Arctic shipping Eurasia side
March 1, 2010 by Jules
Oil tankers first
The findings of the Stockholm International Peace Research Institute’s paper indicate that the Arctic could emerge as an interesting area, the FT reported yesterday:
“Because China’s economy is reliant on foreign trade, there are substantial commercial implications if shipping routes are shortened during the summer months each year,” the report said, since the northern route through the Arctic would shorten the trip from Shanghai to Hamburg by 6,400km compared with the Strait of Malacca and the Suez Canal. In addition, high insurance costs stemming from the risk of piracy could be avoided although gains would be in part cancelled by high ice collision insurance costs.
In addition, Russia will sail a large oil tanker accompanied by nuclear-powered ice breakers from Vitino on the White Sea to Japan this July, in a pilot voyage marking the start of oil exports along the northern route.
Sergei Frank, the chief executive of Sovcomflot, said the new route would be a “floating pipeline,” gradually helping Russia re-orientate its oil and gas exports away from Europe towards more dynamic eastern markets, including China.
Mr Frank ruled out the possibility of Chinese container vessels using the northern route, citing unpredictable Arctic navigation conditions and high insurance rates. “It’s nonsense,” he said.
Ms Jakobson told the Financial Times: “China is particularly wary of Russia and whether it might demand high passage fees, which could erase some or most of the potential efficiency gains.”
Sovcomflot, already the world’s biggest owner of ice-class vessels, expects to corner the market in Arctic energy shipping as huge new oil and gas reserves are developed in polar regions. Mr Frank said Russia’s northern route would not be closed to foreign shipping companies, but users would need to comply with Russian environmental and navigation rules.
In: Market News