Outcomes of the 'Arctic: Territory of Dialogue

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Outcomes of the 'Arctic: Territory of Dialogue OUTCOMES OF THE ‘ARCTIC: TERRITORY OF DIALOGUE’ INTERNATIONAL ARCTIC FORUM 2019 CONTENTS Investing in the Arctic: 8 a new approach Infrastructure – the foundation 14 for Arctic development One Arctic for the 22 entire world The Arctic – 27 territory of life THE INTERNATIONAL ARCTIC FORUM 2019 IN FIGURES The Forum was attended by >3,600 representatives of the political, scientific, and business communities COUNTRIES REPRESENTED and leading media outlets from Russia and around the world The Forum was covered by 845media representatives The Forum saw from the signing 16 of countries: Russia, Canada, China, Estonia, Finland, 45agreements France, Germany, Italy, Japan, Norway, Largest delegations: Slovakia, Spain, Sweden, the United worth Kingdom, Vietnam, and the United States RUB billion* • Norway • Sweden • Iceland 69,8 • China • USA • Canada 52countries • Finland • Denmark • Japan 4 INTERNATIONAL ARCTIC FORUM 2019 IN FIGURES INTERNATIONAL ARCTIC FORUM 2019 IN FIGURES 5 The ‘Arctic: Territory of Dialogue’ 5th International Arctic Forum was held on 9–10 April 2019 in St. Petersburg under the theme ‘The Arctic. An Ocean of Opportunity’. The Forum agenda was devoted to discussions on the comprehensive socioeconomic development of Arctic territories and the development of mechanisms for the discovery and effective exploitation of the region's resource potential. “I am pleased to note that this Forum, which has now become a regular event, enjoys broad public support. Its noble goals unite expert and research communities, as well as prominent politicians and businesspeople from different countries – those who, in their official capacity or at the bidding of their heart, are involved in the important work of promoting the harmonious development of the Arctic and the preservation of its unique nature and the distinctive cultural traditions of the local peoples,” said President of the Russian Federation Vladimir Putin in his welcome address to Forum participants. 6 Arctic: Territory of Dialogue Arctic: Territory of Dialogue 7 INVESTING IN THE ARCTIC: A NEW APPROACH The Arctic is full of potential for invest- sumption is growing by about 1.6% annu- complex and the Bovanenkovsk and ment. ally, which is the highest rate of energy Kharasaveysk gas fields. consumption in the world. By 2035, the “According to preliminary estimates, share of natural gas in the global energy Chairman of the Management Board we have about 13 billion tonnes mix will reach 26%, compared to 23% and Member of the Board of Directors of oil and 95 trillion cubic metres today. Meanwhile, LNG's share of the gas of NOVATEK Leonid Mikhelson told of natural gas. They represent trade is expected to reach 51% by 2025, International Arctic Forum 2019 par- colossal planetary reserves,” said and 70% by 2040. As such, Russia is Vladimir Putin, President of the Russian poised to take up 30–40% of the global Federation. LNG market. “The Arctic is <...> a risk zone, but those risks are manageable; Experts estimate that the Arctic is home The Arctic is already Russia's primary it is a zone of efficient, to 13% of the world's undiscovered oil source of gas. predictable economic affairs.” reserves and approximately 30% of the world's undiscovered natural gas “Today, Russia produces 725 billion Maxim Akimov, Deputy Prime reserves. A significant portion thereof is cubic metres, of which 83% is pro- Minister of the Russian Federation located within Russian territory. duced in the Arctic zone. That gas is The Arctic accounts The Arctic is competitive, despite the fact that it ticipants that his company is currently for about home to The significance of these reserves is is produced in the Arctic, because of implementing a new project, Arctic growing with global demand for hydro- the low cost of production and very LNG-2, that boasts a higher capacity carbons, especially for natural gas. good quality of natural resources,” than the Yamal LNG project. A number % % said Alexander Novak. of major contracts related to this project As Minister of Energy of the Russian Fed- have already been signed, including 6 13 % eration Alexander Novak noted during Globally significant projects include the one making French energy corporation of Russia's GDP of the world's undiscovered the Forum, the rate of global gas con- Yamal liquefied natural gas production Total a shareholder. By the end of the and oil reserves and 83 % % of Russian gas comes 11 30 from the Arctic zone of investments of undiscovered natural in fixed assets gas reserves International Arctic Forum, agreements The Arctic accounts for approx- The development of Arctic fields acts as were also signed with the Chinese imately 6% of Russia's GDP, and a driver for the development of Russia's companies CNODC and CNOOC. 11% of investments in fixed assets. economy as a whole. Negotiations are in progress with partners from the Persian Gulf, Japan, “The Arctic is <...> a risk zone, but “According to our estimates, LNG and South Korea. those risks are manageable; it is a projects will provide work for about zone of efficient, predictable eco- 800 Russian enterprises and create Russia's Arctic zone also contains sig- nomic affairs,” said Maxim Akimov, about 80,000 jobs all over Russia,” nificant reserves of nickel, copper, and Deputy Prime Minister of the Russian said Leonid Mikhelson. rare-earth metals. Federation. 8 Investing in the Arctic: a new approach Investing in the Arctic: a new approach 9 OBJECTIVE: SOLUTIONS Comprehensive support of projects in the Arctic region There are a number of macroeconomic • Developing domestic software for LNG The Russian government is paying par- the Far East Development Fund for problems that are barriers to harness- plants (currently, 80% of software is ticular attention to the development of selective financing of Arctic projects.” ing the economic potential of the Arctic. foreign) based on government procure- the Arctic region. The foremost of these is the significant ment. “We will expand the work of all Far cost of operations, which is related to New government bodies have been created Eastern development institutions to increased spending on transporting fuel, • Localizing the production of seismic to manage the territory: the Arctic is part of the Arctic region. This means that materials, and equipment; the cost of equipment in Russia. the purview of the Ministry for the Develop- we will help with land procurement, labour; accelerated technological depre- ment of the Russian Far East. “This year individually supervise each pro- ciation; the need to compensate for eco- • Improving financing mechanisms for we are going to draft and adopt a ject, provide support when it comes logical risks; and underdeveloped infra- fundamental and applied research in new strategy for the development of to protection from inspections, and structure. the Arctic, taking into account sustain- the Russian Arctic up to 2035,” said provide financing at subsidized able development principles. Vladimir Putin, President of the Russian rates,” said Yury Trutnev, Deputy Prime Forum participants also noted the lack of Federation. Minister of the Russian Federation and technologies for Arctic geological explo- Presidential Plenipotentiary Envoy to the ration and dependence on foreign suppli- President Putin has also said that all avail- Far Eastern Federal District. ers of goods and services. This problem Experts from the SKOLKOVO able investment support tools must be lev- is becoming increasingly significant due Moscow School of Management eraged in order to increase investment in Speaking at the Forum, Minister for the to sanctions. predict that LNG projects could see the region and launch new projects, includ- Development of the Russian Far East and ing tools that have been used successfully the Arctic Alexander Kozlov highlighted “Nobody yet possesses the technology in Russia's Far Eastern region development that his agency offers two types of tax needed to develop deposits located > RUB programmes. Taking the specific fea- benefits for new projects in the Arctic in water bodies which are largely tures of the Arctic into account, “investors zone. under ice. <…> State support for the should and will receive more advanced programme to build drilling capac- and more stable preferences,” he said. • The first option confers tax benefits for ity is not tangible, due to the fact that 10 years for projects worth up to RUB said 300 The Russian Federation has already devel- 100 billion and for 15 years for pro- it is completely non-existent,” Mikhail Grigoryev, Director and co-owner billion oped government programmes in six jects worth upwards of RUB 100 billion. of GECON Geological Consulting Centre. in additional investments before strategic development areas related to The corporate income tax, extractive 2023. This would allow medium- the Arctic: aviation, shipbuilding, special resource production tax, property tax, “Exploration of hydrocarbons and tonnage LNG production capacities technologies, navigation, oil and gas tech- and land tax would be 0%, with 7.6% equipment for shelf development: to increase by nologies, and special materials. Those insurance contributions. we must attain independence here involved in the implementation of innova- by 2021, given the pressure on our tive projects as part of these government • The second option involves benefits energy companies from the sanc- programmes should receive support in the over the entire implementation period tions,” said Oleg Ryazantsev, Deputy million form of tax benefits.
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