Russia’s Arctic Security Strategy - Analysis | Inuit Nunangat Stories |


November 6, 2011

By Dmitry Gorenburg

The Russian Arctic’s economic Potential

A 2008 US Geological Survey estimates that 13 percent of the world’s remaining oil and 30 percent of its natural gas reserves are located in the Arctic. A relative increase in energy prices compared to the historical average has made the exploitation of these remote and technically difficult resources more cost-effective. Russia’s natural resources ministry has stated that the parts of the Arctic Ocean claimed by Russia may hold more petroleum deposits than those currently held by Saudi Arabia. The same US Geological Survey estimated total Russian offshore oil reserves at 30 billion barrels, while natural gas reserves were estimated at 34 trillion cubic meters (tcm), with an additional 27 billion barrels of natural gas liquids.1

Because most of these deposits are located offshore in the Arctic Ocean, where extraction platforms will be subject to severe storms and the danger of sea-ice, the exploitation of these resources will require significant investment and in some cases the development of new technology. This means that extraction will only be economically feasible if prices for hydrocarbons remain high.

However, Russian natural resources in the Arctic are not limited to hydrocarbons. According to the secretary of Russia’s Security Council, Nikolai Patrushev, the Arctic currently supplies more than 90 percent of Russia’s nickel, cobalt, and platinum, as well as 60 percent of Russia’s copper. Ninety percent of Russian diamonds and 24 percent of its gold is mined in the Arctic region of Yakutia. One of the world’s largest phosphate mines is located on the Kola Peninsula. In addition, Arctic Russia has significant deposits of silver, tungsten, manganese, tin, chromium, and titanium.


The extraction of these natural resources provides Russia with 11 percent of its GDP and 22 percent of its export earnings.2

In the relatively near future, Russia is likely to develop the significant deposits of rare earths, which are found on the Kola Peninsula and in Yakutia.

The future economic potential of the region is not limited to the extraction of natural resources. In recent decades, it has become clear that climate change is leading to the rapid melting of the polar ice cap, which has already improved access to the Russian Arctic. In the future, Russian planners hope to see the development of a northern sea route that might compete with the Suez Canal route for commercial maritime traffic.

The route is attractive because it is a significantly shorter path from Asia to Europe than via the Suez Canal or around the Cape of Good Hope. Furthermore, the route avoids the risks posed by pirates operating in the Straits of Malacca and in the Indian Ocean of the coast of Somalia. However, these benefits are offset by the added expense of having to hire icebreakers and the potential for delays due to unexpected ice or severe storms.

While analysts differ on how quickly the Northern Sea Route will become commercially viable, the consensus seems to indicate that while the passage will be largely ice free during the summer by 2015, regular commercial traffic may not be feasible for another 20–30 years.

Finally, the region represents one of the world’s most significant fishing areas. While the Arctic’s share of global fisheries has been stable at four percent for the last 30 years, it is likely to increase as the result of over-fishing in other parts of the world.