January 2022, Vol. 249, No. 1
Features
Russia Making Moves Affecting the Arctic’s Hydrocarbon Future
By Gordon Feller, PGJ Contributor
Editor’s note: This is Part 2 of our article on Russia’s moves under its Strategic Development Act.
In October 2020, President Vladimir Putin formally adopted the “Strategy for the Development of the Russian Arctic Zone and Provision of National Security Through 2035.” The strategy gives particular significance to Murmansk Oblast, emphasizing a broad range of complex and multifaceted transformative measures targeting this province.
Murmansk has long been the Russian Federation’s most prioritized Arctic entity. In 2007, an initiative named the “Arctic Bridge” envisaged creating a seasonal, 4,163-mile (6,700-km) maritime transport route between the Port of Murmansk and the Canadian Port of Churchill, in Manitoba.
The strategy document lays out the plan for multiple geographies within the country:
- Chukotka will see a series of ambitious transit projects. These include the Pevek seaport and terminals (Chaun Bay), a transportation-logistical hub in the Provideniya port (Bering Sea) and a year-round sea terminal on the Arinay Lagoon (also on the Bering Sea).
- In the Yamalo-Nenets Autonomous Okrug (YaNAO), the document envisages several ambitions, including an integrated system of transportation infrastructure, which includes measures in both seas (the Port of Sabetta with supporting facilities as well as the canal in the Gulf of Ob).
- In the NAO, the strategy calls for the development of strategic-level transportation infrastructure. Namely, the document emphasizes plans to build a deep-water, ice-free Indiga Seaport suitable for ships with a deadweight of at least 100,000 tons. The port, de facto a coastal cluster connected to locally based, resource-rich areas through a network of rail, pipeline and water transit, is expected to become a hub for exporting cargo from Russia to the United States, Canada, Europe, China and Asia-Pacific countries. The strategy also lays out plans to modernize local railroads (the Sosnogorsk-Ingida line) and highways (Narian-Mar-Usinsk).
The Arctic is an extreme and dynamic region. It is increasingly receiving attention from global and regional powers for its natural resources, its utility as a sea line of communications connecting Europe, North America and Asia, and its political/military advantages.
Decreasing sea ice is extending opportunities for global shipping, increasing the geostrategic importance of the region. Russia has been capitalizing on this opportunity by investing in an icebreaker fleet that vastly outnumbers those of all other Arctic nations combined. Although the Arctic will not surpass warmer shipping routes in traffic volume, there is a growing number of ships transiting between Asia and Europe via the NorthWest Passage (NWP) and the Norwegian Sea Route (NSR), the latter being the most robust northern shipping route.
The Arctic is rapidly becoming a new theater of great power competition – both geo-economic and geostrategic. Russia has been attempting to expand its exclusive economic zones in the region and is conducting enforcement operations with internationally unrecognized authority in Arctic Seas. The Russian military has also been improving its capabilities to operate in the Arctic. Similarly, China, coveting Arctic shipping routes and potential resources, has been attempting to legitimize potential future Arctic claims by describing itself as a “near-Arctic” power.
Eight countries, Canada, Denmark (including Greenland), Finland, Iceland, Norway, Russia, Sweden and the U.S., have Arctic territory. Five countries, Canada, Denmark [Greenland], Norway, Russia and the U.S., have Arctic Ocean coastline. Of note, Russia has the most expansive Arctic territory of any of these countries.
Russia officially designates a region of its own territory as the Arctic Zone of the Russian Federation, which contains Russian maritime and terrestrial areas above or near the Arctic Circle. These include all or parts of “the Murmansk and Arkhangelsk Oblasts, the Taimyr Peninsula in Krasnoyarsk Krai, the Nenetskiy, the Yamalo-Nenentskiy and the Chukotskiy Autonomous Okrugs, as well as lands and islands ... and the internal maritime waters and territorial seas, adjacent to the northern coast of the Russian Federation.”
Russia is by far the most capable Arctic competitor among the three superpowers. The Kremlin views the Arctic as critical to its overall national defense strategy. Consequently, the country is actively preparing its military forces to operate there, while simultaneously working to secure and exploit the region’s untapped resources. Russia hopes to control enough Arctic resources, particularly energy resources, to ensure national economic stability and growth while controlling all shipping near its coastline and maintaining sufficient military power to deter any aggressors crossing the Arctic.
Climate change is also taking a toll on established Arctic infrastructure. Most Arctic infrastructure is built on permafrost in areas at risk for thawing in the near future. In Russia, a third of Arctic infrastructure could be severely damaged by thawing. However, growing interest in economic exploitation has stimulated infrastructure investment. Approximately 900 Arctic infrastructure development projects were in progress as of 2016, with $1 trillion in total expected investments through 2031.
To access the Arctic seas, as of 2019, Russia developed a polar icebreaker fleet that outnumbered the rest of the world’s fleets combined. As Russia considers expanding this fleet, especially its nuclear icebreakers, that number is likely to continue to grow. Furthermore, Russia is modernizing ports along its Arctic coast to improve its capability to use the NSR.
Russia maintains that its extensive Arctic capabilities give it additional rights and has claimed authority to regulate ships transiting international waters in the NSR. This policy has been protested by other nations that state it violates international laws, specifically the United Nations Convention on the Law of the Seas (UNCLOS). However, UNCLOS, along with the Polar Code, may be inadequate for the unique Arctic environment. Ambiguities and inconsistencies between them have resulted in the Arctic nations enacting their own navigation laws and policies.
A broad range of new Russian activities in the Arctic are now underway, which may be understandable from the Kremlin’s perspective but have unsettled other Arctic states and created a security dilemma. The extent to which the Sino-Russian cooperation will also develop a military dimension in the Arctic is another uncertainty. When Russia assumed the chair of the Arctic Council during the May 2021 ministerial meeting in Reykjavik, it signaled to all concerned that it would consider addressing the resulting conflict potential.
Of the five Arctic Ocean coastal states, Russia will likely experience the greatest percentage access increases to its exclusive economic zone, followed by Greenland/Denmark, Norway, Canada and the U.S. Along the NSR, the July–October navigation season length averages 120, 113 and 103 days for PC3, PC6 and OW vessels, respectively, by late-century, with shorter seasons (but substantial increases) along the NWP and Trans-Polar Route.
Primary Russian ports in the Arctic are Murmansk, Archangelsk, Dudinka, Varandei, Vitino and Kandalaskha. Upgrade and modernization investments are now underway in each of these ports.
Statistics show that Murmansk Oblast is the biggest Arctic shipping hub. Located on the Koala peninsula at the coast of Barents Sea is the non-freezing port that can service any type of vessel. In the near future, it will face a major modernization process as a part of the Russian objective to develop industrial facilities along Koala Bay. In the same way that Norwegian and Icelandic shipping hubs are not only operating on ice-free NWP, this also creates possibilities to service the NSR when that is established.
The Murmansk shipping hub is not the only Russian port playing a key role in Arctic marine shipping. The Port of Petropavlovsk at the coast of Kamchatka is to be developed as an eastern hub for the NSR. According to the newest Russian reports, the Port of Petropavlovsk is going to play a major international role because it will become the hub for all vessels operating the route.
Among the many Russian initiatives, the Murmansk Transport Node is one of the most ambitious. This is the name of the project that Moscow has approved. It involves the integration of several distinct but interconnected elements:
- Reconstruction of a coal terminal with a total capacity of 9.6 million tons
- Construction of a container terminal with a total capacity of 1 million tons. TEUs
- Logistics center
Kola Bay’s western shore will have two major facilities:
- Coal terminal with a total capacity of 20 million tons
- Oil terminal with a total capacity of 35 million tons
Expanding and improving access into and out of the Port requires that the project proceed on multiple levels:
- Reconstruction of the main railway line that runs from Murmansk to St. Petersburg
- Construction of a new 18-mile (29-km) railway line and new railway station for Murmashi-Lavna, located on the Kola Bay’s western shore
- Construction of several new motorways
- Reconstruction of the Murmansk Airport
Development of the Murmansk Sea Commercial Port is being undertaken in two phases:
- Phase 1 will be characterized by minimal throughput and deeper depths. Capacity growth of the first cargo district will increase from 6.4 to 12.9 million tons (coal).
- Phase 2 will be characterized by the extension of the port area and deeper depths, plus a dedicated coal complex.
- Alternatively, Phase 2 will be characterized by keeping the project within the existing port area and deeper depths.
The northern coast of the Russian Federation has several deep-water ports that have been supported by the NSR Authority and a fleet of icebreakers for several decades. Murmansk is well known for being the largest deep-water port north of the Arctic Circle that is ice-free throughout the year.
Murmansk also provides intermodal access to northern European and Asian industrial centers. In recent years, Russian Arctic ports in the Barents Sea, including Murmansk, have expanded significantly as offshore oil and ore production have increased in the region. Since 2004, more than €4.4 billion have been invested in improving Murmansk’s deep-water port facilities to include new oil, coal and container terminals, as well as expanded rail lines.
Capacities of the Port of Murmansk are projected to increase to an annual 28.5 million tons by 2010 and 52 million tons by 2020. Other Russian Arctic ports along the NSR include Pevek, Tiksi, Igarka, Dudinka, Dikson, Vitino, Arkhangelsk and Novy. These ports are well-established and supported by the Russian icebreaker fleet, although many require long river transits to access.
The Port of Varandey on the Pechora Sea coast is unique to the region. As oil production expands in the Russian Arctic, Lukoil, in cooperation with ConocoPhillips, has developed Varandey into a deep-water oil export terminal. The Varandey facility consists of an onshore tank farm with a total rated capacity of 2 million barrels (325,000 cubic meters) and an innovative, fixed, ice-resistant oil terminal 14 miles (23 km) offshore, with a height of more than 160 feet (49 meters).
The terminal includes living quarters and a mooring cargo handling system with a jib and a helicopter platform; two underwater pipelines, connecting the onshore tank battery and the offshore oil terminal; and an oil metering station, auxiliary tanks, pumping station and power supply facilities. Sovkomflothas has one new 70,000-deadweight ton (DWT) ice-strengthened oil tanker in operation and two being built in South Korean shipyards to shuttle oil to Murmansk, as well as other locations in Europe and North America.
Comments