A socially oriented non-financial development institution and a major organizer of international conventions; exhibitions; and sporting, public, and cultural events.

The Roscongress Foundation – a socially oriented non-financial development institution and a major organizer of international conventions; exhibitions; and sporting, public, and cultural events.

The Foundation was established in 2007 with the aim of facilitating the development of Russia’s economic potential, promoting its national interests, and strengthening the country’s image. One of the roles of the Foundation is to comprehensively evaluate, analyse, and cover issues on the Russian and global economic agendas. It also offers administrative services, provides promotional support for business projects and attracting investment, and helps foster social entrepreneurship and charitable initiatives.

Each year, the Foundation’s events draw participants from 208 countries and territories, with more than 15,000 media representatives working on-site at Roscongress’ various venues. The Foundation benefits from analytical and professional expertise provided by 2,500 people working in Russia and abroad. In addition, it works in close cooperation with 122 economic partners; industrialists’ and entrepreneurs’ unions; and financial, trade, and business associations from 69 countries worldwide.

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20 November 2019
Andrei Ivanov

The Arctic: Source of Pride, Area of Interest, and Field for Cooperation

The Ministry for the Development of the Russian Far East and Arctic will present a draft development strategy for the Arctic zone to 2035 by 1 December 2019. Expert at the Project Office for the Development of the Arctic (PORA), member of the Association of Polar Explorers, and Roscongress Foundation blog author Andrei Ivanov looks at why the government is prioritizing the region, and what needs to be done to ensure that the Arctic realizes its potential.

The historical context

Russia is the undisputed global leader in Arctic development. This is down to geographical and historical factors. The significance of the Arctic, as we like to say at PORA, can be summed up quite simply: «The Arctic is a source of pride, an area of interest, and a field for cooperation.» Russia is now entering an era that might be described as the ‘second wave’ of Arctic development, and if the task of the era of the romantics was to create an oil and gas industry, then in our age what takes priority is the development of the region’s resource and transport potential, as well as its infrastructure. This is going to take decades, but it will be worth the wait: developing the richest region in terms of natural resources could have a huge impact on the national economy. An additional challenge which has emerged in the 21st century and requires urgent attention is the preservation of the Arctic’s unique ecosystem, which is now gravely threatened.

As Chairman of the Accounts Chamber of the Russian Federation Alexey Kudrin said recently at the Strategic Planning Leaders Forum in St. Petersburg, the national economy has been treading water for the last quarter century. The effects of this have been felt in the Arctic, with the government abandoning or gradually pulling out of most of the social and related infrastructure projects it has been implementing in the region. It is clear that the previously existing model, where the state took on 100% of the costs, is no longer viable. It is imperative that additional development tools are put in place. What is needed is a new strategy and a range of legislative proposals to generate these tools and to bring new projects and a new lease of life to every Arctic region.

The Arctic as a state project

The state must, however, retain leadership in the process even after the changes have been made to the funding model. There are two main reasons for this: the high level of state ownership in the economy as a whole (over 70% according to data from the Federal Antimonopoly Service), which could serve as a benchmark for the share of investments in the Arctic the state takes responsibility for; and the functions of the state, which go far beyond the remit of the economy, and include a range of social, military, and infrastructural issues and cannot be measured solely on the basis of revenues and expenditure.

As for state investments, they are being implemented as part of the government Arctic development programme to 2025, for which over RUB 190 billion has been allocated. The area which has seen the most progress so far is the production of a new generation of icebreakers. The launch of three next-generation models — Arktika, Sibir, and Ural — is expected to be rolled out over the 2019–2020 period. The construction of a new flagship icebreaker, Lider, is expected to be completed by 2025. It will be significantly more powerful than all its counterparts (there may in fact be two of them). While the project would previously have been fully funded by the government, a search for private co-investors is now ongoing.

There are plans for significant spending on updating and developing infrastructure, including social infrastructure. Many mid-level projects, spanning river ports, local airports, energy facilities, and local transportation, will be implemented through the public—private partnership (PPP) financing model. This is a necessity of our time.

Windows of opportunity

The immensity and diversity of resources in the Arctic means that many ‘windows of opportunity’ will be open to Russia for a long time to come. Even a cursory glance at present options and potential opportunities in the future makes it clear that the Arctic cannot be ignored.

Looking at total reserves and what has already been extracted, we are at an early stage in the development of mineral deposits in terms of hydrocarbons, and especially solid mineral deposits.

An issue that receives a great deal of press coverage is how much longer Russia’s oil and gas reserves will last. The country’s proven gas reserves alone, most of which are located in the northern part of the West Siberian petroleum basin, are enough to last for another century. Russia is producing around 500 billion cubic metres of gas per year, primarily in the Yamal Peninsula and on the Yamal shelf, with over 50 trillion cubic metres of reserves already proven. The South Kara basin, which occupies the northernmost part of the West Siberian petroleum basin, is unlike any other basin in the world. It accounts for 20% of global gas reserves. In total, 360 oil and gas deposits have been discovered in the Russian Arctic, including 334 on land and 26 on the shelf.

The Arctic accounts for around 15% of Russian oil production, meaning that the region is representative of the nation as a whole for reserves of this type. The majority of oil reserves are concentrated in Khanty-Mansi Autonomous District — Yugra. Russia’s total proven oil reserves are enough to last for over 40 years at current rates of production. As the Arctic has a much higher share of the nation’s reserves and resources and, taking into account Arctic production relative to Arctic reserves, the actual figure is several times higher.

This does not account for other petroleum provinces, including Laptevo-Sibitomorskaya, Severo-Sibirskaya, Vostochno-Sibiromorskaya, Zapadno-Chukotomorskaya and the subarctic Okhotomorskaya. It is in the Arctic that further major discoveries are likely to be made.

Raw hydrocarbons also include the ‘fuel of the future’, gas hydrates. These are compounds containing gas and water molecules. Volumes of this resource exceed even natural gas reserves. Furthermore, a large share of these reserves are confined to the Arctic territories and offshore areas. It is not yet possible to extract this type of raw material, but scientists and oil and gas producers are working hard to develop an industrial-scale technology to this end.

With regard to solid mineral deposits, according to data from the Institute of Geology of Ore Deposits, Petrography, Mineralogy and Geochemistry of the Russian Academy of Sciences, Russia is the global leader for solid mineral deposits in the Arctic, accounting for almost 40% of global production.

The deposits found in the Norilsk ore district are unique. The reserves held in the copper-nickel and platinum group metal deposits are sufficient for another hundred years of mining. Nornickel is the world’s largest producer of nickel and palladium, the fourth largest platinum producer, and the largest producer of copper.

There are diamonds in Yakutia and Arkhangelsk. The Popigai crater is unique for its industrial diamond deposits.

Gold can be found in Chukotka and Northern Yakutia. There are rare metals in Karelo-Kolsky region and Novaya Zemlya. A number of massive deposits have been discovered (Peschanka in Chukotka contains 4,000 tonnes of gold), but mining them is unprofitable due to the great distances to seas or large rivers.

All in all, the Russian Arctic has around 20 unique and enormous deposits containing various minerals. Large swathes of land are yet to be explored. Nevertheless, developing solid mineral deposits in northern climates is difficult, and the majority are lying in wait for better times.

The solid mineral reserves of the Arctic are on a par with hydrocarbons in terms of their significance and value. Bioresources are another source of great value.

The Northern Sea Route as a pan-Arctic megaproject

Even considering the fact that all these mineral resources are unevenly distributed throughout the territory (and the shelf) of the Russian Arctic, there is a megaproject that could provide a stimulus for the development of the northern regions. That project is the Northern Sea Route (NSR).

Each of the Arctic territories, the Far Eastern subarctic, and many Russian industrial centres have competencies that they could bring to the NSR. The most important condition for its success is not simply achieving the actual shipping load of tens of millions of tonnes per year, but creating an entire ‘capillary’ transportation and support system covering the adjacent land mass, the river network, and the air, across a significant part of the Arctic Basin and the northern part of the Pacific Ocean Basin.

I take the position that the NSR should not attempt to compete with the Suez Canal, but rather look to become a stable transport corridor for Russian exports and imports, finding its place within the international transportation system. If this can be achieved in the long term, the NSR is sure to become an institution and a pillar of the domestic economy.

Material prepared by:
Andrei Ivanov, an expert of the Project Office for Development of the Arctic (PORA), a member of the Association of polar explorers.

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