Ilya Mogilevkin
Doctor of economics, professor, Institute of world economy and international relations, Russian Academy of Sciences

    The interest in the Arctic and its potential has been obviously on the rise lately. The growing importance of this region is such that many analysts in the West call this new century �the era of the Arctic�. The heightened attention to the Arctic is explained by quite weighty reasons. One of them is the region’s natural resources. The variety of minerals is so great that specialists commonly talk about the availability of �all of Mendeleev periodic table� there. First and foremost, there are oil and gas fields both off and on shore. In addition to hydrocarbons the Arctic is rich in gold, copper, nickel, tin, platinum, manganese, etc.
To Russia, which is closely connected with the North by its history and basic vital interests, the Arctic’s problem has broad implications in terms of social, economic, spatial and ethnocultural factors. Geopolitical changes of the 1990s resulted in reducing our country’s territory. The European part of Russia became an intracontinental semi-isolated territory. But in the North, from Scandinavia to the Bering Strait, there are enormous territories and water areas with colossal natural resources and industrial and transportation infrastructures. Furthermore this region has an unobstructed passage to the Ocean.
Research studies by the Institute of world economy and international relations prove the necessity to widen the scope of Russia’s economic activities in the Arctic. These activities will logically follow from predictions of gradual reorientation of the country’s economic development toward the North and Far East. Going this way will make it possible not only to make up for aftereffects of negative changes in the country’s European part but also to contribute to a new overall economic upturn. Essentially, the Arctic presents a unique opportunity to ensure a stable development, which could guarantee the future of Russia as a great power. This position is shared by president Vladimir Putin, who said on his trip to Murmansk: «The North is our strategic reserve for developing the statehood».
Basic calculations with respect to economic activities are made on the basis of potential revenues from operating deposits of energy carriers.
Their recoverable reserves on Russia’s continental shelf are estimated at 100 billion tons (in the oil equivalent). The gas-and-oil province on the shelf in the west of Russia’s arctic sector is the center of most recoverable reserves. There are three largest regions: Central Barents, South Kara gas condensate and Pechora oil-and-gas condensate. Although these regions are insufficiently explored, sixteen fields have already been discovered there. They include such richest deposits as the Shtokman gas-condensate field, the Leningradskoye and Rusanovskoye gas fields with reserves of natural gas totaling from 10 to 12 trillion cubic meters. The Laptev, East Siberian and Chukchi Seas in the east are considered quite promising in terms of oil and gas content.
Rates of developing oil and gas production in the Arctic depend considerably on the extent of investments, including the foreign ones. The chronic instability in the Persian Gulf and neighboring territories makes guaranteed oil shipments at predictable prices vulnerable for most countries in the West. Taking this into account the leadership of the European Union decided to expand the energy partnership with Russia. It is expected that, as a result, Russia will be able to double shipments of hydrocarbons to Europe.
An increase of oil and gas shipments will require developing transportation systems. The pipeline transport, of course, will play a major role. Russia’s gas transportation network keeps expanding. At present the 4,200-km Yamal-Europe gas main is being constructed: its throughput capacity will amount to 70 billion cubic meters a year. A pipeline for shipping gas to Finland, Sweden and Denmark is next. The Baltic pipeline system (BPS) is currently under construction so as to raise volumes of oil piping: the West will be getting oil through this system from the Timan-Pechora region, where the production of oil should increase from 9 million to 20 million tons.
It is planned to extend the pipeline network for piping hydrocarbons from Siberia and the Far East to China, Japan and other Asian countries. According to estimates, the annual oil shortage in the Asia-Pacific region will reach 50 million tons by 2010 already. Implementation of projects will consist of several stages and the existing plans provide for use of Chinese credits as well as joint development of some fields.
But pipelines will not solve all transportation problems. For example, oil supplies from the shelf require building a tanker fleet and terminals as well as developing the coastal facilities. The importance of ocean transport becomes even more obvious for carrying ore concentrates, mineral fertilizers, coal, timber as well as cargo needed for a life-support in the region. The ocean shipping has an enormous importance for realizing the potential of the arctic region in terms of transit transportation.
The Arctic’s economic development depends, above all, on restoring the Northern Sea Route (NSR), the largest waterway transportation and communication system where ensuring the year-round navigation is a top priority task. It is connected with increased financing of operations by nuclear-powered icebreakers, replenishment of the merchant fleet with ice ships and restoration of the coast infrastructure along the navigation route from Murmansk to the Bering Strait. Today NSR’s annual freight turnover amounts to 1.5 million tons but it should be increased to 3 to 5 million tons. Real possibilities to achieve this do exist. Currently, the largest shipper is Norilsk Nickel, the mining-and-metallurgical company, which is expanding its economic activities. A potential participant of bulk shipments is LUKoil. This oil company has already placed orders for building ice tankers to transport oil for export from the Timan-Pechora field.
The promising direction of raising freight transit in the arctic basin is to use NSR for transporting transit cargo. At present, the sea shipping between Europe and countries of the Asia-Pacific region is constantly increasing but it takes place mainly at the southern route: the Mediterranean – Suez Canal – Indian Ocean. However, the route via the Arctic is shorter. Attracting to NSL just one tenth of this freight traffic would mean tens of billions of tons of transit cargo and billions of dollars in annual revenues.
Another important task is to develop surface communications. In particular, it is planned to build a 1200-km railroad that will connect the Urals’ North with a port on the coast of the Barents Sea. There are also other plans of constructing transportation facilities.
It is obvious that all mentioned projects should be based on the latest scientific and engineering achievements. In a broader sense the role of science in developing the Arctic is the key one. There is an urgent need to make an inventory of Soviet scientific research studies of the Arctic. It is clearly expedient to use the richest scientific heritage for future fundamental research as well as for practical purposes. Now is the time, when it becomes necessary to search for ways of accomplishing radically new tasks connected with the spatial reorientation. The Russian «Arctic» science should get ready to play an active role in designing technological schemes and developing advanced types of machinery, which could not only correspond to the world’s achievements but make economic sense as well.
Proposals to develop the Arctic should take into account the recent data on climatic changes there. In particular, it is predicted that by 2020 a number of cold winters in the North will decrease by half and there will be no such winters there at all by 2080. Problems of protecting the Arctic’s ecosystem from a possible catastrophic change of the climate should be solved at the international level.
Even a brief review of questions related to possibilities of developing the Arctic’s natural resources proves that the coming decades will merit a considerable growing interest of the international industrial and commercial leaders in this entire region. There is no doubt that with proper exploitation there will be both substantial and profitable results, above all, in the production of minerals, oil and gas, use of biological resources and the development of transportation systems.