Cargo turnover via Russian Northern Sea route climbs 19% past 2012 levels

Moscow (Platts)--26 Sep 2013 627 am EDT/1027 GMT

Cargo turnover via the Northern Sea Route along Russia's Arctic coast has already exceeded 2012 levels by 19% at 1.5 million mt as of this month and is expected to grow to 4 million mt/year in 2015, according to a statement on the Kremlin's website Thursday.

"Last year, cargo shipments via the NSR rose 53% year on year to over 1.26 million. In 2013, this figure has already amounted to 1.5 million mt," the statement quoted Russia's President Vladimir Putin as saying at a governmental meeting held in northern city of Salekhard late Wednesday.

Navigation via the NSR usually starts in early July and closes in mid-November.

"The turnover [via the NSR] is forecast to amount to 4 million mt/year by 2015," he said, adding that the construction of a modern Arctic port of Sabetta in the northern part of the Yamal Peninsula will underpin further growth in shipping.

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Putin said Sabetta will become one of the key infrastructure elements of the NSR. The government has allocated Rb 47.3 billion ($1.48 billion) for port construction, with work to deepen the seabed and build a navigable passage in the Gulf of Ob already under way, Putin said.

"This will allow private investors to start building port terminals in 2014," he said.

Russia has an ambitious plan to turn the NSR into a major international trade artery.

The NSR allows vessels to travel east from the Barents Sea along the Russian coast, through the Bering Strait and then down to the Pacific Ocean. It is 3,900 nautical miles shorter than the traditional route from northern Europe to the Asian-Pacific region via the Suez Canal and the Strait of Malacca -- but its difficult, icy waters and harsh climate pose their own risks and require icebreakers to escort vessels.

The NSR covers the 3,000-mile long icebound route from Novaya Zemlya Island in the Arctic Ocean that separates the Barents and Kara Seas, to Cape Dezhnev, the northeastern-most point of Eurasia on the Chukchi Peninsula.

Sabetta is part of the major Yamal LNG project, which Russia's gas producer Novatek (80%) develops together with France's Total (20%). Under a deal earlier this month, Novatek is to sell 20% of its stake to China's CNPC, with the deal expected to be completed by the end of the year.

The project involves the 16.5 million mt/year Yamal LNG plant, with the first 5.5 million mt/year train to be launched by the end of 2016, followed by two trains of the same capacity each by the end of 2017 and 2018.

The Yamal project, apart from the LNG plant and upstream facilities to produce gas, also involves construction of necessary infrastructure in the remote peninsula, including roads and an airport, being built under state-private partnership.

Private companies have already invested more than Rb60 billion in the project, Putin said.

--Nadia Rodova,
--Edited by Meghan Gordon,

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