CSC March’s Members Meeting

26.03.2019

CSC March’s Members Meeting

On 20th March 2019 the Monthly Members Meeting was held at FourSeasons hotel in Limassol. For this Meeting the Chamber arranged a Presentation by Mr. Igor Pankov, the past v-ce President Marine, Safety and Quality of the SCF Group in Moscow, about „Northern Sea Route”.

As usually, the Meeting was opened by Mr. Andreas Neophytou, Chamber’s v-ce President. In addition to the monthly Chamber’s business report, few words were passed about tonnage tax . Members were informed that Mrs. Natasa Pilides, Shipping Deputy Minister to the President, held a series of unofficial meetings with the Europen Comsission. As you know, the current tax system is valid until 31st December 2019. This is a very important topic for the entire Cypriot Shipping industry. The whole sector keeps fingers crossed for the final success.

After that the floor was given to Mr. Igor Pankov. „The Northern Sea Route, because of its location along the shallow seas of Siberia, is free of ice earlier and stays free longer than other areas of the Arctic,” Mr. Pankov reported. That benefits Russia, which controls an exclusive economic zone where „vessels seeking passage must apply for permits and permissions from Russia’s Northern Sea Route Administration,” according to him, and „Russians also charge fees for navigation and ice-breaking assistance.” Passage through the Russia-controlled Northern Sea from South Korea to Germany reportedly takes just 23 days, which pales in comparison to the route via South Africa (46 days) and Suez Canal (34 days).

On June 8, 2015, the Russian government released the Russia’s Integrated Development Plan for the Northern Sea Route 2015-2030. The plan stresses the importance of providing safer and more reliable navigation on Northern Sear Route (NSR) for maritime export of Russian natural resource materials but also the strategic importance of NSR for Russian national security. The plan is also to increase international transit cargo transportation on NSR in partnership with Asian countries and in particular with China. Russian ships are taking advantage of smoother transit through routes in the Northern Sea because of increased ice melt attributed to global warming.

A substantial part of the Arctic hydrocarbon resource potential is located in NW Russia and offshore in the Barents and Kara seas at the western gateway of the NSR. Current and future development of this Russian resource base is the main driver for increased shipping on the NSR in the coming decades.

NSR cargo flow is expected to increase considerably with further development of Russian Arctic hydrocarbon projects. Year-round export of LNG from the Sabetta Port should reach 17.6 million tons per year starting with the year 2021; crude oil from the Novoport Oil Field 8.5 million tons per year by 2017 (through loading terminal off Cape Kamenny); and crude oil from the Payakha Oil Field 7.3 million tons per year by 2024; according to information from Rosatomflot.

This is in addition to year-round transport of 1.3 million tons per year of nickel and other nonferrous metals from Norilsk Nickel at the Dudinka Port on the Yenisei River. Other projects in the planning states are Novatek’s Arctic LNG-2 on Yamal and Gydan with estimated 16.5 million tons of LNG produced per year; transport of 5-10 million tons of coal from the Taymyr Peninsula from the port of Dikson as part of the VOSTOKcoal Project; and 45 million tons per year of crude oil as part of the Transneft-Arctic Project with development of an offshore loading terminal for crude oil in the Sabetta Port.

If all these energy projects come through then transport volumes on the NSR could reach 100 million tons per year by 2030. Most of this cargo will be transported on the NSR westwards from the Yamal, Gydan and Taymyr Peninsulas to European markets and onwards through the Suez Canal to Asia. Part of the cargo will be transported eastwards on the NSR to Asian markets, but likely mainly during the five to six months of the summer-fall navigational season when sea-ice conditions are most favorable.

The large Russian rivers which all flow north into the Arctic Ocean can also act as major transport connections from the internal part of Russia to the NSR, but also the other way around as Russian rivers such as Ob, Yenisei and Lena Rivers offer logistical possibilities for transportation of goods and project cargo from the NSR into the inner parts of Russia promoting further industrial development.

In short, NSR is the ideal throughway for Russian Arctic resources and industrial products westwards to European markets and eastward to markets in NE Asian, and for promoting regional industrial development.