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IDSA COMMENT

Northern Sea Route: Humming with Activity

August 27, 2013

China and Japan are positioning themselves to take advantage of the opening of the Northern Sea Route (NSR). Presently, the Chinese shipping company COSCO’s container ship is transiting through the NSR carrying exports from a Chinese port to Europe. Earlier this year, a 66,000 tonne vessel carried iron ore to China. Given this trend, in the coming years China may emerge as a major user of Northern sea route.

Japan is also alive to the benefits from the NSR. Last year the Russian gas company GAZPROM delivered a consignment of liquefied natural gas to Japan using the NSR during November 9-18. The LNG ship Ob River travelled from Hammerfest in Norway to Tobata port in Japan safely in a matter of ten days. The ship was escorted by Russian nuclear-powered ice breakers. The tanker made two voyages through the NSR in a single navigation period, having travelled empty from Japan to Europe in October. These voyages have demonstrated the technical and commercial feasibility of the NSR.

The rapid melting of the Arctic Sea ice due to global warming has led to the opening of the NSR. The passage is open for ships during the summer season up to four months. This year transit may be possible even for up to six months. Some ships may be able to sail without the escorting icebreakers. From Rotterdam in Netherlands to Dalian in China, the time of passage will be about 35 days through the NSR as compared to 48 days through the Suez Canal. This will result in considerable saving of time and fuel costs.

The Arctic holds about 20 percent of global hydrocarbon resources. Several companies have plans to invest in the oil resources. Norway is increasingly shifting its oil production activity northwards as oil output from the fields in the North Sea declines. Russia is prospecting for oil in the Yamal peninsula. The NSR and its connectivity with the Russian hinterland will provide many new economic and business opportunities.

The Northern Sea Route runs along the northern coast of Russia from Bering Strait in the west to Novaya Zemlaya in the East for about five thousand kilometres and is described as follows:

“The aquatic space adjacent to the northern coast of the Russian Federation, covering internal waters, territorial sea, the contiguous zone and the exclusive economic zone of the Russian Federation and bounded by division lines across maritime areas with the United States and the parallel Cape Dezhnev in the Bering Strait, west meridian of the Cape of Desire to the Novaya Zemlya archipelago, eastern coastline of the Novaya Zemlya archipelago, and the western boundaries of the Matochkin, Kara, and Yugorsky Straits.”

The NSR is humming with activity this year. According to the information on the website of NSRA (www.NSRA.ru 25 August 2013), 454 vessels have been given permission by the Russian authorities to transit through the route. Of the permissions given an overwhelming are ships with Russian flags (83 percent) and the rest (17 percent ) belonging to various countries including France, UK, China, Poland, Germany, Liberia, Marshall Islands, Liberia, etc. In all 71 applications have been refused on technical grounds.

Russia has major plans to rejuvenate its north through the development of NSR. Arkhangelsk, a major Russian port on the White Sea adjacent to the NSR, will be connected to Perm in the mineral rich Urals through Belkomur railway line. Many cities of the north will be connected through the NSR.

Russia has now complete control over the NSR. A new agency called the Northern Sea Route Administration (NSRA) has been set up in Moscow. It will have an office in Arkhangelsk. This new state agency will decide tariffs and regulations for passage of ships, consider applications from ship owners and give or refuse permissions. Its remit includes providing ice-breakers and pilotage, information regarding weather and ice conditions. The organisation will also do hydrographical surveys, arrange for search and rescue operations, and prevent pollution along the sea route including oil spills, etc.

The refusal of three applications from the international human rights NGO Greenpeace which wanted to send an icebreaker to monitor the offshore exploration of the Russian oil company Rosneft has attracted media headlines. Greenpeace has accused the Russians of trying to stifle legitimate protests over the exploitation of the Arctic Sea for commercial reasons.

Whether the potential of NSR is over-hyped is a matter of debate. This year about 1.5 million tonnes of cargo will be transported through the NSR as compared to nothing five years ago. This is still insignificant as compared to 17,225 ships that carried 928 million tonnes of cargo through the Suez Canal in 2012. Thus NSR is still in infancy. But the technical and commercial feasibility of the NSR has been demonstrated.

What is even more important is that the geopolitical importance of the NSR will be immense. As early trends show, minerals can now be transported from Europe to Asia Pacific and goods from China are now being exported to Europe. Super tankers have already made successful passage through the route. Russia is already using the route to bring development and prosperity to the North by linking the NSR with the rest of Russia through railway lines. The Russian rail and road network will link the northern sea route to Central Asia. Russia will emerge as a major beneficiary of the opening of the NSR.

But there are several challenges too. The route is still hazardous and expensive. There are uncertainties regarding ice formation and weather trends. What if the ice melt trend reverses itself? This happened in 2011 when there was more ice than expected although the melting trend resumed in 2012. The investment in the mineral exploration and shipping is fraught with high risk. Russia will have to invest a lot in infrastructure to provide connectivity with the hinterland.

Shortening of the distance and time from Europe to Asia through the Northern Sea Route will lead to the saving of fuel and on the emissions of carbon dioxide. But, there is a significant downside too. The partially burnt fuel leaves black carbon soot deposits on the ice which is a climate change enforcer. Recent studies have shown that black carbon is second only to carbon dioxide in its heat trapping potential. Arctic Council is concerned about black carbon deposits and wants these to be monitored.

Despite these uncertainties, the emerging trends indicate that the route has become technically viable. If the melting of the ice continues, NSR will become even a busier place.

Views expressed are of the author and do not necessarily reflect the views of the IDSA or of the Government of India.