News review of the events on the NSR
#1 October 2020

1. Transit container corridor along NSR needs improvement

The plans of Rusatom Cargo (member of Rosatom State Corporation) for the development of container traffic along the Northern Sea Route meet the federal task of increasing cargo traffic in the Arctic, but the financial model requires a careful approach, said Andranik Kocharyan, Deputy Director General for Economics and Finance of Atomflot.

During the 10th international conference “Logistics in the Arctic”, which takes place on Zoom platform on Wednesday, Kocharian expressed his personal opinion that the services of Rusatom Cargo will be “very expensive.”

“I would like to draw your attention to the fact that in order to announce the start of transportation of 5000 TEU in 2024 on an ongoing basis, we need to have a cargo base from east to west. I personally have been in the shipping business for a long time and I do not see this volume in this direction. I suppose that these ships will be very expensive, and accordingly, the cost of transportation will be very expensive to recoup these voyages, but perhaps we do not take into account something that our colleagues take into account,” Kocharian said.

According to the expert, icebreaker support will also affect the rise in the cost of Rusatom Cargo’s services, although “the bulk of their transportation will be during summer navigation period”.

“We are now in constant discussion with them, we recommend calculating everything, including the cost of the icebreaking component as part of the cost of transportation. They are still confident, and we hope that their plans come true, this will only help us to fulfill the president’s instructions to expand the scope of these services. But it seems to me that this program will undergo some changes and the building of those container ships announced by Rusatom Cargo will be corrected,” he explained.

Head of Maritime Operations Headquarters – Deputy Director of Navigation Departmnet of Atomflot Vladimir Arutyunyan added that he shares Kocharian’s opinion on this issue.

In turn, Mikhail Grigoriev, director of Gekon LLC (St. Petersburg), member of the Scientific Council under the Security Council of the Russian Federation, noted that Rusatom Cargo declares a cargo traffic in 2024 in the amount of 8-10 million tons of cargo with a multiple increase from 2028.

At the same time, Andrei Dotsenko, Commercial Director of Murmansk Commercial Sea Port (part of SUEK), added during an online conference that the port is negotiating with Rusatom Cargo on the possibility of organizing transit cargo traffic along the Northern Sea Route in the form of container shipments.

Pilot operation of the Northern Sea Transit Corridor is planned from 2024, said the head of Rusatom Cargo Alexey Neklyudov earlier.

The company has started a pre-investment study of the SMTK, within this it is planned to clarify the target market segment and determine a marketing strategy, select sites for transshipment hubs in the east and west of the route, as well as conduct an audit of shipyards for the construction of a pilot series of vessels with high ice class.


2. Novatek intends to supply 80% of gas from Arctic LNG-2 to Asian markets

Novatek intends to supply 80% of liquefied natural gas from the Arctic LNG-2 plant to Asian markets, the head of the company Leonid Mikhelson said in a video message to the participants of the Conference of LNG Producers and Consumers. His words are quoted by TASS.

“Three liquefaction lines with a total capacity of 19.8 million tons of LNG, which will be launched starting in 2023. 80% of LNG is planned to be sent to Asian markets,” he said.

According to him, this will become possible due to year-round icebreaking support of ships along the Northern Sea Route.

Mikhelson added that after the commissioning of the new nuclear-powered icebreakers LK-60, it will be possible to use all the routes of the NSR all year round. “We plan that the commissioning of new LK-60 icebreakers already this decade will make it possible to use all the routes of the NSR all year round. The leading icebreaker “Arktika” is completing trials and will be commissioned next month,” he added.

“Arctic LNG – 2” is Novatek’s second LNG project. In addition to the Russian company, the Chinese CNOOC and CNPC, French Total and the consortium of Japanese companies Mitsui and Jogmec own 10% (for each) of the project. The total capacity of 3 technological lines of the plant will be 19.8 million tons of LNG per year. The launch of the first line is planned in 2023, the second and third lines – in 2024 and 2026, respectively.

3. Headquarters for maritime operations develop the routes of the NSR

The headquarters for maritime operations for the development of the eastern direction of the Northern Sea Route has started its work in Murmansk. The General Director of FSUE «Atomflot» Mustafa Kashka announced this on Monday during the meeting ceremony after ice trials of the nuclear icebreaker “Arktika”.

“We have put into operation the headquarters for maritime operations, which allows using IT technologies to work out the tracks of the ship movements and partially provide services without icebreakers. The synergy of information technologies and the capacity of new icebreakers will allow us to master the eastern route,” said Kashka.

He added that the tasks of mastering the eastern route are being fulfilled. 2 voyages along the eastern direction, performed in May, allow us to say that Atomflot icebreakers are capable of moving east for 9 months a year, the series of tests will be continued in the coming winter period in order to systematically enter year-round navigation by 2025. Large companies are interested.

“Understanding is growing, new users are appearing. Due to large users of services – Novatek, Gazpromneft, Norilsk Nickel – the entire infrastructure will be developed, the “entrance ticket” for the next will be cheaper. We are going along the track, which is set by the presidential decree. This year, I think we will slightly exceed 29 million tons,” said Kashka.

4. The annual volume of cargo transportation along the Northern Sea Route exceeded one trillion rubles

The three largest Russian projects in the Arctic, owned by the companies NOVATEK, Gazpromneft, Norilsk Nickel, earned more than a trillion rubles for the first time in 2019, transporting their cargoes along the Northern Sea Route, said Deputy Chairman of the State Commission for the Arctic Development, special representative of the State Corporation Rosatom on the Arctic development  Vladimir Panov. According to his words, the growth was 25% compared to 2018.

The increase in the value of cargo transported last year to a trillion rubles is an important stage in the development of the Russian Arctic and the Northern Sea Route, Panov noted. “Despite the difficult economic conditions associated with the pandemic, at the beginning of October this year the cargo traffic in the ports of the NSR with year-round navigation is comparable to the same period last year. In order to increase cargo traffic, we need to synchronize the actions of all participants in Arctic projects,” emphasized the special representative of Rosatom for the Arctic development.


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