Natural Resources in Russia: Forestry, Oil and Gas

Russia’s vast resources, from endless spruce forests to Arctic oil fields, shape its economy and foreign policy. The country’s wealth includes forests, hydrocarbons, and strategic metals. Today, services make up 56.9% of GDP, but commodities are the backbone of the state.

By 2024, resource rents accounted for 16.7% of GDP. The Mineral Extraction Tax brings in 18.7% of government revenues. With export duties and other levies, oil and gas fund 49.4% of the budget. In 2019, the Ministry of Natural Resources valued proven, permitted assets at $873 billion. The total endowment is estimated in the tens of trillions.

Russia’s natural resources play a significant role globally and domestically. They include oil, gas, iron ore, coal, diamonds, gold, nickel, palladium, cobalt, copper, rare earths, and vast forest reserves. Despite limited farming due to permafrost, Russia has significant arable land.

Sanctions and tighter financing have reshaped Russia’s trade and prices, starting in 2022. This shift affects pipeline flows and timber exports. It also influences the future of revenues and exports, the location of deposits, and the dominance of companies like Gazprom and Rosneft. Environmental concerns also loom over the world’s largest forest nation.

In summary, natural resources are both the driving force and the foundation of Russia. They promise scale but come with volatility and policy risks. This article explores the role of forests and fuel in Russia’s system.

Russian Natural Resources, Economy, and Policy Context

Russia’s economy is heavily influenced by its natural resources. Even though services make up 56.9% of output in 2024, resource rents account for 16.7% of GDP. This shows how important natural resources are for Russia’s economy, while services handle daily life.

Tax design reflects this reality. The Mineral Extraction Tax brings in about 18.7% of government revenues. Oil and gas taxes add another 49.4%. These taxes help keep profit taxes low, around 15–20%, and a flat 13% personal income tax. In 2019, proven resources with permits were valued at $873 billion, while Russia’s total mineral resources are much higher.

Resource Rents, GDP Share, and Fiscal Dependence on Oil and Gas

Hydrocarbons play a big role in Russia’s budget. Even as services grow, oil and gas keep public finances stable. This setup benefits extraction but raises questions about long-term growth.

Corporate cash cycles show the same story. When prices change, revenue and fiscal room swing fast. This volatility pushes policymakers to adjust duties and fees to stabilize.

Sanctions, Financing Constraints, and Their Impact on Exploration and Development

Sanctions on hydrocarbons and metals have tightened capital and timelines. Higher borrowing costs, due to inflation, make exploration and big projects harder to fund.

Big companies like Rosneft and Gazprom have adapted to sanctions. They’ve delisted, complied with new rules, and changed trade routes. New fields are slower to develop as financing moves to regional lenders and non-Western partners.

Geography of Russia’s Resources: Siberia, Urals, and Far East

Deposits show clear patterns. Northern West Siberia leads in oil and gas. The Volga-Ural zone and Komi-Ukhta add to this. Coal is mostly in Siberia, with the Kuznetsk Basin being a major source.

Iron ore is found across the Kursk Magnetic Anomaly, the Kola Peninsula, the Urals, and Siberia. Hydropower is along the Volga, Kama, Ob, Yenisey, Angara, and Zeya rivers. Old industrial areas match where energy and mineral resources are found.

Exports, Price Caps, and Shifting Trade Flows to China and India

Price caps and embargoes have changed shipping routes. In October–November 2023, earnings from fossil fuel exports outside the cap were about EUR 36 billion. China and India bought 59% of this. Europe increased LNG imports even as pipeline flows decreased.

Metals trade also shifted after sanctions on aluminum and diamond bans by the U.S., U.K., EU, and G7. Companies like Polymetal are looking for new routes and financing, keeping resources moving despite tighter controls.

Forestry and Land: Russia Forestry, Timber Exports, and Environmental Pressures

Russia’s forests cover vast areas, from Karelia to Khabarovsk. The woods are linked by rail lines and icy ports to pulp and paper mills. This network is vital, connecting logging camps to mills, despite the harsh climate.

Scale of Forest Reserves and Softwood Leadership

More than two-fifths of Russia is forested, holding over one-fifth of the world’s forests. Conifers dominate, giving Russia a global softwood edge. This wood is key for timber, pulp, and paper, supporting mills across the country.

Wood is a quiet giant in Russia’s trade. It’s steady, bulky, and essential for many needs. This includes housing, packaging, and publishing.

Employment, Products, and Export Contributions

The forestry industry employs about one million people. It produces a wide range of products, from roundwood to cardboard. Furniture parts and engineered panels add value in regional hubs.

Exports move through Baltic and Arctic ports, with more going to the Pacific. This shift keeps Russia’s resources connected to Asian demand. Asian construction and e-commerce drive the need for packaging.

Slow Growth Rates, Deforestation Risks, and Late-1990s Legislation

Cold climates slow down forest growth, putting pressure on mature stands. Russia has lost about one-third of its original forest area. Rules from the late 1990s aimed to stop further loss, but northern landscapes face logging risks.

Legacy pollution and wasteful cuts from the Soviet era are visible. Fire, pests, and oversight issues add strain. This makes long-term planning for Russia’s natural resources challenging.

Arable Land Constraints, Agriculture Linkages, and Regional Variation

Only a small part of Russia’s land is arable, with agriculture covering less than one-sixth of the country. Wheat, barley, rye, and oats are the main crops, with sunflowers, sugar beets, and potatoes also important.

Cropland spreads across European Russia, while Siberia and the Far East have limited farming. Yields are higher in European Russia. Post-Soviet reforms kept large farms intact, but privatized farms often have thinner soils. Climate and distance to markets also affect farming outcomes.

Natural Resources In Russia

Russia’s natural resources stretch from the Arctic to the Far East. It has the world’s third-largest iron ore deposits and ranks sixth in coal production. Steel output ranks fifth worldwide, showing Russia’s deep industrial roots.

In the Urals, a dense belt of smelters and mines produces Russia metals. These include cobalt, chrome, copper, gold, lead, manganese, nickel, platinum, tungsten, vanadium, and zinc. Nornickel dominates palladium globally and supplies high-grade nickel, despite price swings and sanctions.

Russia produces about 6.8% of the world’s nickel and roughly 44% of palladium. It also produces 4% of cobalt, 4% of cadmium, 2.6% of tungsten, and 4% of copper. Interros, led by Vladimir Potanin, remains a key Nornickel shareholder under personal sanctions.

Rare earths are the next frontier. The Tomtor deposit in Yakutia, advanced by TriArk Mining backed by Rostec and Alexander Nesis, aims for up to 10% of global supply. Delays drew public criticism from President Vladimir Putin in November 2024, pushing for fresh investment and new partners.

PJSC Acron runs a rare earths plant in Veliky Novgorod, producing cerium, lanthanum, and neodymium at about 200 tons of rare earth oxides a year. These projects signal how natural resources in Russia now blend legacy metals with strategic materials tied to EVs, wind turbines, and electronics.

Diamonds keep their shine. Russia controls 32.4% of gem diamond mine output and an estimated 40% of industrial stones. Alrosa, long the dominant producer, faced U.S. measures in 2022 and an EU/G7 ban on non-industrial Russian diamonds starting January 2024, reshaping trade routes.

Aluminum showcases an energy edge. Despite under 2% of global bauxite reserves, Russia produces about 5.4% of aluminum. Rusal holds around 5.5% of world output and operates smelters abroad, while April 2024 actions in the United States and United Kingdom restricted Russian-origin aluminum on exchanges.

Gold plays the hedge. Russia is tied for second in global output and holds the fifth-largest reserves, with one of the biggest unmined bases after Australia. The state boosted purchases to diversify away from the dollar, while shipments moved through the UAE and Switzerland even as sanctions tightened.

Corporate shifts tell the story on the ground. Polyus reported rising profits in 2023 after governance changes and buybacks, and now trades in Moscow markets. Polymetal exited Russia in 2024, selling assets to Mangazeya Mining, while Petropavlovsk fell into administration in 2022 and sold to UMMC.

Iron and steel leaned on vertical integration to steady mills at home. NLMK kept buyers after EU penalties and owns rolling mills in Indiana and Pennsylvania. MMK stayed active despite U.S. measures. Evraz, registered in Luxembourg, makes most Russian rails and runs assets across North America and Europe. Severstal and Mechel continued output under sanctions pressure.

From the Urals hub to Yakutia’s rare earths, Russian natural resources power factories and finance, yet also meet new rules, price caps, and shifting routes to Asia. That mix—Russia metals, Russia minerals, and precious stones—defines a portfolio wider than oil and gas.

Oil and Gas: Russia Energy Sources, Pipelines, and Corporate Landscape

Russia’s vast plains and permafrost are home to oil and gas trade routes. These resources are linked with metals and natural resources, forming a complex system. Wells, pipelines, and ports work together like gears in a machine.

As Russia’s energy focus shifts to Asia, the network adjusts quickly. Europe buys liquefied gas, even as pipeline volumes decrease. This mix keeps prices, policies, and shipping lanes in constant motion.

Reserves and Production Standing in Global Oil and Gas Markets

Russia has 80 billion tons of oil and 1,688 trillion cubic feet of natural gas reserves. It has the world’s largest gas reserves and is second in dry gas output. Russia is also third in oil production, after the United States and Saudi Arabia.

State oil and gas revenues were near 8% of GDP in 2022. This revenue stream supports federal spending and helps stabilize the economy. Russia’s large reserves give it a strategic advantage in energy.

Pipelines, LNG Dynamics, and the Druzhba Shutdown Effects

Pipeline grids connect Siberia to cities at home and buyers abroad. By January 2025, Ukraine halted Druzhba transit, a line that once supplied Central Europe. This stop is expected to trim about 0.25% from Russia’s GDP, 0.5% from Ukraine’s, and 0.3% from Slovakia’s.

Europe offset some shortfall by purchasing record Russian LNG, even as pipeline gas receded. This shows how Russia’s oil and gas move through different channels. It also shows how resources adapt when one door closes and another opens.

Gazprom, Rosneft, Lukoil, Surgutneftegas: Revenues, Market Caps, Sanctions Exposure

Gazprom supplies about two-thirds of Russia’s gas and 16% of oil via Gazprom Neft. Its market cap fell from over $100 billion in 2021 to about $36 billion. It posted a $7 billion net loss in 2023 after a profitable 2022 and strong H1 2024.

Rosneft, majority state-owned, produced 33% of oil and managed 40% of refining capacity in 2023. Valuation peaked at $223 billion in 2021 and slid to $58 billion by January 2025. Profits rose from 2.3 trillion rubles in 2021 to just over 3 trillion in 2023.

Lukoil, with minority shareholders in the lead, saw net income climb from $2.7 billion in 2017 to $13 billion in 2023. Surgutneftegas, known for cash reserves, lifted oil output 7.4% in 2022 to 59.6 million tons. Revenue topped 2.2 trillion rubles in 2022 and eased only 5% in 2023.

By late 2024, reports suggested a Rosneft-led consolidation of Rosneft, Gazprom Neft, and Lukoil, all under U.S. sanctions.

Government Revenues, Mineral Extraction Tax, and Budget Reliance

The Mineral Extraction Tax delivers 18.7% of government revenues. Oil and gas taxes and transfers account for 49.4% of revenues. This shows deep budget reliance on oil and gas cycles.

This setup allows low corporate and personal tax rates. It also heightens exposure to sanctions, price caps, freight costs, and shipping insurance limits. These are pressure points for Russia’s energy sources and related metals projects.

Price Cap Workarounds and Export Pivots to Asia

In October–November 2023, exports outside the Price Cap Coalition brought in EUR 36 billion. China and India took 59%, or EUR 21.2 billion, in that two-month span. Routing shifted toward non-aligned hubs, with ship-to-ship transfers and discounted barrels common in Asian trades.

Europe’s record intake of Russian LNG, even as pipeline volumes fell, highlights a blended market. The pivot shows how Russia’s natural resources and metals are part of a broader export revamp. Russia’s oil and gas lead the traffic eastward.

Conclusion

Russia’s story is one of huge scale and big impact. Its forests are vast, providing wood for homes and products worldwide. Underneath, massive gas and oil reserves, along with metals like palladium, power our daily lives.

The country’s past influences its present. The Soviet era, a crash in the 1990s, and recent changes have shaped its economy. Today, Siberia and the Urals are key, with forests supporting jobs and exports.

But, there are challenges. Fires, logging, and slow forest growth need better rules and monitoring. The country’s farmland faces climate and soil challenges, affecting yields.

Policy and global politics play a big role. Sanctions have changed how Russia exports oil and gas. Despite this, exports continue through new paths and deals.

For those who love travel and maps, Russia is fascinating. It’s where forests meet pipelines and iron ore meets ice roads. For businesses, it shows how resources and economy are closely linked.

In summary, Russia’s natural resources are both its engine and anchor. They are vast, valuable, and key to the country’s economic heartbeat.