The Arctic: a new state priority

The Arctic is gradually turning into one of the main economic stakes of Russian state authorities. It is not just a geographical priority of development. It is already the core of a new Keynesian project.

The Arctic is supposed to ensure substantial cargo traffic in the Northern Sea Route and to create demand for products of Russian engineering industries and new jobs. Meanwhile, production of hydrocarbons is actually the only feasible project in the Arctic. Oil and gas companies feel that President Vladimir Putin is interested in this region, and they deliberately ignite his interest.

Thus, not profitability and real payback of such projects are important, but their contribution to maintaining economic growth of the country. This is the reason for the progressing Arctic gigantomania.

The process began, to a great extent, with the Yamal LNG project that was awarded not only tax exemptions but also state investments in the infrastructure. It not only gave rise to development of an LNG cluster in Yamal and Gydan but also became the sample of successful lobbyism that other companies desire to achieve. In large part, this venture inspired the Vostok Oil project that was the hit of 2020. Though, that’s not everything.

There are debates about development of gas chemicals and even hydrogen production in the Arctic.

The reshuffle of ministers and drafting of different Arctic development programs were also aimed at fulfilling Arctic ambitions.

Corporations need to shift their expenses onto the state, and their proteges with corresponding tasks infiltrate ministries and departments.

The question is whether this Arctic story is not going to bury state resources in permafrost

The new report by the Fund elaborates on the following issues:

• Companies that have managed to include their aspirations into strategic documents on Arctic development and, consequently, turned their corporate tasks into national ones
• Changes in the bureaucratic layout around the Arctic following the autumn reshuffle in the government
• The new system of state administration of the region and its key functionaries
• Prospects of LNG production in the Arctic
• Prospects of large-scale oil production in the Arctic, and whether nonresidents will join such projects
• The cost of Arctic shipbuilding development and how successfully it progresses
• Who controls marine traffic in the Northern Sea Route, and will the NSR be able to become the new Suez Canal?

Contentes of the report: