Putin's $135 Billion Arctic Bet: Saving Ukraine War Efforts through New Trade Routes

Russian President Vladimir Putin is counting on his Arctic gamble to save his Ukraine war efforts. In early February 2022, Putin delayed the invasion of Ukraine to meet with Chinese President Xi Jinping at the Winter Olympics in Beijing.

The meeting led to a slew of new cooperation deals between Russia and China, including those related to Russia's Arctic LNG projects and the Northern Sea Route (NSR). The NSR is set to become a crucial maritime highway for transporting LNG from remote Arctic extraction plants directly to international markets, particularly China.

Last week, Rosneft launched its giant Vostok Oil project, which includes the Vankor cluster, the Zapadno-Irkinsky block, and the Payakhskaya group of fields. The project is estimated to hold proven liquid hydrocarbons reserves of at least 6 billion metric tons (about 51 billion barrels) and will create a 'new oil and gas province' on Siberia's Taymyr peninsula.

The Vostok Oil project is expected to produce 100 million tonnes of oil per year, with 30 million tonnes being sent along the NSR between now and 2024 alone. However, implementing these plans has been difficult due to ongoing sanctions arising from Russia's invasion of Ukraine on February 24, 2022.