The development of the Arctic region and exploration of its resources requires unparalleled efforts and investments. Significantly, even considering the success of shale technologies and the justified criticism on the part of the ecologicallyminded organizations, the full-scale development of resources at the Arctic shelf can only be delayed for so long. Today Russia faces a choice of doing it of its own accord and sticking to its own security-conscious plans, or this development will start anyway with other interests at heart.
It should be mentioned that the conditions of our Russian Arctic are unique in their extremity: unparalleled extent of the seashore and the area of Arctic territory, extreme climatic conditions with critical temperatures as low as —60°C, severe ice conditions with ice fields of 1.5 to 2 m, salt fogs, great depths, and seismic activity. This renders the nature of Artic extremely vulnerable and any accident far beneath the scale of that in the Gulf of Mexico can cause a planetary-wide catastrophe. Arctic is the “climate fountainhead”. Typhoons are born at the poles. At the same time, it has largest proved deposits of hydrocarbons. Today Russia’s policy in Arctic development is not unlike the infill city development strategy with many uncoordinated projects coexisting in one place. “Gazprom”, “Lukoil”, “Rosneft” and “Sakhalin Energy” — all building different facilities and pursuing their own interests. Even though the Russian Federation has a share in each of them they still have their own business interests at heart.
Surely any company works to increase its capital and earn more taxable profits. Taxes can be regarded as their input into the country’s glory. To fulfill this function to the best of its ability each oil company should strive to increase its effectiveness and reduce costs which means it wants to buy technologies and equipment at the most competitive prices — this means buying abroad, using available loans, benefiting from reliable technologies, etc. As a result, we spend currency on technologies, extract and sell oil and gas to use the money for buying new technologies for oil extraction. This brings us to a vicious circle. There is a downright contradiction between the obvious wish of any extracting company to buy equipment at competitive prices in the West and the need for the state to develop its own engineering capacities and industrial potential.
Arctic region — the driver of technological development
At the moment no long-term strategy of Arctic development offering an integral solution is in existence. Common sense and the interests of the state suggest an entirely different solution for the problem.
It will not be an exaggeration to say that the full-scale development of the deep-sea areas of the World Ocean is the task comparable and even surpassing in its complexity the task of cosmic explorations or of mastering the thermonuclear synthesis. It calls for a whole new industry, same as the one required for cosmic explorations. You can’t develop the Arctic North working shifts. It needs a whole network of cities that will turn into personnel, engineering and maintenance pools for the development of Arctic territories. It requires such things as ice-resistant drilling ships and platforms, large gas turbine sets fit to work among salt fogs, underwater production units and underwater infrastructure (riser blocks, manifolds, pipelines, umbilical cables, subsea control and measuring devices and control blocks), infrastructure for transportation of oil and gas. Moreover, the requirements to the quality of marine Arctic equipment are ten times stricter than to the surface equipment: it should be compact in size, super reliable, frost-resistant, and adapted to difficult ice situation, self-servicing or requiring long-distance maintenance with long-term autonomous functioning periods. Also a full-fledged icebreaking unit will be required and a complete restoration of the rare-earth industry as new alloys will be in demand — frost-resistant, crack-resistant, heat-resistant. Many cutting-edge technologies still wait to be developed. What remains unclear for example is the reliable method of resisting icebergs that rip out the sea bottom when they move. We do not know how to safely tuck in the pipelines, to cope with accidental oil spills, to absorb oil-slime under the ice.
Nevertheless, the development of the Arctic shelf was worth starting if only to trigger the rise of the high accuracy mechanical engineering industry. Being a huge resource deposit the Arctic region is also the frontier of the technologies of the future providing an insatiable demand for high-tech inventions for the next 50–70 years.
The humanity has been deliberately investing in such expensive projects as cosmic explorations, studies of thermonuclear synthesis or the collider because they make out the future for us. Arctic development is another such project serving the future generations, the only difference being that this project has already started yielding profits in the form of new technologies and commercial benefits in the form of oil and gas. Any projects based on the Arctic shelf should boost the development of other industries as space explorations did. That is why all developed countries are actively and aggressively making their way into any projects set in the Arctic region. The role of Arctic as the high-tech driver is fully admitted by the foreigners. Commercial incentive is not the only one for the Western companies. They know that their efforts would eventually bring to life unique technologies to be demanded in many other industries. What the world leading companies seek in the Arctic region is the ultra-complicated tasks and challenges unique for this region. Fulfillment of such tasks would entail multiple technological breakthrough solutions, production upgrade and higher competitiveness at the world market.
Today we witness the full-scale war for the market of Arctic sea equipment. The world leading mechanical engineering companies strive to edge out the national producers and shape the potential demand to suit their own interests. It is absolutely clear that foreign technological solutions alone, however cheap and better developed they might seem, would jeopardise our own national interests. Along with forfeiting all chances for acquiring new technologies this strategy will doom us to foreign-made spare parts and compatibility standards. Moreover, nobody will willingly surrender an advanced product, selling yesterday’s or even earlier versions dating 10–15–20 years back, which will seal up our backwardness.
Creation of Arctic Cluster as International Technological Pool
for the development of Arctic and deep-sea technologies
The unparalleled ambition of the task ahead clearly speaks of its unfeasibility for one single country or even for the largest companies. No company will find it profitable to keep its own icebreaking fleet, its own plant for manufacturing subsea production units or turbines. It will hardly choose to develop frost-resistant alloys or heat-resistant substances on its own.
Many technological challenges still wait for solutions because nowhere on earth the conditions of this extremity exist and therefore no industrial solutions have been tried. No company can boast of expertise or good practices in this sphere as the requirements are unprecedented. It is only reasonable to facilitate the development of requisite technologies in Russia, for them to stay with us. It is the more reasonable considering that foreign researchers have no significant edge over Russian mechanical engineering industry in the department of Arctic class equipment.
The full scale cooperation in development aiming to decrease the costs for each party looks like a good option. It would be only logical to join the efforts and achievements in a joint International Pool that would use to the full good practices and experience of such international projects as International Space Station or cooperation in thermo-nuclear research (ITER, ЕАЕК). CERN and the Large Hadron Collider also give a good example of successful international projects ready to accommodate all interested parties.
Obviously, today we are heavily dependent on imported technologies due to technological disadvantage and unadvisable policy of tendering based on Federal Laws. The industrial development under these laws is submitted to the principle of choosing the cheapest (meaning the primitive) instead of the best or advanced solution. It is an open secret that in the last 20 years our country has drastically increased its disadvantage in both science and technologies. For over a decade the country remained plunged into the devastation when fundamental research was virtually nonexistent and the technologies developed in the Soviet Union were sold to the West for a song.
Nevertheless, the potential accumulated during the Soviet period was so great that it still buys us a place among the leaders in many global scientific-research projects. We play a leading part in the ISS project. As for the control of thermonuclear synthesis, it was the Soviet Union that offered to put into the public domain all research in the area and to set up an international scheme where our country is still at the hemp.
CERN is another such example: this project would have never become feasible without Russian researchers. The project uses many Russian developments such as cryogenics, superconductors, fundamental approaches. We are still among the world leaders in submarine building. Russia has a huge potential in building aircraft engines — the quintessence of the engineering design. Russia is among the few countries that have mastered their complete production cycle from design and development through manufacturing. Russia keeps it leading positions in development of frost-resistant substances…
Of course it would be unwise to avoid international experience stepping on a slippery path of isolation. Russia has all the power to initiate and become the natural host of such an International Arctic Cluster project, joint technological and industrial pool for development of Arctic and deep-sea technologies that will pave the way to the development of the World Ocean. In our country we come with the most severe and adverse Arctic conditions making us unique. At the same time the North of Russia has already got an extensive transport infrastructure and the relevant logistics to facilitate the transportation of bulky metal drilling structures to the Arctic region via largest rivers. We have the icebreakers fleet that can deliver equipment by sea, via the Northern Sea Route. Logistics is a key to success in any project. We have high-tech industrial enterprises in the near-Arctic region, such as “Sevmash” or “Zvezdochka”. We have large cargo terminals and a vast pool of scientific and engineering workforce.
We are unique in the skill to build cities and large production facilities in the North. Moreover, Russia is a domineering force in the Arctic region. All taken, Russia is the most likely candidate for the role of a host-country for the Arctic project.
“Egg of Kashchey-the-Deathless” Strategy
(successfully used by the Chinese)
Russia can offer a unique and capacious market for the foreign companies, but at a cost: foreign companies should build full-scale production facilities, open research and development centres, train specialists, develop and transfer technologies thus integrating into the national economy. Preferences and stability will be offered in exchange for technologies. By integrating foreign technological centers set up by leading international companies we will ensure control, loyalty and our own technological independence.
The creation of International Arctic Cluster is an unparalleled task particularly under the imposed sanctions. It can not be fulfilled overnight. It will require thoughtful and persistent efforts aiming to persuade the international community. Where shall it start?
As the first step it seems reasonable to establish a national regulator of the Arctic Cluster in the form of a compact state agency endowed with vast authority but excluding the lobbying possibilities for single companies. This agency should be charged with the development of long-term guidelines that will eventually form a self-balanced system. It will probably be wise to restore the state committee for science and technology.
It also seems reasonable to introduce two amendments to Federal Laws 44 and 233.
First, in tendering for equipment and technologies for the Arctic project an absolute priority should be given to technological sophistication over price criteria.
Second, companies with deep entrenchment in the Russian industrial market should be given preferences of a two to one coefficient in prices. Even though such solutions may be more expensive, they will at least bring money to Russia and will work in the Russian economy instead of adding to the bank deposit.
This one condition will give a huge impetus to the process of localization making the participation in Russian Arctic project attractive in terms of investments for foreign and Russian companies alike, as business goes after the profits. Foreign companies are more likely to be the first to see the advantages. It will induce them to build production enterprises and integrate into the Russian economy.
Economics is the best policy
The moment is ripe for the announcement of Russian Arctic initiative: these years we mark the 100 years anniversary of WWI, 70 years anniversary of the Great Victory when imperialist countries fought shoulder to shoulder with communists against fascism, 40 years anniversary of the Soyuz-Apollo docking, and many other great and memorable international anniversaries.
In 2016 we will celebrate 60 years of international cooperation in thermonuclear synthesis control; we have been sharing the ISS for 22 years, and we have been part of CERN for 62 years. Such cooperation should be expanded at Russia’s initiative.
CERN-like project will be a good offer and a prologue for a new international agreement between Russia and the West, allaying tension in the military and political spheres. If Russia offers a global project on the joint development of the unique resources of the Arctic region it is doomed for support. If we offer unique conditions everyone will forget about sanctions. The confrontation of the last year was grueling for all of us. There is nothing like joint business to bring people together.
«Neftegazdiagnostika» Company Director General,
RISCOM Research and Industrial Union Chairman of the Board