operating in the Arctic
are highly variable and depend on institutional, nancial, political, and
geographical settings. Notably, experiences from Russia, which evolved
substantially in the last two decades, present a number of useful lessons
and good practices to be considered. In Russia, we observe an evolution
of local institutions and increase in their ability to negotiate and
manage more community-driven, equitable benet sharing arrange-
ments. As noted, underdeveloped institutions and weak civil society
may derail most well-intended benet sharing policies. A mismatch
between the capacity of institutions and requirements of benet sharing
frameworks will likely lead to dysfunctional relationships between
companies and communities. Therefore, as a part of benet sharing
obligations, companies and the state must work with Indigenous and
other aected communities to build local institutional capacities and
human capital. This will ensure that benet sharing policies are
nuanced, responsive, empowering, and contribute to sustainable de-
velopment of Arctic communities in a just and equitable manner.
Another missing link in some locations, especially in the Russian Arctic,
is the lack of a mandatory social-economic impacts assessment and
monitoring that could greatly assist in developing appropriate benet
sharing arrangements.
Thus, it is apparent that we need to signicantly improve our
knowledge base about benet sharing in the Arctic energy sector, and
we urge the Arctic Council Sustainable Development Working Group or
the newly formed Arctic Economic Council to conduct a synthesis study
with the aim of nding best practices, identifying lessons learned, and
initiating an inclusive, multi-stakeholder process of developing guide-
lines for companies on benet-sharing arrangements in the Arctic.
Given the complexity of legal, institutional, natural, and cultural set-
tings, this work could be conducted by expert groups embedded in both
the energy industry and communities across the Arctic. This process
could go concurrently with and be a supplement to the emerging Arctic
Investment Protocol [37].
There is little doubt the benet sharing policy for Arctic regions is
essential, as it impacts the livelihoods of thousands of Arctic residents
who depend on land, sea, and access to natural resources. It is im-
portant that the energy sector shares a portion derived from the re-
source extraction with the local inhabitants in an equitable, trans-
parent, and just way, allowing all stakeholders to be a part of the
process and outcome of benetsharing. In other words, benet sharing
arrangements must contribute to sustainable development in Arctic
Among the four modes of transnational corporations TNC benet
sharing arrangements, none appear to be ideal. However, some modes,
and corresponding TNC policy models, are more advantageous for
meeting community needs and fostering sustainable development in
remote regions. Benet sharing must go beyond compensations for loss
and top-down paternalist interventions. Partnership and shareholder
modes seem to bring more desirable results, but they are not devoid of
shortcomings. While based on the overall principles, such as distribu-
tional and procedural justice, the successful benet sharing models in
the Arctic energy sector should be locally nuanced and embedded. An
Impact and Benets Agreement (IBA) model widely used by extractive
companies in other jurisdictions and sectors (e.g. in Arctic Canada) is
another opportunity to tailor benet sharing to specic community
needs, while establishing contractual relationships between the com-
panies and communities [38].
This research was supported by the NWO, the Netherlands
Organization for Scientic Research, Arctic Program (Developing
benet sharing standards in the Arctic, No. 866.15.203), the Finnish
Academy Arctic Program (Oil Production Networks in the Russian
Arctic, No. 286791) and National Science Foundation Arctic-FROST
project (PLR #1338850).
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... This creates conflicts of interest between industrial and traditional land uses. At the same time, the activities of industrial companies, depending on different circumstances, bring benefits to local communities [9][10][11], including those engaged in traditional land use. In some cases, this can lead to paradoxical situations, for example, when the productivity of hunting activities decreases due to industrial activities, but the hunters are dependent on the sponsorship of companies and try to avoid conflict with them [12]. ...
... The district administration has socioeconomic agreements with the companies operating in the territory of the district. Additionally, local authorities work on a negotiation basis with exploration companies, and there are different benefit-sharing mechanisms [9,10]. ...
... The development of a corporate social responsibility policy by companies encourages initiatives by local communities regarding the implementation of various socially significant projects, predominantly in settlements A-D. Here, the results of the CSR policy for local communities largely depend on the management of companies and the activities of local leaders and administrations [9,69]. - ...
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The need of the global economy for natural resources encourages the movement of extractive industries to new areas, significantly affecting local communities. The study of community sustainability under the influence of extractive industries is multidimensional, as it depends on the geographical characteristics of the area, the historical background, the sociocultural and institutional environments, current government policies, and so on. Therefore, it is important for these local-level studies to comprehensively consider heterogeneous qualitative and quantitative data, paying special attention to the views of local people. This paper examines the impact of industrial natural resource development on community sustainability through a comprehensive approach that considers qualitative and quantitative socioeconomic data, including residents’ perceptions of current and future settlement development. The study is based on the example of communities located in areas of new oil and gas development in the north of the Irkutsk region (Eastern Siberia, Russia). Social science methods (semistructured interviews, surveys, questionnaires, and participant observations), comparative geographical, and statistical methods are used. A comprehensive approach allows us to identify various issues associated with maintaining the sustainability of local communities manifested under the influence of oil and gas extraction in different types of settlements. The findings contribute to the study of community sustainability during the industrial development of natural resources and have practical implications for decision-makers in terms of the socioeconomic management of the studied area and other territories with similar conditions.
... In the Arctic energy context, biopolitics (socioeconomic development) of northern territories in the Russian Arctic is strongly tied with energopower (hydrocarbon energy production). Tysiachniouk and Petrov (2018) argue Moscow demonstrates paternalism that is also exacerbated by weak civil society in energy development. Fragile civil society results in weakly developed benefit-sharing agreements that assist local and indigenous communities and protect local and indigenous rights to land and traditional resources. ...
... Even though most oil and gas companies committed to signing benefit-sharing agreements, underdeveloped civil society institutions undermine benefit-sharing policies. Companies struggle to build local institutional capacities and human capital in local indigenous communities in the region (Tysiachniouk & Petrov, 2018). Patrimonialism and weak civil society intertwined with the strategic nature of Arctic energy supplies characterize existing Russian energopower and biopolitics. ...
Russia is aimed to compete with other Arctic states in the race for Arctic petroleum resources by establishing control of over 60% of them via acknowledgement of its right to the Lomonosov Ridge by the special UN Commission. In January 2020, the Russian government adopted new legislation creating $300 billion in new incentives for new infrastructures on the shores and in the waters of the Arctic Ocean. Russia's minister of the Far East and the Arctic, Alexander Kozlov, stated that those incentives resulted in three new massive offshore oil projects. Russia's state oil companies are also expected to increase their onshore Arctic development significantly. Even though some Western oil and gas corporations, the Canadian companies, in particular, have experience working in cold weather environments, analysts predict Russia is more likely to look to the East for expertise and investment — to Japan and China, and India. That being said, regarding Arctic energy projects, Russia is more likely to look at the East. To which extent will the Russia-East collaboration in the Arctic energy projects affect its relationship with the West? How would the relationships with the Eastern partners evolve in the future? By applying international relations theories, this study will analyze how Russia-East relations will influence Russia-West relations in Russian Arctic energy development.
... Regional policies may include elements of employment policy, educational policy, industrial policy, tax policy, social policy, family policy, health policy, and housing policy (Vecernik, 2009). In Russia, such regional SEPs are frequent in remote oil-producing regions with Indigenous populations, harsh climatic conditions and where income inequality and economic diversification are major challenges, such as Nenets and Khanty-Mansi (Tysiachniouk & Petrov, 2018). They are adopted by regional governments in oil-producing regions and usually require the participation of O&G companies. ...
... This research also offers a new perspective on the study of sustainability in the O&G sector, by highlighting how regional policies have an impact on the implementation of the TBL (Ferns et al., 2019), and revealing the optimal way to address and resolve ethical concerns regarding the operations of O&G companies and their contributions to climate change and global warming through APA flaring. Overall, our findings corroborate research conducted on benefitsharing arrangements between oil companies, native corporations, the North Slope Borough and Indigenous people in Alaska and Northern Russia (Tysiachniouk, 2020;Tysiachniouk & Petrov, 2018). ...
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Sustainability is a critical issue for resource-rich countries encountering environmental and social problems in remote regions and struggling to overcome the national economy's reliance on the oil and gas (O&G) industry. We explore, through a case study of Russian oil-producing regions, the interdependency of economic, social and environmental issues by analysing the trade-offs between the need to adopt new technology to combat gas flaring and the demand for socioeconomic policies (SEPs). The findings suggest that international companies can serve as effective vectors for promoting gas flaring technologies if regional governments take a flexible integrated approach to socioeconomic and environmental policies formulation.
... These territories can receive socio-economic effects from the industrial sphere in the form of sponsorship through socio-economic agreements with local administrations and other indirect mechanisms [30]. Schematic diagram in Fig. 1 shows that quantitatively most of the settlements here belong to this 4 th group. ...
The article presents the key issues and challenges relevant to remote areas of Siberia in the light of new economic development on the basis of a locally focused approach. The study is based on the results of field socio-geographical work carried out in February and March 2022 in three northern districts of Irkutsk Oblast, where a new oil and gas industry is actively developing. The findings are supplemented with data from the Federal State Statistics Service, documents of strategic planning at the regional and municipal levels, reports of heads of municipalities and other open sources concerning the issues of socio-economic development of the territories under study. The research results are systematized according to the main manifestations of the consequences of the new economic development: economy, society and ecology. The municipal settlements of the areas under study are grouped according to the degree and nature of the impact of the oil and gas industry on local socio-economic systems.Keywordsresource regionssustainable developmentremote territoriesnew economic development
... Specific attention is devoted by the scholarship to remote areas in the mining sector. (Tysiachniouk and Petrov 2018). ...
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A new model of urban governance, mapping the route to a more equitable management of a city's infrastructure and services. The majority of the world's inhabitants live in cities, but even with the vast wealth and resources these cities generate, their most vulnerable populations live without adequate or affordable housing, safe water, healthy food, and other essentials. And yet, cities also often harbor the solutions to the inequalities they create, as this book makes clear. With examples drawn from cities worldwide, Co-Cities outlines practices, laws, and policies that are presently fostering innovation in the provision of urban services, spurring collaborative economies as a driver of local sustainable development, and promoting inclusive and equitable regeneration of blighted urban areas. Identifying core elements of these diverse efforts, Sheila R. Foster and Christian Iaione develop a framework for understanding how certain initiatives position local communities as key actors in the production, delivery, and management of urban assets or local resources. Within this framework, they explain the forms such initiatives increasingly take, like community land trusts, new kinds of co-housing, neighborhood cooperatives, community-shared broadband and energy networks, and new local offices focused on citizen science and civic imagination. The “Co-City” framework is uniquely rooted in the authors' own decades-long research and first-hand experience working in cities around the world. Foster and Iaione offer their observations as “design principles”—adaptable to local context—to help guide further experimentation in building just and self-sustaining urban communities.
... Local actors had an increasing propensity for carrying out boundary-spanning roles (increasing betweenness) and had increasing effective size and efficiency, indicating their role in facilitating knowledge flow and addressing structural holes. This finding supports the importance of situating northern actors with local and Indigenous knowledge in central roles within Arctic science and innovation activities (GY et al., 2016;ITK, 2018;Tysiachniouk and Petrov, 2018). ...
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In remote peripheral regions like the Arctic, research networks have been identified as an important mechanism for nurturing science-informed innovation. Given that relatively little is known about the network structures that support Arctic innovation processes, we employ social network analysis techniques to examine the structural organization and evolution of ArcticNet, a large Canadian Arctic scientific research network over a 13-year period (2004-17). ArcticNet funded 152 multidisciplinary research teams, connecting multiple types of science-based innovation actors, not including students (301 organizations and 1659 individuals). The research network grew without reaching saturation (increasing size, decreasing density), suggesting that ArcticNet was successful in recruiting new actors over the 13-year period. ArcticNet was centralized around non-local, public-sector actors (mainly Canadian academics). The emergence of collaborations across several boundaries (sectoral, geographic, thematic) suggests that non-local Canadian academic actors played an important boundary-spanning role, particularly in the early stages of the network. Participation by local northern actors doubled from Phase 1 to Phase 4, and with time, local northern actors had an increasing propensity for carrying out boundary-spanning roles and addressing structural holes. This study presents new insights into the networked nature of Arctic scientific research with potential implications for future research and innovation policy.
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This contribution to the debate on Russia, Europe and the colonial present brings together several closely linked events which – alongside the people participating in them – have unleashed enough kinetic energy to kill and maim hundreds of thousands of people in just 12 months. Being inspired and challenged, in equal measure, by Stefan Bouzarovski's intervention on the lasting power of energy colonialism, my aim here is to expose the key features of contemporary Russian imperialism as a concept and the Kremlin's professed lust for territorial expansion and colonial domination as a practice. The empirical vignettes described below are assembled to uncover this exemplar of imperialism and colonialism as a theory-to-practice dyad. They involve (a) a 2021 sketch of pseudoscientific “thermodynamic” theory of imperial geopolitics pencilled by the Kremlin's chief adviser on Ukrainian affairs, (b) a 2016 televised geography lesson from the chairperson of the Russian Geographical Society's board and (c) an original operational plan for achieving control over Ukraine drawn by Moscow in the run-up to its full-scale invasion on 24 February 2022.
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Verkhnemarkovo, a small Siberian town located on an oil field in Russia's Irkutsk region, is plagued by bad roads and limited mobility. This article explores the relationship between corporate social responsibility and the wellbeing of individuals and communities , with a focus on transport and mobility infrastructure. Some oil companies, such as Irkutsk Oil Company, are tied to the sustainability standards of international financial institutions. The article addresses the question of why people are in limbo between the state and local operating oil companies. Contemporary life in Verkhne-markovo is characterized by so-called infrastructural violence, which results from the lack of state support-or false promises made by the state-and relates to good transport infrastructure. In their complaints , local people recall the Soviet past and expect support from the state or industry.
The international norm on combatting the flaring of Associated Petroleum Gas (APG) emerged in the 1970s and, supported by the Global Gas Flaring Reduction Partnership (GGFR), a dedicated programme created in 2002 by the World Bank, rapidly gained momentum on the international stage. The Russian national adoption of this norm took the form of decrees 7 and 1148 passed in 2009 and 2012. After examining how the norm came to be adopted by the Russian authorities under the influence of Transnational Advocacy Networks (TANs), we provide new insights on why compliance is hard to attain, pointing out on one side the hindering part played by badly calibrated Local Content (LC) policies and on the other side the role Transnational Expertise and Experience Networks (TEENs) could have in helping with norm implementation. The Russian decrees on flaring did not lead to the required 95% APG utilization rate across Russia. However, the specific regional case of the Khanty-Mansiysk Autonomous Okrug, which got independently involved in the GGFR project to reduce flaring in the early 2000s and reached the mark of a 95% utilization rate, shows how TEENs can change normative outcomes.KeywordsAssociated Petroleum GasFlaringLocal Content PolicyTransnational Expertise and Experience NetworkLocalizationSustainable development
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This ranking evaluates the public commitments, formalised procedures and institutional arrangements of oil, gas and mining companies for handling indigenous rights in the Arctic. The purpose of the ranking is to support norm formation and to contribute to improving the performance of companies on indigenous rights by highlighting which companies have made a public commitment to indigenous rights, and to what extent. The ranking covers 92 oil, gas and mining companies involved in onshore resource extraction above the Arctic Circle. Each company is assessed according to 20 criteria related to indigenous rights. The criteria were selected by evaluating the main guidelines and legal instruments related to resource extraction and indigenous rights in the Arctic. These criteria include commitments to international standards, the presence of organisational units dedicated to handling indigenous rights, competent staffing, track records on indigenous issues, transparency, and procedures for consulting with indigenous peoples.
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Examining the oil and gas industry in the Russian Arctic, this article investigates the gap between corporate social responsibility (CSR) as articulated in corporate offices and implemented at the local level. In Russia, global CSR norms interact with weak formal institutions and the strong informal expectations of state officials and local communities that companies bear responsibility for welfare and infrastructure. As a result, the concept of citizens as ‘stakeholders’ is underdeveloped. Instead, local residents remain subjects within a neo-paternalist system of governance that mimics some elements of the Soviet past. Compensation for damages to indigenous peoples has blurred legal obligations and the voluntary nature of CSR. However, the CSR in the region is constantly developing and formal methods of compensation may assist in clarifying the scope and practice of CSR.
As part of a recent study, we investigated benefit sharing arrangements between oil companies and indigenous communities in several regions of Russia—the Nenets Autonomous Okrug [NAO], Khanti-Mansiiski Autonomous Okrug (KhMAO), Sakhalin—and on the North Slope of Alaska—Barrow, Nuiqsut, Kaktovik. Our analysis demonstrates that indigenous communities are not benefitting equally from oil and gas extraction. The project analysed the procedural and distributional equity of four different types of benefit sharing arrangements: paternalism, corporate social responsibility, partnership and shareholder models.
This article compares benefit sharing arrangements set up between indigenous people and Russian and transnational oil companies. It demonstrates that Russian oil companies interact with indigenous communities in a paternalistic way, while transnational consortiums, operated by Sakhalin Energy and Exxon Neftegaz Limited, use the partnership mode of benefit sharing. Typically, both kinds of firms set up tripartite partnerships involving companies, indigenous peoples and the state. The paternalistic model of benefit sharing overall provides few opportunities for indigenous peoples to participate in the distribution of funds, and thereby offers little procedural equity. In terms of distributional equity, it is hard to compare Russian companies with their transnational counterparts as the different companies cover different aspects of indigenous peoples’ well being. Russian companies are involved mostly in building social infrastructure, while transnational firms support indigenous entrepreneurship and the revitalization of indigenous subsistence lifestyle, languages and cultures.
In the forty-five years since the Alaska Native Claims Settlement Act (ANCSA) created the Alaska Native regional corporation and village corporations, shareholders and outside observers have criticized the statute’s use of the traditional corporate form as inappropriate for Alaska Native communities. The emergence of the benefit corporation entity across the United States may soon mean that Native corporations have a promising alternative. If Alaska joins the majority of states that have adopted this new legal entity, Native corporations would have an opportunity to significantly reform their corporate governance within the existing framework of ANCSA. This Note will argue that Alaska should enact a benefit corporation statute because it would give Native corporations a legal entity that better fits their purpose. As benefit corporations, Native corporations would commit to pursuing public benefits, and their directors would be required to consider factors beyond shareholder value in making decisions.
The field of Security Studies traditionally focused on military threats to states' survival, however, since the end of the Cold War the concept of security has widened and individuals and communities have gradually become viewed as appropriate referent objects of security: Multifaceted challenges facing communities at the sub-state level are increasingly regarded as security threats, including their potential to cause instability for the larger society, thus affecting states’ security. In the Arctic region, a central challenge is that inhabitants are exposed to multiple non-traditional and non-military threats resulting from environmental, economic, and societal changes, which can be understood as threats to human security. We argue that a comprehensive approach to human security overlaps with the concept of societal security, and must therefore consider threats to collective identity and the essential conditions necessary for the maintenance and preservation of a distinct society. We see the human security framework as a suitable analytical tool to study the specific challenges that threaten the Arctic population, and in turn the well-being of Arctic societies. Therefore, we argue that utilising the concept of human security can promote societal security in the context of the Arctic, and in particular, its sub-regions, for example, the Barents region.
Drawing on recent developments in the problematic relationship between the oil industry and local communities in the Republic of Komi, we develop a case study of environmental grassroots mobilization in northwest Russia. Using a qualitative methodology comprising semi-structured interviews and participant observation, we analyse the movement’s actions in terms of the concept of governance-generating networks (GGN), with reference to the global network of non-governmental environmental organizations and other institutions. The article focuses on the network of non-state actors, examining the spatial levels from local to global in an environmental movement seeking to challenge Lukoil, the major oil company in the region. We investigate the strategies adopted by the social movement and the responses of the oil industry and various governmental institutions, with this analysis including an examination of power between the different bodies and networks involved. In particular, we analyse different forms of corporate social responsibility seen in the steps taken by Lukoil to avoid more severe reactions.
This article proposes a concept of ‘fair and equitable benefit sharing’ deriving from international biodiversity law, international human rights law, and the law of the sea. The concept identifies normative elements that are shared among the international treaties that refer to benefit sharing, comprising the act of sharing; the nature of the benefits to be shared; the activities from which benefit sharing arise; the beneficiaries; and fairness and equity as the rationale for benefit sharing in international law. The concept is not intended to provide a holistic or exhaustive notion of fair and equitable benefit sharing but, rather, to support comparison and generalization with a view to shifting the current investigation from sectoral/technical approaches to the perspective of general international law and the contribution to research in other areas of international law. The proposed conceptualization is thus geared towards the development of a research agenda targeting a variety of international and transnational legal materials, allowing for the appreciation of differences in the context of varying logics of different areas of law.