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

1. Cargo traffic at the Northern Sea Route for 8 months increased by 3.3%

782 vessels got the permits for passage along the NSR

In January-August 2020, 20.47 million tons of cargo were transported along the Northern Sea Route, which is 3.3% more than the same period last year, the Federal Agency for Maritime and River Transport (Rosmorrechflot) reports on Instagram, citing data from the Administration of the NSR.

Transit cargoes along the NSR amounted to about 400 thousand tons.

During the reporting period, 782 vessel got permits for navigation in the waters of the NSR (+ 16% over the same period last year), including 123 vessels under a foreign flag (53% more than during this period in 2019).

Sergey Strelnikov, head of Navigation Safety Department of FSUE Atomflot, when speaking at the 10th International Transport Safety Forum in Saint-Petersburg, said that year-round assistance of vessels on eastward lanes of the Northern Sea Route would be possible on a regular basis from 2023.

2. Hydrographic surveys in the waters of the Northern Sea Route in 2020 exceed 45.5 thousand km

The work is carried out by FSUE “Hydrographic Enterprise”

According to the plan of navigation and hydrographic support in the waters of the Northern Sea Route for 2020, hydrographic research will amount to 45 513 km. The works are performed by “Hydrographic Enterprise”. Sergey Strelnikov, head of Navigation Safety Department of FSUE Atomflot, announced this during the 10th International Transport Safety Forum in St. Petersburg.

He also said that during the current navigation, the Enterprise is carrying out a survey of the sea-bottom topography in the water areas of sections No. 2 of Sabetta port (terminal “Utrenniy”), the area of dredging and the landfill area in the amount of 3 598 km. Sea-bottom topography survey has been completed at the area No. 3 of Sabetta port (Mys Kamennyy, the Arctic Gate terminal) in the amount of 2 445 km.

As “Hydrographic Enterprise” commented to Port News, the planned works are being carried out strictly according to the schedule and will be completed in full.

3. Rosatom proposed to reduce the forecast for the cargo volume in the Arctic by 25%

It had to be revised due to changes in the plans of companies for the supply of coal and oil

State Corporation Rosatom, the one infrastructure operator of the Northern Sea Route, proposed to the Ministry of Transport to set a new target for the project’s cargo traffic: by 2024 it will amount to 60 million tons per year. The current target – 80 million tons – is prescribed in the May 2019 decree of President Vladimir Putin. The proposal with the correction of the forecast was sent to the Ministry of Transport by the head of the NSR Directorate Vyacheslav Ruksha.

In 2019, 31.5 million tons of cargo were delivered along the route. Deputy Prime Minister Yurii Trutnev, who is in charge of the Russian Arctic, spoke in July about a possible decrease in the target indicator of cargo traffic along the NSR. “We made a report to the President, where we described the problems. But the final decision is up to the President,” he said.

Why was it decided to adjust the goal

The plans for loading the NSR by 2024 had to be adjusted mainly due to changes in three large projects that were supposed to provide transportation volumes, a source close to Rosatom told RBC.

Firstly, this happened due to the refusal of the “Vostokugol” company from plans to produce 19 million tons of coal per year by 2024, the source of RBC notes: the current plan provides for only 1 million tons. Yurii Trutnev also said about the “rather difficult situation” with “Vostokugol”: “There will be a sharp decline in volumes for “Vostokugol”, but the project as a whole must live.” According to the Deputy Prime Minister, he held a number of meetings with representatives of the company, discussing the forms of state support.

The second project that changed the plans for loading the NSR is “Vostok Oil”, a joint venture of Rosneft and Neftegazholding (includes the Vankorskiy oil cluster of Rosneft and the Payakhskaya group of fields of Neftegazholding). As the source of RBC explains, Rosneft sent a forecast to the government that “Vostok Oil” will provide up to 9.25 million tons of cargo along the NSR by 2024. At the same time, at a meeting with Putin in May, the CEO of Rosneft Igor Sechin said that the resource potential of “Vostok Oil” is more than 5 billion tons of oil, the “potential for shipping of oil to commodity markets” from this project is estimated in 2024 at 25 million tons. But the project will reach this volume of shipments along the transport corridor in the Arctic in 2025, adds the source. The NSR will reach the total level of cargo traffic up to 82 million tons in 2025, follows from Ruksha’s letter to the Ministry of Transport.

“The company’s plans for oil production volumes within “Vostok Oil” project have not changed, as well as the timing of the project,” a representative of Rosneft told RBC, refusing to clarify details. The shipment of only 9.3 million tons of oil from “Vostok Oil” to the NSR in 2024 and an increase in shipments to 25 million tons only for the next year indicate that the construction of oil pipelines from the Vankorskiy cluster to Payakha and then to the North Bay on Taimyr, and also the shipping terminal will be completed in the second half of 2024, suggests the head of the consulting company “Gekon” Mikhail Grigoriev.

“The third reason is the change in the forecasts of NOVATEK, one of the main users of the Arctic route”, concludes the source close to Rosatom. According to him, the company notified the government that it plans to deliver only 35.5 million tons by 2024 along this route within the framework of the already built LNG plant “Yamal LNG” with a capacity of 16.5 million tons per year and new projects – “Arctic LNG-2” (19.8 million tons of LNG) and “Obskiy LNG” (5 million tons of LNG), taking into account the volume of supply cargo. Back in March 2019, a representative of NOVATEK told RBC that the cargo traffic along the NSR from its projects will amount to about 46.7 million tons by 2024, but only “with the timely development of the NSR infrastructure, which is federal property.”

NOVATEK has already announced a two-year postponement of the launch date for the “Obskiy LNG” plant – now the first stage for 2.5 million tons should start working only in 2024, and not in 2022, as previously planned. But the implementation schedules of projects which investment decisions have already been made for (including “Arctic LNG-2”) “remain unchanged,” the company representative emphasized.

The Northern Sea Route by 2030

The revision of plans for loading the NSR by 2024 coincided with the revision of the timing of the entire federal project – now it has been extended until 2030, follows from Ruksha’s letter to the Ministry of Transport. By this time, it is planned to provide 110 million tons of cargo per year via the Arctic route. This deadline is provided for by Putin’s new decree on national goals, signed in July after the approval of amendments to the Constitution, it replaced the May decree.

The new specifications of the project about the NSR, prepared by Rosatom, has also added an indicator of an increase in the carrying capacity of cargo seaports in the waters of ​​the Northern Sea Route, which is now about 32 million tons. In 2024 it should reach 85 million tons, and in 2030 – 115 million tons. However, in 2028–2029, the forecasted cargo turnover may exceed the level of the ports’ carrying capacity, Ruksha’s letter says. For the last two estimated years of the project’s implementation, deliveries are expected at the level of 104 million tons and 107 million tons, respectively, but the port capacity will be only 97 million tons.

The updated forecast for the loading of the Northern Sea Route is the closest to the real picture, Grigoriev notes. But both the uncertainty with the resource base of coal projects and the timely readiness of the transport infrastructure of new projects, primarily in the Yenisey Bay (it should be built by “Vostok Oil” and “Severnaya Zvezda” – terminals, cargo and support fleet) cause concern, the expert adds.

4. Nuclear container vessel left Petropavlovsk-Kamchatskiy

The vessel arrives in St. Petersburg on September, 25

The nuclear container ship “Sevmorput” left the port of Petropavlovsk-Kamchatskiy on September 8 and headed for St. Petersburg. According to the plan, the ship should arrive on September 25. There are 206 refrigerated containers with fish products on board. The total weight of the cargo is 6.5 thousand tons.

Deputy Director of Navigation of FSUE Atomflot, Vladimir Arutyunyan, reminded that the ship’s crew already has experience in transportation in this direction. In 2019, the vessel performed a test voyage from the Far East to St. Petersburg.

Vladimir Panov, special representative of Rosatom for the issues of the Arctic development, previously reported that the company was seriously thinking about arranging a regular route from the Far East to St. Petersburg with a call to Murmansk and back according to the same plan.

5. Year-round support of ships along the Northern Sea Route eastwards on a regular basis is possible from 2023

This requires the commissioning of the icebreakers “Arktika”, “Ural” and “Sibir”

Year-round support of ships along the Northern Sea Route eastwards on a regular basis is possible from 2023. This opinion, answering the question of PortNews, was given by Sergey Strelnikov, head of Navigation Safety Department of FSUE Atomflot, during the 10th International Transport Safety Forum in St. Petersburg

According to his words, currently there are not enough icebreakers to carry out regular year-round support. This year, the leading icebreaker “Arktika” of project 22220 will enter the fleet of Atomflot, and two more icebreakers – “Ural” and “Sibir” by 2023. This will allow to cover the needs for icebreaker assistance on the NSR routes throughout the year.

Strelnikov recalled that in May of this year, “Yamal” icebreaker successfully escorted “Christophe de Margerie” tanker. This was the earliest eastbound voyage.

As Igor Tonkovidov, General Director of PJSC Sovcomflot noted earlier in his interview to PortNews, the company expects that “in the future, the use of the next generation nuclear icebreakers – the LK-60 type of project 22220, which are currently under construction and surpass “Yamal” in terms of power and hull width – will further increase the efficiency of icebreaker assistance for ships and reduce the transit time along the Northern Sea Route”.

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