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Is Arctic shipping Russia’s answer to the Suez Canal?

When Russia’s United Shipbuilding Corporation (USC) announced the buyout of the remainder of Finland’s Arctech Shipyards, USC’s head of communications Aleksei Kravchenko stated that it was not worried about the yard’s shaky finances. Kravchenko added that it would be easier to secure orders from Russian businesses and Government agencies once production was under full Russian control.

The fact that the state-controlled Russian shipbuilding firm was willing to drop nearly EUR20m ($27m) on the remaining share of the struggling yard - designer of innovative asymmetric hulled icebreaking vessels - leaves the question of whether the move was driven by pragmatism or ideology. Is Russia in fact jockeying for its own Suez Canal?
With a reduction of 40% in ice the last 30 years, the Northern Sea Route (NSR) is becoming an increasingly attractive option for shipowners, with a route 40% shorter than the Suez Canal and 60% shorter than the Cape of Good Hope. The NSR promises major decreases in fuel consumption and emissions, as well as the requirement for piracy countermeasures.
In 2011, Russia’s President Vladimir Putin announced plans to invest $4.6bn in developing maritime traffic in thepolar regions, building 10 new emergency meteorological and rescue centres along the NSR, and increasing capacity at Russian ports by 50%, all by 2015.
Meanwhile, it emerged that Russia’s Finance ministry is setting aside $3.1bn for the construction of three new nuclear-powered icebreakers, to be operated by Atomflot, the maritime arm of state-owned nuclear energy corporation Rosatom.
At 173 m in length and 34 m wide, the new LK-60 breakers are the largest ever conceived. Propulsion consists of two RITM-200 pressurised water reactors, generating 60 MWe, and the design is intended to cut through ice at least 4 m thick, with vessels of up to 70,000 displacement tons in tow. The first is due for delivery in 2017.
Russia is the only country with a fleet of nuclear-powered icebreakers, since US and German attempts failed, prompting Atomflot deputy director general Stanislaus Golovinsky’s unabashed boast that Russia has an “absolute monopoly” on nuclear icebreaker construction, according to a report in US’ Business Insider.
Because nuclear icebreakers can spend a far greater period of time at sea without needing to refuel, they offer a distinct advantage for Arctic voyages. Last week, Russia’s Sovcomflot announced that its 118,000 dwt product tanker Viktor Bakaev, following ice-strengthening work, had made a successful eastbound transit of the NSR aided by two Atomflot nuclear icebreakers, Vaygach and Taimyr.
Both built for the Soviet Union in the late 1980s at Wärtsilä’s Helsinki Shipyard in Finland, the icebreakers are among those to be retired when the LK-60s are launched. It may be just as well, as the ice breakers have been showing their age: in 2011, Taimyr had to be committed for repairs when 6,000 litres of coolant leaked from its nuclear reactor and increased levels of radiation were detected in the reactor’s air ventilation system.
“Using a nuclear reactor is a big advantage, but there's a risk, because there's nothing in the Arctic to repair a nuclear ship in case of an incident,” Anna Kireeva, of global ecological organisation Bellona, told the BBC in 2012.
Meanwhile, in June of this year, Seatrade Global reported on a Memorandum of Understanding whose stipulations included a planned transfer of LNG carrier production to Russian soil. Since that time, Sovcomflot, USC and Gazprom Marketing and Trading have moved towards a wider collaboration on the improvement of Russia’s LNG shipbuilding and engineering capabilities through training partnerships with shipyards.
The reasons are, then, certainly in place for Russia to encourage charterers looking to ship cargoes via the NSR to use Russian vessels accompanied by its own nuclear icebreakers. Now, Russian firms must weigh up the cost-benefit of the Arctic shortcut versus the Suez Canal, and find a way to leverage the cost of enormously expensive nuclear icebreaker operations. If we are, as some sources predict, about to see a resurgence of Somali piracy, Russia might have exactly what it needs.

Posted 11 November 2013

© Copyright 2019 Seatrade (UBM (UK) Ltd). Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Seatrade.

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