Oil and indigenous people in sub-Arctic Russia: Rethinking equity and governance in benefit sharing agreements

- International scrutiny fosters adoption and implementation of global standards.
- Benefit sharing arrangements via partnership increase distributional and procedural equity.
- Consultation and engagement empowers indigenous people for making decisions on benefit sharing.
- Forums of negotiation between companies and indigenous peoples are essential for equitable benefit sharing.

How can the interests of extractive industries and indigenous communities in the Arctic be balanced through benefit sharing policies? This paper analyses how the international oil consortia of Sakhalin Energy and Exxon Neftegaz Limited (ENL) on Sakhalin Island in Russia have introduced benefit sharing through tripartite partnerships. We demonstrate that the procedural and distributional equity of benefit sharing depend on corporate policies, global standards, pressure from international financial institutions, and local social movements connected in a governance generating network. Sakhalin Energy was profoundly influenced by international financial institutions' global rules related to environmental and indigenous people's interests. The benefit sharing arrangement that evolved under these influences resulted in enhanced procedural equity for indigenous people, but has not prevented conflict with and within communities. In contrast, ENL was not significantly influenced by international financial institutions. Its more flexible and limited benefit sharing arrangement was shaped predominantly by global corporate policies, pressure from the regional government and the influence of Sakhalin Energy's model. The paper closes with policy recommendations on benefit sharing arrangements between extractive industries and indigenous communities across Arctic states that could be further developed by the Arctic Council Sustainable Development Working Group.