The Arctic projects will add more than 30 trillion rubles to the GDP by 2035, and tax revenue will reach 13 trillion. The companies will match every ruble from the budget with 15 rubles of their own funds. Budget investments usually pay off in four years.
Meeting on Arctic zone development
DATE: April 13, 2022
Attending the meeting were: Chief of Staff of the Presidential Executive Office Anton Vaino, Deputy Chairman of the Security Council of the Russian Federation and Chairman of the Security Council’s Inter-Departmental Commission for Ensuring the National Interests of the Russian Federation in the Arctic Dmitry Medvedev, Deputy Prime Minister Alexander Novak, Deputy Prime Minister – Presidential Plenipotentiary Envoy to the Far Eastern Federal District and Chairman of the State Commission for Arctic Development Yury Trutnev, Presidential Aides Igor Levitin and Maxim Oreshkin, federal ministers and heads of Russian regions, Special Presidential Representative for Environmental Protection, Ecology and Transport Sergei Ivanov, Special Presidential Representative for International Cooperation in the Arctic and Antarctica Arthur Chilingarov, and the heads of the Federal Service for Hydrometeorology and Environmental Monitoring and Rosatom
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President of Russia Vladimir Putin:
Good afternoon, colleagues.
Today, we will discuss the development of the Arctic zone of Russia.
We have always prioritised efforts to accomplish social, economic and infrastructure tasks in this highly important region and to implement large-scale investment projects there. This remains a priority. Hundreds of thousands of Russian citizens live and work in Arctic territories, and virtually all aspects of this country’s national security, including the environmental, natural resources, military-political and technological dimensions, are concentrated here.
I want to note right away that, considering all kinds of external restrictions and sanctions pressure, we need to focus on all projects and plans linked with the Arctic. We must not shelve or delay them; on the contrary, we must expedite our work on current and long-term tasks to the greatest possible extent, in response to attempts to hamper our development.
Above all, this concerns the social sphere. We should always focus on matters that are most sensitive for people. Under the extreme conditions of the Arctic, people’s health and security are at stake, as well as the survival of entire towns and settlements.
As you may know, the actions by the unfriendly countries have disrupted a number of transport and logistical chains. Certain foreign companies are not meeting their contractual obligations in full or not at all. There is no doubt that in the existing situation this is creating certain difficulties for us. But we have all the resources and every opportunity to enable us to find alternative solutions in no time, and to strengthen our independence from external factors to an even greater extent in the long term.
This is an extremely important task.
To this end, all responsible agencies employed in the Arctic should competently and quickly reorganise their operations, primarily in order to ensure that residents of Arctic territories, rotation workers, businesses and social institutions in the region obtain an uninterrupted supply of food, medicines, fuel, building materials, and equipment. As a reminder, the start of the northern supply haul is close at hand.
The haul should proceed in a well-managed and organised manner, in accordance with the schedule and without setbacks. The Arctic should be supplied with all the necessary goods and services – and in full. This is of fundamental importance in order to guarantee price stability in populated Arctic localities. A list of ships to be employed in the haul and their sailing plan should be compiled as soon as possible. Their priority departure from ports should be ensured as should a more active use of air transport.
I suggest we think of appointing a single operator in the area of maritime delivery of cargoes under the northern supply programme, one involving icebreaker support. Generally, we should clearly identify a northern supply coordinator in the form of a relevant agency and, of course, invest it with all powers and responsibilities. Please submit concrete proposals for this later today.
Let me add the following. I urge the Government and the heads of the Arctic regions to take special responsibility for the smooth construction or renovation of social facilities – kindergartens, schools, hospitals, and rural medical and obstetric stations. Everything envisaged by our programmes and national projects should be implemented.
Another goal towards which we must work proactively is the implementation of priority investment projects. This will determine the further development of the Arctic regions and the well-being of their residents, the preservation of jobs and the creation of new jobs, as well as the fulfilment of Russia’s commitments to reliable business partners.
It is obvious that today many projects should be adjusted, that they need additional support and flexible, out-of-the-box solutions when it comes to funding, technologies and the supply of materials, construction equipment and component parts.
Today I would like to hear your reports on plans for the failsafe adoption of pivotal comprehensive initiatives, which should be done at a normal working pace to ensure the further development of business activity in the Arctic, including support for small and medium-sized businesses.
I would like to emphasise once again that several Western countries’ rejection of normal cooperation, including at least part of Russian energy resources, has hit back at millions of Europeans, has led to a real energy crisis and, incidentally, is affecting the United States. Prices are growing everywhere, and the inflation rate is soaring, which is a completely unprecedented situation for these countries. Of course, we are facing problems as well, but we also have alternatives, new options and new windows of opportunity.
As for Russian oil, gas and coal, we can increase their consumption on the domestic market, stimulate the value-added conversion of raw materials and also boost energy deliveries to the parts of the world that really need them. To achieve this goal, we will make use of all the available opportunities, including the development of transport corridors like the Northern Latitudinal Railway.
The active construction phase of this railway project is scheduled to begin as early as this year. I would like to draw the attention of the Government, RZD, Gazprom and other companies that are involved in this project to the fact that this is a direct instruction, and that is how you must regard it. We have been working on the Northern Latitudinal Railway project for a long time. It will help us ease the burden on the BAM and Trans-Siberian railways, which is a matter of fundamental importance in light of redirecting our basic exports to the east.
Yesterday, I spoke with the Amur Region Governor where trains come and go every five minutes in some places. By the way, he asked us to help with viaduct construction. We must do this, no matter what, because it is necessary to create normal living conditions in these areas. Well, this is a different subject, and we will discuss it later.
Today, I suggest that we discuss a number of other matters in detail.
The development of the Northern Sea Route is the first topic. It is necessary to create a modern port and search-and-rescue infrastructure there. We also need to develop satellite-based monitoring systems and communications networks. This also includes the implementation of our ambitious plans, in the good sense of this term, to expand icebreaker and merchant marine fleets and to build Arctic-class gas carriers.
I would like the Head of the Rosatom State Corporation to report on projects to build and design new icebreakers, as well as on the state measures that are essential in order to fully accomplish all the tasks that have been set here on time.
The second topic is to do with equipment for Arctic ports and terminals, vessels, navigation systems, as well as equipment for regional enterprises. Today, I am looking forward to hearing proposals on import substitution and the localisation of the relevant equipment manufacturing facilities in Russia.
The third area of importance is ecology and the environment. We closely link all Arctic programmes and projects with efforts to preserve biodiversity and Arctic ecosystems, as well as long-term work to address climate agenda tasks.
Thus, we need to continue implementing projects to totally eliminate accumulated damage. This also concerns scientific research programmes, primarily those aiming to facilitate a stable balance between economic development and the conservation of Arctic nature. As you know, the local ecosystem is very fragile.
Permafrost monitoring projects are the foundation for maintaining such stability. Melting permafrost layers can have an impact on Arctic ecosystems and infrastructure facilities, as well as those in adjacent territories. We have already issued an instruction to create and finance the relevant monitoring system. Today, I will ask you to report on its implementation.
I would like to emphasise that scientific data and timely, well-grounded forecasts will allow us to make the best managerial decisions, including those on developing international cooperation in the Arctic.
The Severny Polyus (North Pole) ice-resistant vessel is set to become a platform for international scientific cooperation. Working in the format of an operating drifting laboratory – and I think they plan to establish 16 laboratories there – it will provide for the broadest range of studies – from bottom deposits to the upper layers of the atmosphere. This vessel is in a league of its own, and the international scientific community is certainly interested in its launch and start of work. It is necessary to complete all tests without red tape and send this vessel on its first expedition in autumn as we planned.
I would like to emphasise that Russia is open for cooperation with all interested partners under current and future programmes and projects in the Arctic. This is confirmed by the special economic terms in place here, as well as all sorts of preferences for Russian and foreign businesses.
I believe in the current conditions we should get extra-regional states and associations more involved in cooperation in the Arctic – there will be enough work for everyone. We will offer cooperation to all those who, like Russia, are interested in the sustainable development of this unique region. We view the Arctic as a territory of dialogue, stability and constructive cooperation rather than a zone of geopolitical intrigue.
Let us get down to business.
I am giving the floor to Deputy Prime Minister and Chairman of the State Commission for Arctic Development Yury Trutnev. Mr Trutnev, please.
Deputy Prime Minister – Presidential Envoy to the Far Eastern Federal District, Chairman of the State Commission for Arctic Development Yury Trutnev: Mr President, colleagues,
Three years ago, in accordance with the President’s decision, the Ministry for the Development of the Russian Far East was tasked with working on Arctic development. What has been done since then?
First of all, a legislative framework was created to increase the investment appeal of the Russian Arctic. The Foundations of Russia’s State Policy in the Arctic and the Strategy for Developing the Russian Arctic Zone and Ensuring National Security until 2035 were developed and adopted. Six federal laws and 40 regulatory acts were approved.
Using the experience gained in the Far East, we developed the Arctic system of preferences differentiated by four types of economic activity. As a result, the growth of new projects in the Arctic zone is 20–25 percent higher than in the Far East. Today, more than 460 projects are being implemented in the Arctic with state support. Total contract investment exceeds 1.3 trillion rubles. As a result of their implementation, 30,000 jobs will be created.
Most projects are implemented in sparsely populated areas and require support for building infrastructure. So, for the development of the Baimskaya ore zone, it is necessary to build a marine terminal and an automobile road. Providing the project with electricity will require the construction of a floating nuclear power plant. At the same time, the launch of this project will help double Chukotka’s budget.
Segezha West will be the first project to create a pulp and paper mill in 40 years. As part of the Arctic LNG 2 project, a unique centre of large-tonnage offshore facilities is being created. The development of the Syradasaisky coking coal deposit will ensure the transportation of up to seven million tonnes of coal along the Northern Sea Route by 2026.
Mr President,
I am here to report to you that the actions undertaken by unfriendly countries have led to difficulties in implementing ongoing projects and have increased the cost of borrowing. Please consider the proposals on subsidising interest rates for the above projects. The required financing for 2022 amounts to 5.9 billion rubles.
Developing the Northern Sea Route is a systemically critical prerequisite for implementing the Arctic zone projects. The Northern Sea Route is instrumental in importing the necessary construction materials, transporting raw materials and finished products and, in fact, ties the Russian North together.
Our strategic goal is to create a new global transport corridor based on the Northern Sea Route. Four companies, NOVATEK, Gazpromneft, Rosneft and Severnaya Zvezda will account for the bulk of cargo shipment along the Northern Sea Route until 2024. If these companies manage to fulfill their plans, the volume of cargo transported along the NSR will have exceeded 200 million tonnes by 2030. The heads of the companies are here and will report on the implementation of the project separately.
Much needs to be done along the entire NSR in order to ensure safe and reliable cargo shipment if we want to increase cargo traffic. This work is underway. Four nuclear-powered icebreakers, including the peerless Leader icebreaker, are under construction at Russian shipyards. Six more icebreakers will be built by 2030. Four of them will be built with extra-budgetary funding.
Starting from 2025, Rosatom will launch a regular transport line, which will increase international transit to 30 million tonnes by 2030. Regarding the expansion of port infrastructure, four terminals are being built on the Northern Sea Route with a total investment of over 300 billion rubles to 2030.
Mr President, thank you for your decision regarding the Northern Latitudinal Railway which is crucial for the development of the Northern Sea Route.
Upgrading the emergency rescue infrastructure and expanding the Emergencies Ministry operated maritime and aviation emergency rescue centre network is of paramount importance. Expanding the space group in order to create a stable communications, meteorology and ice radar system is a separate task.
Mr President, you said that extending target dates was unacceptable, so please support the proposal to align the timeframe for making decisions on financing the construction of additional icebreakers and the satellite constellation infrastructure with the schedules that are required to see these investment projects to successful completion.
The Arctic projects will add more than 30 trillion rubles to the GDP by 2035, and tax revenue will reach 13 trillion. The companies will match every ruble from the budget with 15 rubles of their own funds. Budget investments usually pay off in four years.
Expanding domestic transport is critical. In conjunction with Rosatom, the Ministry for the Development of the Russian Far East and the Arctic will open a regular coastal service between St Petersburg and Vladivostok in August operated by a Sevmorput lighter carrier which will cut the cost of transporting the cargo needed for investment projects, and will also help ensure northern delivery.
A few words about the northern shipments that provide residents of 25 northern Russian regions with food, essential supplies, medicines, and building materials. The volume of cargo shipping along the Northern Sea Route under northern delivery alone is over 3 million tonnes annually.
Transport costs significantly impact the final price of essential supplies, medicines, and food, and thus, the standard of living of people in the Arctic. Since northern delivery is paid for with lending resources, a higher cost can trigger a spike in prices of food, medicines, and building materials.
Mr President, if you decide to support us, we are ready to promptly put together proposals for subsidising the interest rate for northern shipping.
There is still much to do in the North. Creating comfortable living conditions is among our priorities. A major project for modernising communal flat infrastructure and renovating the housing stock will be carried out in Norilsk. Norilsk Nickel will cover the bulk of spending in the amount of 120 billion rubles.
Mr President,
In accordance with your instructions for developing the Far East, funds are annually allocated to eliminate the backlog of social infrastructure projects. As part of this programme, over the last four years in the Far East we have built and repaired 1,500 social facilities, including schools, hospitals, kindergartens, and sports grounds. I consider it important to draft the same programme for developing the Russian Arctic zone.
Since August 2021, the Far Eastern Hectare programme has also been implemented in the Arctic. Over the first six months, we have received almost 8,000 applications. The greatest demand is for hectares in the Murmansk Region and the Republic of Karelia.
Under the Children of the Arctic project, 100 percent of the cost of recreation for children living in the Arctic zone will be covered by the federal budget.
Nineteen indigenous peoples of the North live in the Russian Arctic zone. The preservation of their customs, traditions and way of life is one of the foundations of our state’s policy. The state budget has necessary funds for this work.
Another important area of work in the Arctic is the development of science and technology. For this purpose, two scientific and educational centres are being created in the Arctic zone: in the Arkhangelsk Region and the Republic of Sakha (Yakutia). The construction of an ice-resistant mobile platform for oceanological, biological and environmental studies is nearing completion.
A year-round Arctic research station, Snezhinka, using advanced technologies in the field of clean energy production and life support systems will be built in Yamal.
Work has begun on environmental monitoring and addressing the damage that has accumulated over time.
Mr President, colleagues,
On March 1, 2021, Russia became the chair of the Arctic Council. More than 8,000 people representing 15 countries have already taken part in this work in such areas as economic development, investment, exploration of the Arctic Ocean shelf, and preservation of the traditional way of life, customs and languages of the indigenous peoples of the North.
Sustainable development of the region and joint efforts to counter climate change are the main topic of Russia’s chairmanship. No country in the world can do this work alone; but that is especially true without Russia, which accounts for 58 percent of the Arctic coast. I am sure that our neighbours in the Arctic region will realise their responsibility and resume joint work.
Mr President,
In conclusion, I would like to present the results we should achieve by 2030 by implementing the state programme for the socioeconomic development of the Arctic and the strategy for the development of the Arctic region and indicators of national projects.
The number of projects implemented with state support will reach at least 1,300, actual private investments made total at least 730 billion roubles, and there are planned investments under contracts worth almost five trillion. At least 110,000 jobs will be created. The average salary in the Arctic zone will increase to 159,000 roubles.
Mr President, thank you for your attention and constant support for our work to develop the Arctic and the Far East.
Vladimir Putin: Thank you.
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Vladimir Putin: Colleagues,
I would like to summarise our discussion and outline the main objectives and instructions.
First of all, I believe it is necessary to approve the masterplan for the development of the Northern Sea Route for the period until 2035, to ensure reliable and safe cargo shipment on this essential shipping artery, the Northern Sea Route.
I would like the Government to plan for the following objectives.
First, to clearly identify the Northern Sea Route cargo traffic for the long-term perspective by specifying investment projects, shipping companies’ obligations in terms of volume – as this determines our infrastructure goals – as well as the size and composition of the icebreaker fleet. All of our colleagues have just been talking about this. It goes beyond icebreakers though. I agree with Rosatom management when they say that we should consider the types of vessels that will operate at the icebreakers’ tails. These 132 vessels that I mentioned must also be considered now. Our fleet upgrade plan also depends on these factors and the volume of shipments.
We need to clearly determine the deadlines and volumes of icebreaker and Arctic-class vessel supplies. We also need to consider the scope of associated hardware required for construction. Considering this, we need to plan modernisation and expansion of production capacities for our shipbuilding facilities. It is also necessary for us to take action with respect to maintenance, in line with the report of the Arkhangelsk Region Governor.
Second, the master plan for the development of the Northern Sea Route must include the construction and maintenance of a rescue fleet and the Emergencies Ministry’s comprehensive emergency and rescue centres. We have hardly spoken about this today but it is a very important task. I know that we mentioned a helicopter group and so on but it is not sufficient and it is a different matter. Above all, we need to consider such upgrades where essential and large-scale infrastructure and investment projects are involved.
Third, it is necessary to identify the level and sources of funding for all the measures included in the masterplan. This funding must be very specific and broken down by year.
Furthermore, as we have said, complete and timely maritime delivery of goods to the north is a task of special importance. I would like to ask you to draft a special federal law on northern delivery. It should reflect all aspects of the issue, starting from a list of goods and delivery methods to the planning, implementation and control of these measures. At the same time, it is necessary to upgrade the existing and establish new transport corridors involving the Northern Sea Route and adjacent waters.
As for implementing investment projects in the Arctic, I would like you to make active use of state support mechanisms, including the so-called Project Finance Factory. I would also ask you to review the issue of extending the benefits enjoyed by the residents of the Russian Arctic to the projects of companies that are already operating there. Obviously, there are many issues here, but these measures will allow these companies to build up their capacities and expand production. I would like to ask you to study the issue of granting these benefits.
In conclusion, I would like to tell you about the proposal related to the development of the housing and social infrastructure of the closed administrative territorial units (CATU) of the Arctic zone, notably, military settlements and bases where our military personnel live with their families and children.
I would like to ask the Government and the Defence Minister to monitor this issue and to ensure, before 2024, comprehensive modernisation of the infrastructure, energy, housing and social facilities in the Murmansk Region’s CATU – the Northern Fleet’s main base. You should continue this work in all other Arctic areas. It is necessary to focus on creating new jobs in addition to building and upgrading kindergartens, schools, medical, cultural and entertainment facilities. This very important task directly affects the wellbeing of the families of our military personnel.
Of course, in working on the draft instructions that we already have, you should pay attention to the proposals made during our current meeting which were not reflected in this document before.
Many thanks to all of you.
