Inside Putin’s $135 Billion Arctic Gamble That Could Save His Ukraine War
Continental Strikes Venezuela Oil Deal with PDVSA Simon Watkins is a former senior FX trader and salesman, financial journalist, and best-selling author.
He was Head of Forex Institutional Sales and Trading for… Back in early February 2022, Vladimir Putin had his first in-person meeting with his Chinese counterpart Xi Jinping for nearly two years, at the opening of the Winter Olympics ceremony in Beijing.
To avoid disrupting this landmark event for Xi and to allow China to finalise the multiple hoarding deals for oil and liquefied natural gas (LNG) supplies in which it had been engaged over the previous year, as analysed in full in my latest book on thenew global oil market order, Putin had delayed the imminent invasion of Ukraine.
At that meeting, Moscow and Beijing reiterated that there was ‘no limit’ to how far Russian and Chinese friendship may go, and they also announced a slew of huge new cooperation deals in the oil and gas sectors and beyond, including those connected to Russia’s Arctic LNG projects and the Northern Sea Route (NSR).
With the relationship between Moscow and Beijing having developed significant limits following several of Russia’s missteps in the Ukraine War, this Arctic Route has become even more important to Putin, and last week saw Russia’s biggest oil producer Rosneft launch its giant Vostok Oil project to this effect.
In addition to the then-current supply of Russian gas and oil through pipelines to China, and future expansion programmes thereof, Putin had been keen back in 2022 to push the idea of more Russian LNG supplies going through the NSR.
This had early on been earmarked to serve as the primary maritime highway used by Russia to transport LNG from its remote Arctic extraction plants (including Yamal LNG and Arctic LNG 2) directly to international markets, particularly China.
The Vostok Oil project in Russia’s Far North includes the Vankor cluster, the Zapadno-Irkinsky block, the Payakhskaya group of fields, and the East Taimyr cluster, which overall is estimated to hold proven liquid hydrocarbons reserves of at least 6 billion metric tons (about 51 billion barrels), all within close proximity of the NSR.
Rosneft chief executive officer Igor Sechin had promised Putin before the leader met Xi in February 2022 that the Vostok Oil project and corollary build-out of the NSR would create a ‘new oil and gas province’ on Siberia’s Taymyr peninsula.
The complete project was projected at that point to cost RUB10 trillion (then-USD135 billion), including two airports and 15 ‘industry towns.’ According to Sechin, Rosneft’s Arctic developments would eventually produce 100 million tonnes of oil per year (slightly over 200,000 barrels per day), with 30 million tonnes of oil being sent from the Arctic along the NSR between then and 2024 alone.
Last week’s launch of the Vostok Oil project involved the opening of a new pipeline linking the Vankor and Payakha fields with Bukhta Sever, with a design capacity of 100 million metric.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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