September 26, 2020

Russia’s strategic news in the Arctic

By Domenico Letizia.

Among Russia’s strategic choices in the formulation of its Arctic policies, there is a willingness to become a regional leader in the production and the storage of Liquefied Natural Gas (LNG), circumventing the sanctions imposed by the United States and controlling the tanks that sail from Asia to Rotterdam crossing through the Nordic route. With this in mind, it is worrying to observe Russia’s military expansion in the region, with its fleet of vessels and submarines allotted by the Kremlin to the Arctic region. This fleet is today at its peak since the fall of the Soviet Union.

Delving into this issue, it should be recalled that Novatek’s Yamal Lng is Russia’s biggest LNG producer and that in 2018 it has already carried over 7 million tons of LNG for the European and Norwegian markets. At the end of June 2017, in the waters of the Kola Bay, a Gazprom subsidiary started drilling operations, using a Chinese fabrication platform able to explore at a depth of up to 1400 meters. Moreover, still in the Kola waters, “ArcticToday” media reported that in 2019 the Russian federal government plans to spend 965 million euros to build a major arctic terminal for LNG storage and recharge.

The project has been approved in April 2019 from Prime Minister Dmitry Medvedv. According to the documents, the project should be ready in 2023 and it entails the construction of two floating storage facilities and a dock with all necessary coastal infrastructure. It should be noted that the announcement by the Russian institutions comes a few weeks after the approval of a similar project on the country’s Pacific coast, in Bechevinka, in the Kamchatka peninsula. The facilities will be useful not only for Novatek, but also for the formulation of new LNG-linked projects in the Arctic region.

Moreover, a second project, the Arctic LNG 2, is currently in its development phase and it is set to supply 18.9 million tons of material per year. The government’s documents do not clearly state where the new terminal will be built in the Kora peninsula, but Novatek has stated that it will be close to Ura Guba. The area hosts one of the most important naval bases of Russia’s Northern Fleet. Ura Guba is about 50 kilometers north-west of Murmansk. It has a deep fjord and throughout the whole year there is no ice, a feature that makes it one of the most important areas for navigation and the port logistics of the Kola peninsula.

In the local naval base there are different nuclear-propelled submarines, including the “Sierra II” and the “Victor III”. The construction of the new terminals will allow Novatek to reduce the transport costs of LNG. The tankers “Arc7”, set up as icebreakers and currently operating between Sabetta and Yamal, are very costly and the aim is to allow access also to normal tankers. With the construction of transshipment hubs, the “Arc7” tankers will be used in other areas and common tankers will collect the natural gas, sailing to reach Europe and serve the customers there. 

Since the end of 2018, Novatek has been busy with supplying LNG in the Norwegian fjord of Sarnes. With the new projects, the transfer operations will happen in Russian waters and this idea has been confirmed by Novatek’s administration through the declarations of Leonid Mikhlson. As Russia looks for partners operating outside of the scope of the EU and US sanctions but still able to deploy the same technological capacities, a common interest has developed between Russia and China, resulting in the start of a specific cooperation with Beijing aimed at the utilization of the Polar areas. 

In 2016, Russia’s Federal Subsoil Resources Management Agency and China Oilfield Services Limited signed a cooperation agreement, according to which they are set to collaborate in the long term in the field of seismic surveillance at sea, both in Russia and abroad. The Arctic is becoming increasingly interesting both for the Russian Federation and for the emerging Chinese power, with new alliances that might even change the geopolitical scenario in the immediate future. 

Published for Opinione.it: http://www.opinione.it/economia/2019/05/02/domenico-letizia_russia-artico-gas-liquido-sanzioni-usa-yamal-lng-novatek-gazprom-dmitry-medvedev/

About the author:

Domenico Letizia Journalist. Radio speaker of “RadioAtene”. Researcher, publicist and social media manager of the “Water Museum of Venice”, member of the UNESCO World Network of Water Museums. Public relations manager of the Mediterranean Academy of Culture, Technology and Trade of Malta. Expert in geopolitics, green, blue economy, digital and agri-food.

Comments are closed.