Arctic shipping along the NSR saw a moderate increase to 34m tons in 2022 even though international operators shied away from the route bringing a halt to transit traffic. With Vostok Oil under construction, volume is set to surge after 2024.
The transport of oil and gas along the Northern Sea Route (NSR) continues unabated. Cargo volume along Russia’s Arctic shipping lane surpassed the official target of 32m tons by 2m tons in 2022. This represents a modest gain of 966,000 tons compared to 2021.
While destinational traffic, primarily in the form of oil and gas deliveries from the Russian Arctic to Europe and Asia, reached record-levels, transits collapsed as international shipping companies shied away from the route as a result of the sanctions and the Ukraine war.
Even Chinese shipping company COSCO, which had been a regular visitor along the route over the past decade sending more than a dozen ships onto the route during some years, did not dispatch vessels into the Arctic this year.
"Despite the external influence, an increase in the Russian cargo traffic over the Northern Sea Route was observed throughout the last year […] owing to Russian companies,” explains Rosatom Deputy CEO Vyacheslav Ruksha. Rosatom operates Russia’s nuclear icebreaker fleet and is in charge of administering the route.
LNG remains king on the NSR
In 2022 LNG transport along the route reached new heights as Novatek’s Yamal LNG plant recorded a record production. Liquefied natural gas (LNG) and gas condensate accounted for 20.5m tons of cargo, followed by oil and petroleum products with 7.22m metric tons.
Coal and iron ore represented 295,000 and 43,500 tons. General cargo made up 4.25m tons.
"I would like to stress that this year the increase by 850,000 tons has been in the Russian cargo traffic, because, if we eye the transit cargo flow, it was less stable and less predictable. The Russian cargo traffic has continued to grow,” said Vladimir Panov, Rosatom's special representative.
During peak navigation season the route saw up to 94 vessels operating on the route at the same time. This figure is down slightly from previous years where up to 120 vessels were active during the peak related to the construction of the port of Sabetta.
Next year the building of Rosneft’s Vostok Oil project will result in additional cargo volume. According to Rosatom, the construction phase of the project will result in more than 500,000 tons of construction materials being delivered to the site on the Taimyr Peninsula.
NSR Volume to Triple
During a cabinet meeting held on Monday Russia’s government allocated funds around 4bn rubles ($60m) for new developments along the NSR. A portion of the funds will go towards a new ice monitoring system enabling vessels operating on the NSR to receive real time information about ice conditions along the route.
Additional funds will be directed toward deepening the shipping channel in the mouth of the Yenisei river in preparation of the new Sever Bay (Bukhta Sever) port being constructed to support the recently announced Vostok Oil project.
Russian energy company Rosneft aims to construct one of the world’s largest oil loading terminals at the head of the bay shipping up to 100m tons of petroleum products by 2030. In its initial phase the port will have five berths along a 1.3km long dock. The project is the world’s largest oil development in at least a decade.
In order to ship oil to markets in Europe and Asia using ice-cable Arc4 and Arc7 carriers a deepening of the channel is crucial to accommodate 120,000 ton vessels. Construction of the port is expected to cost $1.7bn. Its location toward the middle of the NSR will allow delivery of product to both the East and West.
Russia’s Zvezda shipyards in the Far East have received orders for ten tankers with a high Arc7 ice-class and in total the project will require up to 50 vessels of varying ice-classes to shuttle oil back and forth from the Taimyr Peninsula.
A technical support agreement signed with South Korean Hyundai Heavy Industries in 2017 was terminated by Hyundai in May 2022 following Russia’s invasion of Ukraine and the sanction regime, raising questions how quickly Zvezda can deliver on the full order book which includes more than 100 vessels.
The Zvezda shipyards are still under construction with only parts of it operating. In its first seven years the yard has delivered only six vessels.