Ice cold black gold

First of two parts

Above the Arctic Circle, NENETZ AUTONOMOUS DISTRICT, Russia

Lying under the tundra, thick forests and wilderness here is Russia’s wealth, the key to its future and an important lifeline for the world economy.

Russia has just begun to unlock the vast oil and gas resources of its remote Arctic and eastern Siberian plains and ocean shelves. Developing those resources will require overcoming harsh, even brutal, conditions and building costly and extensive pipelines and transportation networks to deliver them to consumers in Asia, Europe and the United States. These importers look to Russia increasingly for the fuel that keeps their cars running and the world economy growing.

Russia already ranks as the world’s largest supplier of natural gas and second-largest supplier of oil because of the giant oil and gas fields first tapped in western Siberia near the Ural Mountains in the 1960s.

But Russia is one of the few nations left that has the potential to substantially increase its contribution to fast-growing world energy needs — whether in the United States or developing countries such as China, India and Russia itself, where the use of cars is growing rapidly.

Saudi Arabia narrowly exceeds Russia’s 9.5 million barrels a day of petroleum output and also is ramping up to meet growing demand. But oil analysts say Russia has the world’s largest undeveloped reserves of oil, and no country can rival its wealth and breadth of energy resources, from oil and gas to coal, nuclear and hydroelectric power.

The unparalleled mineral resources derived from an expanse of land spanning 11 time zones has enabled Russia to emerge as the world’s energy superpower.

Russia’s rise as an energy giant began when production from the western Siberian fields peaked at 12.5 million barrels a day in 1988. But output from the aging fields collapsed with the Soviet Union in the early 1990s, and recovered only after the introduction of Western investment and technology at the end of the decade.

By 2003 and 2004, Russia’s output was growing again at double-digit rates, and its international profile as an energy superpower came fully into view.

Cognizant that the surging oil and gas sector held the key to Russia’s wealth and economic success, President Vladimir Putin in 2003 started to reassert state control over strategically important oil businesses that had been privatized in the 1990s, starting with the dismantling of Russia’s leading oil company, Yukos and the jailing of its founder, Mikhail Khordokovsky, on tax-evasion charges.

That was his opening bid to re-establish Russia as an economic power and to exploit the country’s mineral wealth to achieve broader economic and political goals. Since then, the state has consolidated control over a third of the oil sector and nearly all of the gas sector through the state monopoly Gazprom, and Mr. Putin has used the state’s power to press Russia’s interests in domestic and international political and economic disputes.

Feeling Russia’s power

Russia’s dominance as an energy provider is felt most keenly in Europe, which gets a quarter of its oil and nearly half of the gas it uses to heat homes and provide electricity through enormous networks of pipelines leading from remote oil and gas fields in Russia and Central Asia.

With Europe hooked on Russian gas, its demand for it is expected to grow by 64 percent in the next 25 years, spurred by requirements of the global-warming treaty that force it to rely on such low-carbon fuels. The European Union was instrumental in persuading Mr. Putin to sign the treaty two years ago in a stroke that served to put the treaty into effect worldwide and to deepen the continent’s energy dependence on Russia.

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