Future Prospects of the Northern Sea Route as an International Trade Route Dr. Bjørn Gunnarsson Managing Director bjorn@chnl.no
The Northern Sea Route (NSR) 2
1. NSR s Economic and Strategic Significance for Russia 3
Map showing gas, oil and mining resources in the Arctic Source: Nordregio at www.nordregio.se 4
Oil & Gas Development Transport Yamal LNG - Port Sabetta 17.6 million tons LNG per year (2021- ) Year-round operations 16 LNG tankers (172 600 m3) 240 port calls per year (1 tanker/36 h) Novy Port Oil Field - Novy Port 8.5 million tons per year (2017- ) Year-round operations New tankers of 36 000 dwt Monthly export 700 000 tons Payakha Oil Field Tanalau 7,3 million tons per year (2024- ) Year-round operations 4-8 Arc7 tankers of 40 000 dwt 220 port calls per year (1 tanker/40 h) 5
Russia s New Ice-Class LNG Tanker Veliky Novogorod 6
Yamal s LNG Shipping Options Source: Yamal, Total 2014 7
Growth of NSR s Cargo Traffic as a Result of Development of Russian Arctic Hydrocarbon Projects Millions of tons Source: Atomflot 2015 8
Estimates of Potential Traffic through NSR by 2030 Hydrocarbons Dry Bulk & Project Cargo Container Cargo 50 million tons 5 million tons? Export of hydrocarbon products from several energy projects in coastal and offshore areas of the Barents and Kara Seas Including cargo from Norilsk Nickel currently about 1.1 million tons per year; iron ore from Scandinavia; deliveries to Arctic communities Source: Far East Development Fund 2015 Current container traffic between North European ports and Asia is now about 15 million TEUs per year 9
Russia s Integrated Development Plan for the NSR 2015-2030 The plan has six main focus areas to promote safer and more reliable navigation on NSR; and strategic importance Increase NSR s total cargo volume up to 80 million tons per year by 2030; or 20-times compared to 2014 Most of the planned cargos are oil and gas resources from the Russian Arctic coast and continental shelf; mineral resources Increasing cargo transport on NSR by foreign flag ships between European and Asian markets; partnerships with Asian countries, mainly China 10
Natural Resources of the Eurasian Arctic Source: VSEGEI/Rosnedra 11
NSR will Unlock the Resource Potential of the Eurasian Arctic Onega Murmansk Kandalaksha Vitino Arkhangelsk Mezen Naryan Mar Varandey Amdema NSR Water Area Sabetta Dikson Dudinka Khatanga Tiksi Pevek Anadyr Kolyma River Provideniya Ob River Igarka Yenisey River Lena River Petropavlovsk- Kamchatskiy 12
2. NSR as Alternative Trade Route NW Europe - NE Asia 13
22-24 Feb. 2016 - JW Marriott, LNG Cairo, Tanker Egypt ArcticAurora 84 600 dwt NSR s Demonstration Voyages 2010-2013 Suezmax Tanker Vladimir Tikhonov 162 360 dwt LNGC Ob River 84 682 dwt Tanker Propontis 117 055 dwt Tanker SCF Baltica 117 153 dwt LNGC Arctic Aurora 84 604 dwt Bulk Carrier Nordic Orion Bulk Carrier Nordic Odyssey 75 603 dwt 14
Large Vessels with Cargo in 2011 Perseverance Russia to China 59 981 t gas condensate STI Heritage Russia to Thailand 60 944 t gas condensate Marilee Russia to China 60 098 t gas condensate Vladimir Tikhonov Norway to Thailand 120 843 t gas condensate Stena Poseidon Russia to Korea 57 814 t gas condensate Perserverance Korea to France 64 400 t kerosene Palva Russia to China 59 313 t gas condensate Mariann Russia to Korea 61 259 t gas condensate Affinity Russia to China 59 079 t gas condensate Perserverance Russia to China 61 275 t gas condensate Sanko Odyssey Russia to China 66 344 t iron-ore 15
Shipments on NSR Between Ports Located Outside the Arctic 2012-2013 Vessel Cargo Loading Port Destination Port Stena Poseidon Jet Fuel Yosu, South Korea Porvoo, Finland Marika Jet Fuel Yosu, South Korea Porvoo, Finland Palva Jet Fuel Yosu, South Korea Porvoo, Finland Nordic Odyssey Coal Vancouver, Canada Hamburg, Germany Propontis Diesel Ulsan, South Korea Rotterdam, Holland Mari Ugland Naphtha Zeeland, Holland Mailiao, Taiwan Zaliv Amurskiy Diesel Onsan, South Korea Rotterdam, Holland Nordic Bothnia General Xingang, China Amsterdam, Holland Viktor Bakaev Jet Fuel Yosu, South Korea Rotterdam, Holland Nordic Odyssey Coal Vancouver, Canada Pori, Finland 16
NSR as an International Trade Route? Transport Safety Russian nuclear icebreaker escort; Russian ice pilots; transport by ice-class vessels (Arc4); NSR admittance criteria and Polar Code requirements. Additional support infrastructure needed Predictability & Punctuality Attractiveness of NSR for transits is low due to the lack of predictability. Regularity of a year-round supply of goods is no less important than the cost of transportation 17
NSR as an International Trade Route? Cargo Transport Westward & Eastward Prerequisite for increased growth of transit shipping on the NSR is the availability of cargo transport in both east and west directions Economy of Scale Limited number of vessels with adequate ice class represent a limitation on the utilization of the NSR; makes NSR vulnerable to competition from much larger vessels going via the Suez or Cape 18
3. NSR s Sustainability Plan Administration & Management Transport Services Maritime Infrastructure System 19
NSR «Authority» Risk of Delays Transport Fees NSR s Administration & Management A single organization needs to oversee all NSR s activities, services and marketing Minimize the risk of sailing delays due to sea ice Tariff system needs to be user-friendly and fees competitive to fees on southerly routes 20
Icebreakers Port Operations SAR & Oil Spill Response Navigation & Communication NSR s Transport Services Availability and readiness of icebreaking services; optimization of icebreaking capacity Modernization of Russian Arctic ports; refuge and salvage operations Development of SAR and oil spill response services Major improvements in navigational aids and communication system 21
NSR s Infrastructure System New Integrated Transport System Cost Estimates Fanancing Design a new integraded transportation and logistics system for reliable and safe cargo transport Estimating the costs of the various infrastructure components Assessment of different funding mechanism in financing long-term capital-intensive infrastructure projects 22
Concluding Remarks NSR s Strategic & Economic Importance NSR has the potential of unlocking the natural resource potential of the Russian Arctic NSR as International Trade Route A supplimentary route for certain types of cargos serviced by a fleet of specialized ice-class vessels on a year-round basis NSR s Sustainability of Usage A number of administrative, managment, service oriented and infrastructure issues need to be addressed Future NSR s Transportation & Logistics System We need to understand what kind of maritime transport infrastructure is needed for safer and more reliable transport on a year-round basis 23
Thank You! 24