Russia's Arctic Energy Expansion: A Geopolitical and Economic Gambit
Look
By Simon Watkins - Aug 05, 2024,
Russia's Arctic Northern Sea Route allows the country to continue exporting oil to China despite sanctions, highlighting the route's strategic importance.
Russia aims to significantly increase the NSR's cargo capacity, supported by vast Arctic oil and gas reserves.
This Arctic development serves both economic and geopolitical purposes, including reducing dependence on the US dollar in energy trade.

The continued use of the Arctic Northern Sea Route (NSR) by Russian oil tankers sanctioned following its 24 February 2022 invasion of Ukraine underlines the ongoing critical importance of this route and the country’s Arctic hydrocarbon fields to President Vladimir Putin. That the final destination of one such high-profile vessel using the NSR path is China highlights one reason why Putin has pushed the expansion of the NSR and of Russia’s Artic operations so forcefully since the invasion of Ukraine’s Crimea region in 2014, as analysed in my latest book on the new global oil market order. Geopolitically, China is not just another major world power to Russia, but rather it crucially holds one of only five Permanent Member seats on the United Nations (U.N.) Security Council – these being occupied by the U.S., UK, France, China, and Russia itself. Just one veto on this Council is needed to block any significant U.N. Security Council resolution, including the authorisation for the stationing of any collective peacekeeping force in a country or indeed military action against one. It is China that has ensured that neither of these serious moves have been made against Russia either after its 2014 invasion of Ukraine’s Crimea or the widescale 2022 invasion.
Aside from a pledge to do the same thing for Beijing in the event of it undertaking a similar ‘reunification’ of the territory it believes should be part of its own ‘mainland’ – such as Taiwan – Russia’s principal reciprocation for this diplomatic largesse remains a steady stream of oil and gas exports to China costing less than the official OPEC+ pricing benchmarks. A large portion of these goes through pipelines, including the ‘Power of Siberia’ gas transit route, which is set to deliver 30 billion cubic metres (Bcm) this year and 38 Bcm in 2025. Another growing part of Russia’s energy deliveries to China is planned to come from liquefied natural gas (LNG) in the years ahead, with an additional 10 Bcm of gas intended to be supplied in this form by the end of this year, as also detailed in my latest book on the new global oil market order. LNG became the world’s emergency energy source following the sanctions placed on Russian gas flows after its invasion of Ukraine. Unlike gas delivered through pipelines, LNG does not require years of costly infrastructure build-out before it can be moved, and it is not necessarily subject to long-term contracts priced to reflect these expenses. Instead, it can be bought quickly in the spot market if needed, and shipped to wherever is required extremely quickly. It is safe to say that any further major military escalation in the world – resulting perhaps from China making good on its threats to forcibly retake Taiwan if necessary – would only exacerbate LNG’s importance in the global energy sector.
Ensuring that China receives the oil and gas that Russia can continue to leverage into ongoing geopolitical support is crucial to Moscow, in addition to providing the increasingly sanctioned country with vital financial support. In a global energy shipping market in which Russia finds itself increasingly blocked off due to international sanctions, the NSR still enables it to deliver energy to China with relative ease. The only problem has been that due to its location in the frozen Arctic, ships have been unable to sail at all during March, April, and May, and have struggled to do so at other times as well.
Look
By Simon Watkins - Aug 05, 2024,
Russia's Arctic Northern Sea Route allows the country to continue exporting oil to China despite sanctions, highlighting the route's strategic importance.
Russia aims to significantly increase the NSR's cargo capacity, supported by vast Arctic oil and gas reserves.
This Arctic development serves both economic and geopolitical purposes, including reducing dependence on the US dollar in energy trade.

The continued use of the Arctic Northern Sea Route (NSR) by Russian oil tankers sanctioned following its 24 February 2022 invasion of Ukraine underlines the ongoing critical importance of this route and the country’s Arctic hydrocarbon fields to President Vladimir Putin. That the final destination of one such high-profile vessel using the NSR path is China highlights one reason why Putin has pushed the expansion of the NSR and of Russia’s Artic operations so forcefully since the invasion of Ukraine’s Crimea region in 2014, as analysed in my latest book on the new global oil market order. Geopolitically, China is not just another major world power to Russia, but rather it crucially holds one of only five Permanent Member seats on the United Nations (U.N.) Security Council – these being occupied by the U.S., UK, France, China, and Russia itself. Just one veto on this Council is needed to block any significant U.N. Security Council resolution, including the authorisation for the stationing of any collective peacekeeping force in a country or indeed military action against one. It is China that has ensured that neither of these serious moves have been made against Russia either after its 2014 invasion of Ukraine’s Crimea or the widescale 2022 invasion.
Aside from a pledge to do the same thing for Beijing in the event of it undertaking a similar ‘reunification’ of the territory it believes should be part of its own ‘mainland’ – such as Taiwan – Russia’s principal reciprocation for this diplomatic largesse remains a steady stream of oil and gas exports to China costing less than the official OPEC+ pricing benchmarks. A large portion of these goes through pipelines, including the ‘Power of Siberia’ gas transit route, which is set to deliver 30 billion cubic metres (Bcm) this year and 38 Bcm in 2025. Another growing part of Russia’s energy deliveries to China is planned to come from liquefied natural gas (LNG) in the years ahead, with an additional 10 Bcm of gas intended to be supplied in this form by the end of this year, as also detailed in my latest book on the new global oil market order. LNG became the world’s emergency energy source following the sanctions placed on Russian gas flows after its invasion of Ukraine. Unlike gas delivered through pipelines, LNG does not require years of costly infrastructure build-out before it can be moved, and it is not necessarily subject to long-term contracts priced to reflect these expenses. Instead, it can be bought quickly in the spot market if needed, and shipped to wherever is required extremely quickly. It is safe to say that any further major military escalation in the world – resulting perhaps from China making good on its threats to forcibly retake Taiwan if necessary – would only exacerbate LNG’s importance in the global energy sector.
Ensuring that China receives the oil and gas that Russia can continue to leverage into ongoing geopolitical support is crucial to Moscow, in addition to providing the increasingly sanctioned country with vital financial support. In a global energy shipping market in which Russia finds itself increasingly blocked off due to international sanctions, the NSR still enables it to deliver energy to China with relative ease. The only problem has been that due to its location in the frozen Arctic, ships have been unable to sail at all during March, April, and May, and have struggled to do so at other times as well.