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Russian Arctic alternative route for LNG tankers to China

By Sonny Atumah

For centuries it has been a transport of delight watching vessels on shipping lanes crossing bodies of water. Shipping as a private and highly competitive service industry is divided into liner service, tanker operation, tramp shipping and industrial service, and, all of which operate on certain well-established routes.

Shipping is determined by geography, economics, and historical tradition to connect major industrial regions to one another and to areas that produce raw materials. The Encarta Encyclopedia records that the first steam-propelled ship designed as an oceangoing tanker was the Glückauf, built in Britain in 1886.

Global shipping is done in these major ocean routes: the North Pacific route linking western America with Japan and China; and the South Pacific route from western America to Australia, New Zealand, Indonesia, and southern Asia. Others are the North Atlantic, between Europe and eastern North America; the Mediterranean-Asian route via the Suez Canal; the Panama Canal route connecting Europe and the eastern American coasts with the western American coasts and Asia; the South African route linking Europe and America with Africa; the South American route from Europe and North America to South America; and the old Cape of Good Hope route that has been shortened by the Suez Canal for giant oil tankers between the Persian Gulf and Europe and America.

File: LNG Vessel

Shipping attained a great economic significance when the Suez Canal was opened to the maritime transportation industry in 1869. The completion of the 163 kilometres Suez Canal made it quicker for ocean going tankers to sail between both Western European and American ports and ports located in southern Asia, eastern Africa, and Oceania. Although the artificial waterway had saved cost for tankers it was projected that a passage along the arctic coastline could also be much cheaper but it was not possible because of permafrost.

Oceanographers define the Arctic as the portion of the northern oceans that is covered with ice for at least part of the year. Geographically, the Arctic is the area north of the Arctic Circle (latitude 66°302  north) where 24 hours of daylight and 24 hours of night occur once a year. Climatically, the Arctic is the region north of the 10°C (50°F) summer isotherm. The summer isotherm is a line on a map drawn through locations with an average annual temperature of 0°C (32°F) or less and a mean temperature for the warmest summer month of 10°C (50°F). The Arctic is the region north of the tree line, the point beyond which trees do not grow.  The Arctic is also defined as the region where permafrost remains continuously frozen throughout the year. Experts had in the past decades intensified research on the potential benefits the Northwest Passage could bring to the impassable arctic that was covered by arctic ice all year round or seasonally.

After years of technological and scientific research, there is another breakthrough and yet another alternative: the North Sea route, NSR for ocean tankers. The Northern Sea Route ensures shorter transportation time and lower costs. The Russians through its largest independent natural gas producer, PAO Novatek appeared to have taken the lead as it shipped its first liquefied natural gas from the Yamal LNG project to China via the Northern Sea Route two weeks ago.  Two LNG tankers Vladimir Rusanov and Eduard Toll with cargo capacity over 172,000 cubic meters each were loaded at Russia’s port of Sabetta, home to the Yamal LNG processing and export plant, and sailed without icebreaker escort through the Northern Sea Route to the Chinese port of Jiangsu Rudong in just 19 days, compared to the 35 days it would take to sail the traditional eastern route via the Suez Canal. The US$27 billion Yamal LNG plant is a joint-venture of Novatek, holding 50.1 percent in the project, with France’s Total and China’s CNPC and Silk Road Fund as minority partners.

“This voyage begins a new era of Russian LNG shipments to meet the growing natural gas demands of the Asian-Pacific markets using the Northern Sea Route of the Arctic Ocean,” according to Leonid Mickhelson, Chairman of Novatek’s Management Board, “ as quoted by Reuters.  The Northern Sea Route ensures shorter transportation time and lower costs, which plays a key role in developing our hydrocarbon fields on the Yamal and Gydan peninsulas. Our vast high-quality, conventional natural gas resource base combined with low capital intensity and operation and transportation costs positions Novatek’s LNG projects among the most competitive projects globally.

The Northern Sea Route, what transportation specialists call the Northwest Passage is a shipping lane that runs along the Russian Arctic coast from Murmansk on the Barents Sea, along Siberia, to the Bering Strait and Far East. It is a sea route that connects the Atlantic and Pacific Oceans through the Canadian Arctic Archipelago. This may indeed, be another revolution in the shipping industry as route distance is reduced; meaning a travel time, fuel consumption, and bunker fuel reduction. Indeed, a lower vessel operating cost translates to an increased profit margin for seafarers.

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