Natural gas, rare earth minerals: what are the stakes for Ukraine on the territory that Russia is trying to conquer


The war in Ukraine is about Russian mythology — the idea of ​​bringing together two peoples with a long and viscerally complicated relationship dating back centuries — and outdated ideas about spheres of influence.

It could be empire building or rebuilding, depending on how you want to interpret your story and the text you use as a guide to explain Moscow’s attempt to subjugate an independent nation of 44 million people. souls.

And it may very well be.

There is, however, a cold, hard and underestimated calculation, which – depending on the end of the war – has the potential to secure the economic future of Ukraine or Russia for the next century.

If you take a map of the areas occupied or fought by Russian forces and then transpose it to a map of the resources of Ukraine, you begin to understand what is at stake beyond the fuzzy cultural illusions and dreams of empire.

The eastern region of Donbass, where most of the fighting has taken place over the past eight years, is often referred to as Ukraine’s industrial heartland. Rich in coal, it helped power the nation’s steel mills, smelters and power generators for a century or more.

It’s more than that, however.

Critical Mineral Superpower

Ukraine has the potential to become a “critical mineral superpower,” according to a recent assessment by SecDev, an Ottawa-based research and analysis think tank.

The country ranks fourth in the world in terms of total estimated value of natural resources, with around $15 billion in annual production and a potential “estimated value” [that] could reach 7.5 trillion dollars”, according to the report.

Beyond that, Ukraine is believed to have the largest supply of recoverable rare earth resources in Europe, although much of it is underdeveloped. Rare earth minerals (cerium, yttrium, lanthanum, and neodymium) and alloys are used in many devices that people use every day, such as computer memory, rechargeable batteries, cell phones, and more .

About 80% of Ukraine’s oil, natural gas and coal production reserves are in the Dnieper-Donetsk region, which was the main focus of Russian military operations to “liberate” the country, the report notes. SevDev.

Equally important, Ukraine is believed to have the second largest natural gas deposits in Europe, estimated at 1.2 trillion cubic meters of proven reserves – and possibly as high as 5.4 trillion cubic meters , much of it in the now-contested offshore Black Sea region.

The gains Russia has made so far in the invasion mean that Moscow now controls two-thirds of its neighbor’s sea shelf, where around 80% of Ukraine’s offshore oil and natural gas deposits are located.

The timing of the invasion is no coincidence

The timing of Russia’s military actions and its choice of territory to conquer are no coincidence, said Oleksandr Kharchenko, director general of the Energy Industry Research Center, a research and consultancy firm in Kyiv.

At the time of the annexation of Crimea in 2014, Ukraine was in talks with Shell Oil Co. and Chevron Corp. to develop Black Sea reserves – plans that were canceled because of Russian actions.

The Black Sea is “an enormous source of [natural] gas, which was [discovered] in Soviet times, and we have other sources that [were] clearly stopped because of [the] the Russian invasion,” he said.

Oleksandr Kharchenko, general director of the Energy Industry Research Center, a research and consulting company in Kyiv. He said Russia’s war on Ukraine came after the Eastern European country tried to assert its energy independence. (Murray Brewster/CBC)

The goal of the development program, he said, was to wean Ukraine off imports of Russian oil and natural gas.

“Everyone believed that in five, seven years of development, even if [there was] 50% success [rate in development]it will be enough to have Ukraine independent from Russia,” Kharchenko said in a recent interview with CBC News.

In the intervening years until last winter, he said, Russia directed much of its secret intelligence in Ukraine towards sabotaging the country’s energy independence ambitions, particularly in the development of hydrocarbons.

Ukraine was preparing to issue more exploratory approvals in the region when Russia launched its invasion on February 24, Kharchenko said.

“I don’t believe it was accidental. I believe Russia has a very good understanding” of what was at stake for Ukraine and what it could lose if its former client becomes a competitor or alternative supplier energy to Europe, he said. , which is the largest market in Moscow.

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The myth of Great Russia

Former Ukrainian President Petro Poroshenko says sabotaging his country’s mineral and hydrocarbon development plans is “a very important part” of Russian President Vladmir Putin’s plan, but not the main motivation, in his view .

“Compromise is unattainable because the picture is black and white: Putin wants to kill us, and we just want to live,” Poroshenko said. “Putin wants to erase our country, our state and our nation from the map of the world.”

Zuzanna Nowak, of the Polish Institute of International Affairs, said she also believed the main motivation for the war was rooted in the myth of a “Greater Russia” and patriotism, but she couldn’t help but notice how closely the war history line and current battle map can be tied to resources.

“All the troubles, which we have seen since 2014; they have always been linked to the question of the liberalization of the Ukrainian gas market,” said Nowak, who also noted that Ukraine has enormous potential for gas storage. hydrocarbons and which European leaders were interested in developing to improve Europe’s overall capability.

Former Ukrainian President Petro Poroshenko in Kyiv on May 2. He said he believed the war was about Russia’s desire to secure natural resources but also to destroy Ukrainian culture and life. (Murray Brewster/CBC)

All wars are about resources

But it is too simplistic to say that the war in Ukraine is only about resources, said one of the authors of the recent SecDev assessment.

That said, “all wars are ultimately about some kind of resource,” said SecDev founder Rafal Rohozinski.

He said it was hard to ignore the economic benefits that would accrue to Russia if it won the war and shared Ukraine’s mineral and hydrocarbon wealth.

“The areas of occupation, not just now but going back to 2014, really encompass the eastern part of the country, which, not coincidentally, also happens to be where you have the greatest endowment of natural resources. available to Ukraine,” Rohozinski said.

He described rare earth deposits as “the real wild card” as many countries quietly scramble to secure their own supply.

The idea that Moscow viewed its neighbor as a strategic economic threat should not be discounted, and Rohozinski believes that the longer the war drags on, the more Russia will feel the need to find an advantage to justify the huge cost.

“Much of Russia’s security strategy over the past two decades has been built on these two pillars of military-political security, but also energy security,” he said.

“The fact that now that the war is definitely directed against Russia, in terms of its immediate political goals of overthrowing the Ukrainian regime, it could well become a war for the resources that are in the lands it controls.”