Supply Chain Control and Strategies to Reduce Operational Risk in Russian Extractive Industries Along the Northern Sea Route

Abstract

Russian resource developers operating in remote parts of the Arctic have demonstrated over the past several years that it is feasible to extract natural resources throughout the year, and ship large quantities of raw materials with regular intervals from the Arctic to international markets; this despite very difficult operational conditions in the Arctic during both winter and spring. Several resource extraction projects are currently being implemented or planned. This study examines how the extractive companies have built up enhanced supply chain resilience and transport reliability to mitigate common Arctic risks. The companies have taken control over supply chains and adopted several precautionary and innovative infrastructure and logistics measures designed to prevent or mitigate disruption to these supply chains. Preferred logistical solutions for all of these extraction projects have developed into large package deals, where long-term production and transport of commodities, icebreaking services, and state support are all included. Western sanctions on Russia as a result of the war in Ukraine, will slow down the pace of future Russian projects in the Arctic, at least in the short to medium-term, but the sanctions are likely to increase the future significance of export terminals on the NSR, as the preferred departure points for Russian Arctic commodities on their way to selective market destinations.

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