CORRECTED-UK opposes Arctic drilling ban, to update policy this year

Mon Jan 14, 2013 11:10pm EST

(corrects 10th paragraph to say Shell rig ran aground, did not sink)

* UK wants tighter rules to protect Arctic biodiversity

* UK supports Arctic oil spill prevention

* Arctic policy later this year to include oil, gas drilling

By Karolin Schaps

LONDON, Jan 15 (Reuters) - Britain opposes a stop to oil and gas drilling in the Arctic, the government said in a report on Tuesday, dismissing a parliamentary committee call to impose an exploration ban in the environmentally fragile region.

The Arctic holds 30 percent of the world's undiscovered gas and 13 percent of its untapped oil, experts estimate, but exploration there is risky and costly, and any spills would severely threaten the environment.

Members of the Arctic Council including Norway, the United States and Russia are promoting safe fossil fuel exploration in the Arctic, but none have responded to environmentalists' calls to ban the activity outright.

Britain is not a member of the Arctic Council but is one of six observer countries that have an interest in activities in the Arctic and can make recommendations to the eight governing Arctic states.

In September, a British parliamentary committee urged the government to immediately stop all oil and gas drilling in the Arctic, which it described as "reckless", until an oil-spill response standard is put in place.

Instead of a ban, the foreign ministry said it was pressing for tighter global laws to protect marine biodiversity in the Arctic and supported efforts to improve oil spill prevention.

"These measures - combined with effective and ambitious global action to reduce global greenhouse gas emissions - are more likely to be effective in protecting the Arctic environment than pressing for a complete moratorium on all drilling in the Arctic region," the government said in the report.

The government plans to publish the first policy framework for the Arctic later this year to spell out Britain's position regarding oil and gas exploration, sustainable fishing and shipping in the Arctic, among other policy interests, the report said.

"We are acutely aware of the potential environmental impacts of an oil spill in the Arctic and recognise the risks of drilling for hydrocarbons. We therefore fully support the use of the highest environmental and drilling standards in the Arctic," a government spokesman said.

The Shell-owned oil rig Kulluk ran aground in stormy weather in Alaska on New Year's Eve, highlighting the dangers involved in Arctic oil and gas exploration.

The UK's Environmental Audit committee said on Tuesday it would invite Shell to give further evidence to Parliament on the incident and might update its report to include the new evidence.

"The grounding of the Kulluk rig raises serious questions about the safety of Shell's operations in the Arctic," said Joan Walley, the committee chairwoman. (Reporting by Karolin Schaps; editing by Jane Baird and Bill Trott)