Arctic Shipping Soars, Led by Russia and Lured by Energy

The Yamal is one of Russia’s four powerful nuclear icebreakers, part of a fleet of 37 icebreakers that provide escort along the Northern Sea Route.

Stable ice began forming in mid-October along the coast of Siberia’s Yamal Peninsula, the large landmass north of the Arctic Circle that juts into the Kara Sea. The freeze was expected to spread steadily west and southwest, inundating Kara Strait by this week.

Once nature closes that narrow strait to the Barents Sea, it effectively shuts down until next summer the entrance to Russia’s Northern Sea Route (NSR), the 3,000-mile (4,828-kilometer) east-west passage between Europe and Asia that global warming has made possible.

Never mind that Arctic sea ice rebounded 30 percent this year from its 2012 record low. Seventy-one ships completed “transits,” or complete journeys between the Barents Sea and the Bering Strait, up more than 50 percent from last year, according to Rosatomflot, Russia’s state-operated nuclear-powered icebreaker fleet, which provides mandatory escort—for a fee. As recently as 2010, only four ships made the crossing.

A Year of Firsts

This year marked the first NSR transit for a container ship, and the premier voyages for vessels commissioned by China and South Korea.

Russia conducted naval exercises on the NSR for the second straight year, and capped the September flotilla with an announcement that the Kremlin would reopen an old Soviet Arctic military base.

Two other milestones, uncelebrated, were just as significant for the Arctic’s future: the first tanker accident of the NSR’s new era and the first act of civil disobedience. No spills or injuries were reported in the crash of Russia’s Nordvik into an ice floe, but the rescue took more than a week as the stricken ship’s owners haggled with Rosatomflot over cost.

The Greenpeace icebreaker Arctic Sunrise entered the NSR in defiance of authorities who denied them passage before staging a protest on a nearby floating Gazprom oil rig. The 28 activists and two freelance journalists from 16 different countries were initially charged with piracy and imprisoned for weeks in Murmansk and then St. Petersburg. The charges were reduced to hooliganism and all of the protesters were freed on bail over the past week, but not before the incident escalated into an international diplomatic conflict.

The tanker and Greenpeace incidents underscore a reality about the new era of Arctic shipping often overlooked both in official Russian pronouncements and international media coverage of the transit firsts. Although the Arctic provides a shorter route around the world than the traditional course through warmer waters, it is not necessarily cheaper. That’s why experts believe that the first surge of new ship traffic in the Arctic will be focused on these harsh seas as a potentially lucrative destination rather than as a passage; their aim will be extraction of the wealth of minerals, oil, and natural gas that are now accessible due to global warming.

Old Route, New Ambition

Although the notion of the NSR as an international shipping lane is new, there’s a long history of Arctic navigation, particularly in the icy waters north of Russia. Indigenous people traversed the Arctic by boat for thousands of years in search of food, supplies, and potential settlement areas, notes a major assessment of Arctic shipping commissioned in 2009 by the Arctic Council, a cooperative organization of the eight Arctic states.

From the 1490s, European and Russian explorers searched for both a Northwest Passage and a Northeast Passage.

Norwegian Roald Amundsen is credited with making the first successful complete transit of the Northwest Passage in 1906, a journey he survived over three harsh Canadian winters only with the help of the native Inuit.

While the Northwest Passage has seen increased activity—this year a bulk freighter delivering coal from Vancouver to Finland was the first vessel of its kind to transit—experts believe its prospects as a global sea route are far weaker than those of Russia’s NSR. Canada’s Arctic archipelago, comprised of 36,000 islands, islets, and rocks, one of the most complex geographies on Earth, is a major impediment. And the Northwest Passage lacks the NSR’s history of development.

After the Russian revolution, Vladimir Lenin directed the development of the NSR. At first devoted to fishing and transport of food and other supplies to and from the Siberian settlements devoted to coal and mineral development, the NSR later served as an important military supply conduit during World War II.

The Soviets expanded their ability to travel the NSR substantially when they launched a fleet of nuclear-powered icebreakers, beginning with the Lenin in 1957. The ships were expensive to build and operate, but they aided the Soviet Union in moving supplies throughout the nation’s vast military-industrial complex in Siberia. During the Cold War, foreign ships were forbidden entrance to the NSR, which at its mid-1980s peak was carrying 6.6 million tons of cargo. Traffic fell precipitously, though, with the collapse of the Soviet Union.

Only in the past few years, with the rapid retreat of Arctic sea ice, has Russia made progress toward rebuilding the NSR for a new era of globalization. Russia’s ambitions are aided by its fleet of 37 icebreakers, including the only four nuclear-powered icebreakers in the world, an inherited legacy of the Soviet era. Many of the ships are aging, but a new generation of larger nuclear vessels is under construction, ships designed to cut through thicker ice and extend the navigational season. In contrast, Canada has six and the United States has two.

A Rival To Suez?

Cargo volume for the 71 vessels that transited the NSR this year, 1.4 million tons, is small compared to that at the height of its service as a Soviet supply route, according to NSR Information Office of Rosatomflot and the nonprofit Centre for High North Logistics. But Russia’s hopes for the new NSR are far more expansive. “The shortest route between Europe’s largest markets and the Asia-Pacific region lie across the Arctic,” Prime Minister Vladimir Putin said at an Arctic Forum in 2011. “I want to stress the importance of the Northern Sea Route as an international transport artery that will rival traditional trade lanes in service fees, security, and quality.”

With this year’s shipping milestones, the NSR may be on its way to fulfilling Putin’s vision. The first commercial Chinese vessel and first container ship to transit the NSR, the Yong Sheng, commissioned by state-owned Cosco shipping, arrived in Rotterdam on September 10 laden with steel and industrial machinery. Its 33-day journey from the Chinese port of Dailan was nine days and 2,800 nautical miles shorter than the conventional voyage through the Suez Canal.

The Arctic Council’s 2009 report estimated that the NSR offers from a 35 percent to 60 percent savings in distance for ships traveling between Europe and the Far East. Ships also can circumvent regional conflicts and the risk of piracy near the coast of Africa or in the Straits of Malacca off Malaysia.

Still, both expense and uncertainty are substantial. Hiring charges for mandatory escort by Rosatomflot’s icebreakers vary, but the average cost is about $200,000, according to a report by Lloyd’s of London.

Felix Tschudi, chairman of Tschudi Shipping, a company that focuses on cargo flows among Europe, Russia, and Central Asia, said in a recent article that the cost of escort through the NSR is roughly equivalent to that of passage through the Suez Canal. At a National Geographic forum this fall, The Arctic: The Science of Change, Tschudi challenged the notion that there was an “explosion” in Arctic shipping traffic. He and others note the NSR has a long way to go to catch up to the Suez, which provided passage for 17,225 ships and 928.5 million tons of cargo.

There are size constraints on ships in the shallow NSR. They need to wait for permission to transit. Even though sea ice has receded, and experts now predict ice-free summers in the Arctic as soon as this decade, weather in the far north can be brutal and unpredictable. Poor visibility and the potential for wind-driven ice can cause unexpected delays, said Stephen Carmel, senior vice president of the giant Maersk shipping line, in a recent article for the U.S. Naval Institute’s Proceedings magazine. Because “container” shipping of goods, (as opposed to bulk shipping of raw commodities like ores and fuel), relies heavily on on-time delivery, Carmel thinks it unlikely the NSR ever will become a major pathway for this kind of global commerce.

“It isn’t just about the sea ice retreat, profound as it is,” said Lawson Brigham, a former U.S. Coast Guard captain, now a professor at the University of Alaska Fairbanks and chair of the Arctic Council’s 2009 Arctic shipping assessment. “It’s about whether you can make a Euro or a dollar.”

Destination: Oil and Gas

Brigham, Carmel, and many other experts believe most Arctic ship traffic in the coming years will be “destination” shipping, with primary focus on the 22 percent of the world’s remaining undiscovered oil and natural gas resources to be found in the far north.

For example, South Korea made its first NSR transit this year, commissioning the Swedish tanker Stena Polaris to transport naphtha, a crude oil derivative, from the Russian port of Ust-Luga near the Finland border. That’s where the private Russian gas company Novatek, a fast-growing challenger to state-run Gazprom, opened a new gas processing complex in June.

Novatek’s far bigger project is on the Yamal Peninsula along the NSR, a major port at Sabetta and a $20 billion liquefied natural gas (LNG) plant. Just last month, Novatek signed a deal to supply China National Petroleum Corporation for 15 years with fuel sent from Yamal by tanker. Production is expected to begin in 2016.

And Gazprom’s new Prirazlomnaya platform, the world’s first Arctic-class ice-resistant offshore oil rig, was set to begin drilling this year in the Pechora Sea, the southeast portion of the Barents Sea just outside Kara Strait. Greenpeace activists targeted the site for a protest against the energy development, its potential impact on the fragile Arctic environment, and contribution to global warming.

In August, the protesters’ ship, the Arctic Sunrise, entered the NSR in defiance of Russian authorities, but then departed. The vessel was outside the NSR, in international waters, but within Russia’s exclusive economic zone (within 200 nautical miles of shore), when boarded by members of Russia’s Federal Security Service who dropped by helicopter on September 19. The incident demonstrated that Russia will act harshly against interference with its Arctic plans; the protesters and journalists were released only after the Netherlands filed an appeal at the International Tribunal for the Law of the Sea.

Russia has sought to emphasize its efforts on safe offshore operations in the Arctic, adopting new insurance requirements making clear that ship owners are responsible for environmental damage and pollution. A new NSR administration was established earlier this year, and it is opening the first of ten planned search and rescue stations along the NSR, a project for which the government has set aside more than 900 million rubles—sroughly $27 million.

Putin in September also announced the planned reopening of a Soviet-era military base on the Novosibirsk Islands to provide greater safety and security. He told a meeting of defense officials that reopening the base and its airfield will “make it possible for the emergency services, hydrologists, and climate specialists to work together to ensure the security and effective work of the Northern Sea Route.” His announcement came after ten warships, led by the most powerful ship in the Russian Navy, the Petr Veliky, conducted maneuvers in the NSR, reportedly encountering no ice whatsoever in a monthlong journey that ended September 20.

The Nordvik was not so fortunate. The nearly 30-year-old tanker was carrying almost 5,000 tons of diesel fuel when it began taking on water after it rammed an ice floe September 4 in a strait east of the Kara Sea. Russian authorities said the tanker acted in violation of its NSR permit by entering waters with medium ice conditions without icebreaker escort. In a drama that played out over two weeks, the cargo was unloaded onto another tanker, and two Rosatomflot nuclear icebreakers escorted the vessel back to its home port.

The incident demonstrated that maintaining safety on the NSR will require not only rules but enforcement and emergency response. A main finding of the Arctic Council’s 2009 marine shipping report was the lack of infrastructure for both saving lives and pollution mitigation. There are limits to radio and satellite communications, and large gaps in navigational charts and meteorological data, making emergency response extremely difficult.

Climate change may have opened access to the Arctic waters, but the environment continues to be harsh, said Brigham. “People think just because the ice is going away, we’re just going to drive across the Arctic. It actually may be more complicated because the ice is dynamic,” Brigham said. “Ice is a complicated barrier, even if it’s not a complete barrier.”

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