Inside Putin’s $135 Billion Arctic Gamble That Could Save His Ukraine War

In early February 2022, Russia and China used a high-profile meeting between Vladimir Putin and Xi Jinping at the Beijing Winter Olympics to expand energy cooperation, naming the Arctic and the Northern Sea Route as central elements. The two governments announced a series of large-scale deals across oil and gas sectors, tying future Russian Arctic output to Chinese demand and to new maritime export corridors.

Rosneft has moved to operationalise those ambitions with the formal launch of its Vostok Oil project, a vast development on Siberia’s Taymyr peninsula. The project bundles fields and blocks such as Vankor, Zapadno-Irkinsky, Payakhskaya and the East Taimyr cluster; Rosneft has put proven liquid-hydrocarbon reserves for the area at a minimum of 6 billion metric tons. Company chief Igor Sechin previously described the plan as creating a ‘‘new oil and gas province,’’ with a total project price tag of RUB10 trillion (then-USD135 billion) that would include major infrastructure additions such as two airports and 15 industrial towns.

Last week’s rollout included a new pipeline linking the Vankor and Payakha fields to Bukhta Sever, built to a design capacity of 100 million metric tons per year, and the loading of first oil aboard the Arc7 ice-class tanker Valentin Pikul at the Bukhta Sever Port on the Kara Sea. Rosneft says that, given sanctions constraints, Vostok could begin supplying about 30 million metric tons of oil as early as the second half of 2027 and ramp toward 50 million metric tons by 2030. Bukhta Sever already features an oil-loading berth, two cargo berths, a port fleet berth and 14 storage tanks with a combined capacity of 30,000 metric tons.

Those Arctic plans dovetail with broader eastbound export commitments made in February 2022: Rosneft signed an USD80 billion, 10-year deal to deliver 100 million metric tonnes of oil to China National Petroleum Corporation, with many shipments routed from Kazakhstan to northwestern Chinese refineries. In 2021, Russian pipeline shipments to China totalled about 40 million metric tonnes, while the East Siberia–Pacific Ocean pipeline (and the port of Kozmino) has capacity historically cited at roughly 80 million metric tonnes per year. Russia’s Arctic endowments remain substantial on paper: around 35.7 trillion cubic metres of gas and more than 2.3 billion metric tons of oil and condensate, concentrated mainly on the Yamal and Gydan peninsulas.

State-linked companies beyond Rosneft have also trialed the NSR. Gazprom Neft shipped a 144,000-tonne cargo of Novy Port oil to Yantai in July 2020, a voyage that took 47 days, and subsequently announced a joint venture with Shell focused on Gydan-area resources. The Leskinsky and Pukhutsyayakhsky licence blocks were estimated to hold at least 100 million and 35 million metric tons of oil equivalent respectively. After Shell withdrew from its Russian joint ventures in early 2022, Gazprom Neft assumed full control of those assets; implementation of planned Arctic projects has been complicated by the sanctions environment that followed Russia’s February 2022 invasion of Ukraine.