Rosatom plans to deploy icebreaker fleet to allow year-round access for shipping
Russia plans to hand control of shipping through the Arctic Northern Sea Route to Rosatom as the state-run nuclear group seeks to become the sole operator of one of the world’s emerging trade arteries.
Russia’s parliament voted on Tuesday to give the company, which has a nuclear-powered icebreaker fleet, control over infrastructure, access, security and shipping in the northern waterway as it seeks to introduce year-round shipments within the next decade. The route would roughly halve sailing times from Europe to China.
The transport ministry will retain an administrative role and will issue shipping permits in conjunction with Rosatom.
The Northern Sea Route stretches from the Bering Strait between Russia and the US along the far north of Russia to its exit close to Norway. Unusually high temperatures inside the Arctic Circle have caused the ice sheet to shrink by 13 per cent over the past decade, according to Nasa data, increasing access for shipping.
The waterway is a potential geopolitical flashpoint. Global shipping companies, including Maersk, have conducted trials of its viability while Russia has upgraded mothballed military bases in the Arctic region and established new sites. Arctic countries are also competing over the region’s potentially vast hydrocarbon resources.
We want to be like [a] taxi for icebreakers in the Arctic. There should be icebreakers available along the route for anyone to call up and get one to accompany a ship
Maxim Kulinko, deputy head of Northern Sea Route directorate at Rosatom,
Shifting control from Russia’s transport ministry to Rosatom, which builds and operates the country’s nuclear power plants, is seen as a way to modernise the sea route. It was widely used in Soviet times but then neglected until a few years ago when energy projects in the Arctic began to produce oil and gas.
Using Russia’s Arctic waters to travel between Europe and Asia instead of the far longer route through southern seas and the Suez Canal could save freight companies about $1m per trip and weeks of travel time, according to shipping industry experts.
Under the plan, Rosatom will run a fleet of icebreakers to pilot freighters along the route, which is frozen for six to seven months of the year.
“We want to be like Yandex taxi for icebreakers in the Arctic,” Maxim Kulinko, deputy head of Northern Sea Route directorate at Rosatom, told the FT, referring to Russia’s most popular ride-hailing app.
“There should be icebreakers available along the route for anyone to call up and get it to accompany a ship,” he said. “When the line works regularly, that’s when you have year-round shipment.”
The Russian state would provide 50 per cent of the financing for the initiative, with the remainder coming from Rosatom and fundraising, Mr Kulinko added.
Rosatom is building eight new icebreakers and expects them all to be operational by the early 2030s.
“Based on our estimates, year-round shipments require at least five LK60 icebreakers, three Leader icebreakers, and four LNG-run icebreakers. This is possible around the year 2030-31,” Mr Kulinko said at a recent conference on the Arctic region in St Petersburg.
“What is important is the vector, the ambition, and not so much whether we hit the mark in 2024 or 2030,” said Sergei Buyanov, head of the Central Research and Development institute of the Russian navy.
Russian companies such as nickel producer Norilsk Nickel, gas company Novatek and oil group Gazprom Neft already use the route. They accounted for the bulk of the 10.7m tonnes of cargo transiting through it last year — a total that was up more than 40 per cent on 2016.
Total cargo using the waterway is expected to reach 18m tonnes this year and 29m tonnes in 2019, according to Rosatom estimates, after Novatek ramped up LNG production at its flagship Arctic gas liquefaction plant, Yamal LNG, and crude production was increased at Gazprom Neft’s Novy Port field.
Officials from neighbouring countries told the FT they would wait and analyse Russia’s experience with the route before introducing their own operations.
“We have very large shipping industries that will follow this very closely,” said Bard Ivar Svendsen, ambassador for Arctic and Antarctic Affairs at Norway’s foreign ministry. “There aren’t a lot of ships that have done this route, and I think we need more experience with it before we can say how effective and how successful it will actually be. This is potentially very, very interesting.”
Bjorn Lyrvall, ambassador for Arctic Affairs at Sweden’s foreign ministry, said the route could have potential for shipments of Swedish iron ore to south-east Asia.
“But obviously there is more work that needs to be done before we are there. You have to have predictability and availability of the route. [There are] insurance costs,” he said.
Achieving year-round shipments would make the Northern Sea Route competitive with rivals such as Suez, said Sergei Vakhrukov, deputy secretary of Russia’s Security Council.
“NSR is no Suez. The latter . . . lies in different latitudes,” said Mr Vakhrukov. “Without the proper nuclear icebreakers, navigation is possible only in the summer or fall period, which is only five to six months and does not make the route economic. We need year-round navigation, only then can it compete.”