Russian officials announced that year-round exports of liquified natural gas from the Arctic to Asia will begin early next year. A milestone for Novatek, the company has worked toward regular winter deliveries along the eastern part of the Northern Sea Route for the past five years.
Just two years after gas carriers conducted the first trial winter voyages along the Northern Sea Route (NSR) Russian gas company Novatek is set to begin year-round shipping along the Arctic seaway.
During an extensive government briefing on the NSR and Arctic development the head of Rosatom – operator of Russia’s expansive nuclear icebreaker fleet – announced the milestone to President Putin.
“Together with Novatek, we plan to launch year-round navigation in the eastern part of the NSR early next year. This is a truly historic decision, important for the development of the entire Arctic and of particular importance, of course, for the economy of our country,” said Alexei Likhachev, CEO of Rosatom.
The development of the NSR has been a key priority for Russia and a personal project of Putin for much of the past decade. During last week’s meeting the Kremlin chef spoke at length about the importance of the route.
“We must think about the future. The Northern Sea Route is opening up, that is obvious. For better or worse, this is happening - the Northern Sea Route is opening,” Putin explained.
Year-round shipping on the route represents a key milestone in Russia’s goal to ship 200 million tons along the route by 2030, a six-fold increase over 2023.
Big milestone for Novatek
Russian natural gas major Novatek has been working toward year-round shipping of liquefied natural gas (LNG) to Asia for the past five years since production at its Yamal LNG plant began at the end of 2017.
Currently, the company sends its gas almost exclusively to Europe during the winter months.
With talks of a potential ban of Russian LNG by the European Union, the ability to send its product to customers in Asia year-round may soon become indispensable for Novatek. The Netherlands have already begun phasing out the import of LNG from Russia.
NSR is a strategic priority
During the briefing Putin appeared eager to push ahead with the development of the route.
None of the major projects in the Arctic has stopped the implementation of their plans.
“The development of the Northern Sea Route is, of course, one of the obvious strategic priorities. And here, probably, we should not save and cut something, based on the current situation,” he stated.
Several companies and state enterprises, including Novatek and Rosatom, have become the target of western sanctions, but apart from limited slow-downs Russia’s Arctic projects remain on track.
“Despite the sanctions, including restrictions on the supply of equipment, none of the major projects in the Arctic has stopped the implementation of their plans. Together with Novatek, Norilsk Nickel, Rosneft and other companies, we continue to implement large-scale projects that are important both for the Russian economy and have a key impact on global markets,” said Likhachev of Rosatom.
Rerouting via the Arctic
Even more importantly, the existing development of the NSR has proven critical for Russia’s ability to re-route the flow of hydrocarbon exports away from Europe and toward Asia.
“The embargo imposed by European countries on the supply of Russian oil and oil products not only became a challenge, but also opened a new window of opportunity. We are working on redirecting Russian oil from the Baltic ports to the NSR. Thanks to the route, it became possible to transfer many transport maritime activities from west to east,” concluded Likhachev.
The growing flow of crude oil along the route has raised alarm bells among environmental groups as a cleanup of oil in Arctic waters following any accidental spills is considered to be nearly impossible.
More ships and sailors
Key challenges in achieving Russia’s ambitious development goals for the route will be the construction of enough ice-capable ships for the Arctic and the recruitment of skilled labor.
“Schedules have been approved for the creation of a new icebreaking and ice-class transport fleet, totaling 153 vessels. The main challenge in this part is the replacement of a number of technologies from unfriendly countries. Our shipbuilders and the entire Russian industry are now overcoming this challenge,” stated Alexander Chekunkov, Minister for the Development of the Far East and the Arctic.
For this purpose Russia has expanded its Zvezda shipyard and ramped up production. Experts, however, remain skeptical how quickly and to what degree the country can overcome the lack of access to western technology. The first home-made oil and gas carriers are slated to leave the shipyard next year.
Expanding shipping to 70m tons in 2024 and 200m tons by 2030 will also require investments in recruiting and training large numbers of seafarers. According to Chekunkov, by the end of the decade Russia will need 7,500 new Arctic seafarers, including at least 1,500 to staff Rosatom’s nuclear icebreakers.