Russian Ministers try nervously to fulfill Putin’s Arctic shipping goals

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Publish date: January 21, 2019

Ever since Russian President Vladimir Putin decreed last year that shipping traffic through the Arctic’s Northern Sea Route must increase to a soaring 80 million tons annually within a mere five years, the emperor’s wish has been treated as a reality.

Ever since Russian President Vladimir Putin decreed last year that shipping traffic through the Arctic’s Northern Sea Route must increase to a soaring 80 million tons annually within a mere five years, the emperor’s wish has been treated as a reality.

The May presidential decree had the ring of the old-fashioned Stalinist five-year plans, which, throughout the communist era, were the economic yardstick of the Soviet economy. The penalties for coming up short were harsh, with under-producing bureaucrats singled out for public humiliation, the Gulag and worse.

Today’s generation of movers and shakers heard Putin’s message loud and clear. Huge industries, like Rosatom, Russia’s nuclear corporation, have retrained 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 a facelift, with three new billion-dollar vessels nearing completion and several even grander ones on the drawing board.

putin-franzjosefland2-kremlin_0 President Vladimir Putin photographed last year at one of Russia's Arctic outposts. Credit: Kremlin Photo

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 bear out the bounty.

But a report in the Russian business newswire RBK dailyas reported by the Barents Observer – shows a number of Putin’s ministers are getting a little nervous about how they will deliver on the Arctic plan their boss is demanding – and they’re trying to come up with a way to soften the news.

RBK reports that the Ministry of Natural Resources ­–which bears particular responsibility for boosting shipping weights – has only managed to guarantee a traffic flow of 52 million tons per year by 2024, well short of the 80 million tons Putin is demanding.

The figures were part of a presentation the ministry made to the leaders of nine regions in Russia’s Arctic on Christmas day – and the proceedings were subsequently leaked to RBK.

According to documents, the ministry calculated that by 2024, liquefied natural gas shipments along the Arctic will reach only some 40 million tons, followed by 9.2 million tons of oil, and 3.2 million tons of mineral ores from Norilsk Nickel, one of the world’s largest nickel producers located in Northern Siberia.

The ministry presentation to Arctic leaders singled out promises made by various Russian business magnates to boost their industries’ production – but cast shade on whether they could live up to their claims.

One of these promises came from Dmitry Bosov, one of the heads of VostokCoal, a Russian coal mining company with lavish backing from the Kremlin. Bosov made headlines in November with a commitment to ship out 30 million tons of anthracite coal per year from the Arctic’s Taymyr Peninsula. But the Natural Resources Ministry laid the odds of Bosov fulfilling that goal at only about 1 in 5.

Similarly, Russia’s Neftgaz Holdings, an oil company, has said it will ship out 5 million tons of oil from a field at the mouth of the Yenesei River by 2024. But the ministry rubbished those forecasts as well.

But according to the RBK report, the Ministry might be able to come up with the tonnage Putin promised they would – it could simply, and literally, move the goal posts.

Current measurements of what, precisely, constitutes the Northern Sea Route are set by Russian legislation, and extend from near the Bering Strait in the East to the Novaya Zemlya Archipelago in the West – a distance of about 4,800 kilometers.

But as the reporting from RBK suggests, one way of getting more cargo in the water would be to simply reestablish the boundaries of the Northern Sea Route itself. If its Western terminus were extended beyond Novaya Zemlya to the busier Pechora or Barents Sea, cargo weights would inflate accordingly – doubtless to the president’s pleasure.

In a similar vein, the ministry has rosier predictions if it measures Arctic traffic against a deadline that not as pressing as 2024. If projections are extended to 2042, the ministry then calculates that annual traffic will reach as high as 155 million tons.

But how Putin will take this news is another question. For the moment, many of these issues are sure to come up at Bellona’s Arctic Fuel Menu and Northern Sea Route conference on Wednesday, January 23.