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2020 July 17

Northern Sea Route: now from the Arab world to China

Arab and Chinese shipping and logistic companies are set to be actively involved in the development of the Northern Transit Corridor. Under the auspices of Rosatom, a joint venture with foreign investors is to be established, a fleet of Arctic container carriers is to be built as well as cargo handling hubs. Meanwhile, Russia is trying to lighten international requirements under the ban on the use of heavy fuel oil in the Arctic.

Having failed to expand the Northern Sea Route currently limited by the Kara Strait in the west and the Bering Strait in the east to Murmansk and Kamchatka accordingly (due to international legislation related to freezing), Russia still can continue implementation of projects related to the concept of the Northern Maritime Transport (Transit) Corridor.

Export of raw commodities (primarily liquefied gas) currently makes the bulk of cargo traffic on the Northern Sea Route which is to continue in the foreseeable future. As Vyacheslav Ruksha, Deputy Director of Rosatom - Director of Rosatom’s Northern Sea Route Directorate, said in his interview with PortNews-TV at the 3rd International Congress “Hydraulic Engineering Structures and Dredging, ”Concerning the international transit, I think it is the prospect for 2030 when we will show by an example of our cargo ... navigation stability. Then, others will probably catch up, though not quickly of course. As for the summer-autumn navigation, I expect the annual level of 3-5 million tonnes that can be achieved in the coming three-five years. But then again we will need at least Arc4 class ships of large capacity which are not that many in the world”.

Nevertheless, Rosatom is now full of determination to speed up the process. A dedicated meeting of Northern Sea Route Public Council chaired by Sergey Frank, Chairman of the Board of Directors of Sovcomflot, was held online on 16 July 2020.

“The work on the Northern Sea Route never stopped despite all the constraints, state bodies and scientific centers continued doing their part ... It is encouraging that a very positive dynamics is maintained, a number of projects are being developed successfully, even ahead of schedule”, said Sergey Frank.

When speaking at the meeting, Aleksandr Neklyudov, General Director of Rusatom Cargo (a company of State Corporation “Rosatom”), said that the company is working on the Northern Transit Corridor project. Two transport and logistics hubs (in the Far East and in Murmansk) are to be established in the framework of NTC for transshipment of containers from non-ice-class feeder ships to Arctic class ones and back. Besides, the company is going to build its own fleet of Arc7 container carriers (preliminary plan), establish digital logistics services and organize feeder services.

Pilot operation of the project is to commence in 2024 with annual turnover of 8-10 million tonnes per year. The project has already entered the active pre-investment phase. By December 2020, the company is set to select sites for terminals, conduct audit of shipyards and develop specifications for newbuildings.

The project’s strategic investor is DP World. Negotiations are underway on creation of a joint venture.

When asked by IAA PortNews, United Shipbuilding Corporation said its companies are ready to build Arctic class container ships although no requests have been received from Rusatom Cargo so far.

DP World Chairman and CEO Sultan Ahmed Bin Sulayem who participated in the meeting via videoconference confirmed the Group’s interest in arranging transit shipping in the Arctic.

“The Northern Sea Route has numerous advantages. It crosses only the territory of Russia while the way via the Suez Canal runs through multiple countries where there are risks and threats, pirates … Vladivostok and Khabarovsk should be developed as hubs, economic zones should be created in the Far East, in Murmansk ... I recommend Rosatom build Arctic container carriers and work on analytics, support of routes, reliable system to ensure safety of Arctic transportation and provide state support measures”, said Sultan Ahmed Bin Sulayem.

Another foreign participant of the meeting representing Chinese company COSCO also expressed the interest in using the Northern Sea Route for transit shipping. He also asked to pay additional attention to safety and extension of the seasonal “window”.

Felix Tschudi, Chairman of the Board, Tschudi Shipping Company AS (Norway), also highly praised the potential of the Arctic transport corridor.

“The Northern Sea Route needs more international users ... In our opinion, it is necessary to actively raise the awareness of the route opportunities and potential, comprehension of the fact that it is the shortest link between the key regions of the work. Moreover, it is a green route open for international players which not only can but should reach out to Russia,” he said.

Through the ice

A powerful fleet of icebreakers and Arctic class cargo ships should be created to ensure year round navigation in the Arctic. According to Rosatom, the demand for newbuildings intended for the Arctic till 2035 is as large as five nuclear-powered icebreakers of LK-60 class, three nuclear-powered icebreakers of Leader class, four LNG-powered icebreakers, 59 tankers, 21 bulkers and 15 ice lass gas carriers.

Besides, emergency rescue fleet operating in the Arctic should be expanded by 2024 with two multipurpose rescuers of up to 18 MW in capacity, three 7 MW ships and one 4 MW ship as well as ten rescue and fire fighting tugboats.

Moreover, nine new hydrographic survey ships and buoy tenders will operate in the Northern Sea Route waters.

In addition to five emergency rescue centers of Russia’s EMERCOM there is a plan to establish three more ones.

As Alexey Likhachev, head of State Corporation “Rosatom”, said at the online meeting of Northern Sea Route Public Council, the fifth LK-60 icebreaker, the Chukotka, is to be laid down in 2021 with the delivery of the lead ship in the series, the Arktika, scheduled for September 2020. The same month is also to see the keel-laying of the lead Leader class icebreaker at Zvezda Shipyard.

Implementation of the above-mentioned projects will allow for year-round navigation with a proper level of safety.

Also, shipping can be arranged by a shorter high-latitude route (northward of the New Siberian Islands and еру Wrangel Island). As Maxim Kulinko, Head of Rosatom’s Department for Development of NSR and Costal Territories, told the meeting participants, Rosatom had confirmed the possibility of icebreaker assistance to ships with low ice class, draft of 18.5 meters and width of 50 meters in spring-summer season.

Among the concerns making some of western companies deny using the Northern Sea Route is the environmental one. The ban on the use of heavy fuel oil in the Arctic initiated in the framework of the International Maritime Organization (IMO) may additionally hinder shipping in the region.

According to Maxim Kulinko, the Ministry of Transport of the Russian Federation has developed proposals regarding the ban which are to be submitted for consideration at the IMO’s MEPC 76 session scheduled for October 2020.

As Maxim Kulinko told the meeting participants, Russia proposes that the ban on HFO use should come into effect from July 2024 without covering the ships ensuring safe navigation, ships involved in search and rescue operations and OSR vessels. Besides, it is proposed to grant an indulgence till 1 July 2029 to vessels with tanks featuring structural protection in compliance with MARPOL and Polar Code requirements. The proposals also foresee the right of each Arctic state for excluding national-flagged ships including FSOs from the ban.

There are also arrangements for regular fish shipping along the Northern Sea Route from the Far East to the European part of the Russian Federation as we told earlier >>>>

Taking into consideration the new federal law on privileges for investors in the Arctic recently signed by Russian President Vladimir Putin, one can expect the region to play an increasingly high role in the economy of Russia, particularly in its transport segment. However, it is necessary to remember the challenges of this region including harsh climate, vulnerable environment, need for icebreakers and ice-class ships, remoteness from the core infrastructure facilities.

Vitaly Chernov

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