MOSCOW. (Igor Tomberg for RIA Novosti)
-- All analysts have noticed a change in Russia's foreign policy. It has adopted a line towards closer cooperation with China, India and other Asian and Pacific nations. The approach to the situation in eastern areas of Russia has changed accordingly. The authorities are concentrating on the goals formulated by Vladimir Putin as a priority for his second term: development of the economic, transport, and social infrastructure of Siberia and the Far East. It is only natural that President Putin's first trip in the new year was to Yakutia, Russia's easternmost region.
The president's trip has demonstrated Moscow's new, comprehensive approach to the regions. Vladimir Putin has set a major challenge before the Yakutian and federal governments: the implementation of large-scale national projects, such as the development of the social sphere, the oil-and-gas sector in East Siberia, the transport infrastructure (railways and highways), coal deposits, and agriculture.
Siberia accounts for almost 90% of Russia's natural gas production, 70% of its oil and coal output, most of its reserves of non-ferrous and rare metals, and big amounts of explored chemicals. It has half of Russia's forests, and more than half of its water and hydropower resources.
President Putin has emphasized the need to step up the efforts to create a unified system for gas production and transportation in East Siberia and the Far East. East Siberia accounts for 14% of Russia's oil resources, or approximately 10 billion tons of recoverable reserves. The Russian shelf is rich in gas, especially in the Arctic, which has about 30% of national gas reserves. About 20%, or more than 40 trillion cu m of gas, are concentrated in East Siberia, Yakutia, and the island of Sakhalin.
Considerable explored and perspective gas reserves in Siberia and the Far East allow Russia to develop new centers of gas production, which would meet its domestic requirements in gas, and create potentialities for its export. The program for the development of the unified gas production and transportation system in East Siberia and the Far East provides for a more than ten-fold increase in gas output by the year 2015, and for a 15-fold growth of its current level by 2020.
But the development of these natural resources requires major investment. According to the Institute of Oil and Gas Geology at the Siberian branch of the Russian Academy of Sciences, about 26.5 billion dollars will have to be invested in geological prospecting in West Siberia by 2020. To guarantee oil production at the level of 80 million tons by 2030, Russia will have to invest at least 14.5 billion dollars in the industry. The development of the Sakhalin shelf has a price tag of 2.8-3 billion dollars.
Siberian experts have calculated that this is no more than two percent of the cost of sold oil and gas at the price of $26 per barrel, that is, much less than oil companies usually invest. In other words, this geological prospecting will be very cost-effective, and is certain to attract serious investors. The problem is finding them. As for now, Russia plans to spend no less than two billion rubles a year, or about 650 million dollars, on its projects in the region in 2006 alone.
President Putin has stressed the importance of developing the oil-and-gas sector in the East of Russia. He believes that this will promote the overall growth of East Siberia, and allow Russia "to reliably satisfy its domestic requirements in oil and gas, and supply energy resources to the markets of its Far Eastern Federal District, and further to the markets of our partners in Asia and the Pacific."
Oil production has recently been launched at the Verkhnechonsk deposit, one of the biggest in Eastern Siberia. This is a major step towards the development of Russia's Eastern oil-and-gas industry. This deposit will play a major role in the projected Eastern Siberia-Pacific (Taishet-Nakhodka) main pipeline.
According to plan, construction of this pipeline will start in the summer of 2006. President Putin said that he considers it a national project. It will not only give Russia a free hand in Asia and the Pacific, but will also step up the development of East Siberia and the Far East. In addition, the Maritime Territory will cease to be a subsidized region once the oil pipeline is commissioned in 2008. In five years Russia will save up to $1.2 billion by creating new jobs and levying taxes.
Importantly, the oil pipeline will be instrumental in integrating Eastern Russia into a dynamically developing economy of Asia and the Pacific. At the APEC summit in 2003 in Bangkok, President Putin for the first time positioned Russia as the main guarantor of energy security in Asia and the Pacific. Russia has traditionally given priority to the APEC energy sector. South Korean Daesung CEO David Kim said that in the context of skyrocketing oil and gas prices, dependence of the rapidly growing Asia and the Pacific on the outside energy sources would reach 66% by the year 2030. Out of APEC's 21 nations, Russia is the only major oil and gas supplier.
In the meantime, Russia has many more problems in the East than in its European part. Russian analysts believe that the current status of East Siberia and the Far East is the main domestic threat for Russia. Moreover, in the 21st century the issue of national unity will be decided in the East, which has plunged into a deep crisis after the disintegration of the Soviet Union. For this reason it is vital for Russia to achieve "dual integration" of Siberia and the Far East by keeping it within its borders as part of Russian territory, and making it part of the dynamically growing Asia and the Pacific.
In the 1970s, the Soviet Union accomplished an enormous oil-and-gas project in West Siberia, which had no precedent in economic and geopolitical importance, as well as in the involved material, technical, and financial resources. The project was designed to develop a new mega deposit of hydrocarbons on a scale unmatched in the country or abroad. The project for East Siberia and the Far East will be similar to this West Siberian phenomenon in its national, economic, political, and demographic aspects.
A project of such scale requires all-round development of deposits, with emphasis on the processing industries and the end product. Depleting natural resources would be a waste.
The project should not be limited to the development of the oil-and-gas industry, but should embrace all major resources and aspects of life in East Siberia and the Far East. Russia's only option is to go east.
Igor Tomberg, Candidate of Sciences (Economy), leading researcher of the Institute of Economics of the Russian Academy of Sciences
