Russia's drive to the Arctic currently stymied by economics of Arctic oil production and poor state of Russian infrastructure
By just about any measure, Russia is an Arctic superpower. It has an enormous coastline, a significant number of people living above the Arctic Circle, six nuclear-powered icebreakers in the region, and industrial centers in Nikel and Norilsk (which produce a high volume of industrial pollution).
Russia used to play up this status, staging large-scale annual conferences, graced by President Vladimir Putin’s presence. Not anymore, and it is not just the fallout from the Ukraine crisis that has poisoned that climate of cooperation. Russia has experienced two major setbacks in its vision for “conquering” the High North.
The first setback came from the seriously reduced value of the natural resources that are presumed to be hidden in the depths of the Arctic shelf. Putin’s lieutenants—including Nikolai Patrushev, the secretary of the Security Council of Russia—loved to engage in speculations about the fierce competition for access to the rich oil and gas fields that were certain to be discovered there. The problem is not only that the U.S. and EU sanctions have made it impossible for the state-owned oil giant Rosneft to continue the exploration of Arctic seas. (Sanctions prevent the import of technology and know-how, and U.S. companies—such as Exxon Mobil—who had worked in partnership with Rosneft have left.) The real problem is that estimated production costs and low oil prices add huge liabilities to any off-shore project.
The second disappointment has to do with international maritime transit along the Northern Sea Route (called Sevmorput in Russian). Many politicians in Moscow expected that climate change would shrink the Arctic ice, increase the commercial viability of a shorter connection between China and Europe, and provide useful employment for Russian icebreakers. The problem is that the old Soviet infrastructure along the Sevmorput is so rotten that navigation in the difficult northern waters remains too risky. Egypt, in the meantime, has swiftly constructed the New Suez Canal, which offers a far more reliable route for tanker and container traffic.