Anxious Russian ministry says billions are needed for Arctic buildup

icemelt2 Polar ice melt. Credit: Shutterstock

Russia’s Ministry of Natural Resources has calculated that the Arctic needs some $160 billion of new investment to realize a presidential demand to ratchet up shipping traffic through the Northern Sea Route, a new report shows.

By drawing private investment to coal fields and oil deposits in far northern Siberia, says the report, some 77 million more tons of traffic will be set afloat on the waters of the Arctic over the next five years.

The new big-ticket estimation is one of many recently issued by Kremlin ministries as they scramble to fulfill a decree by Vladimir Putin, who last year tasked his government with boosting the amount of goods shipped via the Arctic to 80 million tons by 2024.

The decree landed with a thunderclap, and ever since many of Russia’s biggest industries and government agencies have gone on near wartime footing. Huge state enterprises, like Rosatom, Russia’s nuclear corporation, have redirected their focus toward Arctic port and infrastructure development. The Yamal LNG project, a $27 billion natural gas endeavor, reached full capacity on the tundra above the Russian Arctic circle a year ahead of schedule, heralding a bustling year-round sea trade with gas markets in Asia and Europe alike.

Moscow’s nuclear icebreaker fleet, already the biggest in the world, is getting an overhaul with three new billion-dollar vessels nearing completion and several even grander ones on the drawing board.

And the Russian state policy on climate change, instead of combatting rising temperatures, seems geared toward letting them heat up. The more the Arctic melts, the Kremlin logic seems to suggest, the more accessible it will become – complete with new Russian hydrocarbon and mineral reserves and more ice-free shipping lanes controlled by Moscow to carry out the bounty.

In that sense, it’s not surprising that the Natural Resources Ministry – which also oversees Russia’s environmental policy – would signal investors toward such carbon intensive projects as coal and oil.

Among the 118 priority undertakings the ministry’s report lays out are development and infrastructure projects that would boost shipments from coal deposits in the Taymyr Peninsula along the Kara Sea. It also tallied investment needs to support a build out of oilfields on the Yenesei River in central northern Siberia.

Further it reviewed the needs of a pipeline Rosneft, Russia’s oil monopoly, plans to build from the Vaknor oilfield to the Yenesie River’s west. The pipeline project, which was announced in February, would redirect millions of tons of oil to ports on the Northern Sea Route – thus pushing up cargo numbers in service of Putin’s decree.

The report concluded by warning that unless these projects were funded, the government would fail to meet Putin’s demand. These latest figures top of an anxious season for the Natural Resources Ministry. In late January, ministry representatives   were reported to be fretting about natural gas output and how it would effect delivering on Putin’s decree.

At that time, according to documents leaked to RBK Russian newswire, ministry bureaucrats feared they could guarantee a natural gas traffic flow of only 54 million tons annually by 2024 – well short of the 80 million tons Putin demands.