China’s new foothold on Northern Sea Route

Chinese Arctic shippingBarents Observer 2010-11-26
Original article here
The China National Petroleum Corporation has signed an agreement with Sovcomflot about shipping along the the Northern Sea Route.

Shipping along the Northern Sea Route is a key point in the agreement which was signed by CEO of Sovcomflot, Sergey Frank and President of CNPC Jiang Jiemin in Sankt Petersburg on Monday.

A press release from the event reads that the two companies have “agreed upon the format for coordination in utilising the transportation potential of the Northern Sea Route”. This format includes both transit shipments of hydrocarbons and transportation of oil and gas extracted at Russian Arctic offshore fields.

The agreement is part of a long-term partnership strategy, the companies say. It was signed in the presence of Deputy Prime Minister Igor Sechin and Wang Qishan, Vice-Premier in the Chinese State Council. The strategy also includes Sovcomflot’s construction of several large-capacity VLCC tankers of more than 300,000 dwt, as well as cooperation on quality and safety standards and maritime specialist training.

China has over the last years shown increasing interest in Arctic affairs and has discussed the region both with Russian, Norwegian and Icelandic authorities.

Read also: Norway welcomes China to the Arctic

Shipping is of special interest to the Chinese. Only this summer, several historical shipping operations have been conducted along the route, many of them to China, and traffic is expected to increase strongly in 2011. As many as 15 planned shipping operations along the route have already applied for Russian icebreaker assistance.

Read also: Cargo transport through Northern Sea Route will tenfold

China will continue to be the main destination of goods shipped along the Northern Sea Route. That regards trans-shipments, but to a certain extent also Russian goods shipped from Russian Arctic ports. It is likely that a significant part of oil and gas produced in the Russian Arctic will end up in China. Russia is currently in the process of developing several Arctic fields with adjacent infrastructure, among them in the Barents Sea and in Yamal.

As previously reported, the Novatek company has openly said that LNG shipments eastwards along the Northern Sea Route will be a real alternative when then South Tambey LNG plant starts production around 2018.

Possibly, also LNG from the Shtokman field and oil from the Prirazlomnoye field could be sent to China along the Arctic route.

As reported by BarentsObserver, the Russian Ministry of Transport is preparing a bill, which is to regulate commercial shipping along the Northern Sea Route. The bill proposes to give the federal Northern Sea Route Administration the responsibility to organize shipping in the area. The Administration will also regulate pilotage and icebreaker services and the level of fees for the use of these.

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