A ban on oil, gas and coal production in the Arctic. Will Russian Arctic projects pay off?

A ban on oil, gas and coal production in the Arctic. Will Russian Arctic projects pay off?

14.10.2021 0 Автор NKIR

Russian President Vladimir Putin is very optimistic about the upcoming the European Union ban on the hydrocarbons extraction in the Arctic. «If such decisions lead to a certain surge in price, then in general (the Russian economy) will not suffer so much. Because we will reduce production, but we will get everything we expected on prices

I don’t share the President’s optimism. It is enough to recall the Nord Stream gas pipeline coming from Yamal. Its actual capacity is 58.8 billion m3 of gas per year. Gas is supplied mainly to Europe. In addition, liquefied natural gas is delivered from Yamal, the Yuzhno-Tambeyskoye field. Gas reserves here are estimated at 926 billion m3. Liquefied gas is delivered by tankers along the Northeast Passage.

It should be borne in mind that there is a coal deposit on Taimyr. Coal reserves there are estimated at 5.7 billion tons. By 2030, the mining company plans to increase production to 10 million tons per year. It is planned to order 28 ice-class vessels to export coal from the Arctic by 2032.

Let’s turn to the Report On the state and prospects of using the mineral resource base of the Arctic zone for 03/15/2021. I found it in the open access: in the Russian Arctic today extract:

  • 87.4% of Russian gas;
  • 100% zirconium and titanium;
  • 88% gallium, 97% rubidium, 96% platinum and 99% apatite ore.

Mining and their transportation along the Northeast Passage is an important, integral part of its development. If a ban on gas production is imposed in the Arctic, Russia will not be able to sell gas to Europe. Then how will Russia benefit from an increase in gas prices if it cannot sell it?