I posted about current competition between countries over resources and trade routes in the Arctic few weeks ago. As a extensions of this article, I am going to handle the topic that why ‘Shell’ exits from Arctic even it has lots of potentiality in the future.
Shell said that they believe Arctic is no more valuable to explore for the oil and gas. This is an unexpected announcement for me because I read the article that about 30% of natural gas, 20% of liquefied natural gas and 15% of world’s remaining oil are stored in the Arctic seabed. It is a massive amount that our human-being could use, and in case of Russia they put their flags under the Arctic to claim that its their territory.
The reason why they quit drilling in Arctic is Shell was disappointed at the result after drilling one well. It could be embarrassing to the U.S. because Royal Dutch Shell and environmentalists have been keep fighting against each other due to their different beliefs and the U.S. decided in the Shell’s favor. Royal Dutch Shell put $7 billion for oil search in Alaska but they believe they cannot meet the surplus with current situation.
In the Fearon’s 3 main point, the U.S. government decided to fight or at least ignore environmentalist’s argue because they believed war with environmentalist will bring huge benefits compare to cooperate and discuss with them. However, the situation that the government facing is keep changing as times goes by. For example, Royal Dutch Shell is not going to drill further at least as long as the oil prices remain near $50 per barrel. The U.S. government could thought that losing environmentalists support is not a big deal compare to the potential economic benefits of drilling Arctic.
I believe this circumstances shows that the condition of expected utility keep changes as time goes by. It shows that cooperation is hard to be made even it is not a conflict between the states. If I apply this situation to the real international conflict, I would say that deciding cooperation or having war could be change in every second depends on the world situation.
Also, I could expect that ‘Shell’ could re-drill in Arctic if they listen that other companies in the world found huge amount of oil that could cover every investment that they made and create huge amount of surpluses. So, I would like to say that current decision made by ‘Shell’ could be smart decision until they could find the hope of making surpluses.