Record Season for LNG, Crude Oil, and Container Shipping Looms in Russian Arctic

As the summer navigation season in the Russian Arctic officially begins on Monday July 1, the Northern Sea Route looks set for a significant boost in traffic.

The first eastbound delivery of liquefied natural gas from Yamal LNG is days away from completing the first voyage to Asia of the summer. Eduard Toll is traveling together in a convoy with nuclear icebreaker Sibir and crude oil shuttle tanker Shturman Skuratov.

LNG shipments, crude oil transits and burgeoning container shipping will dominate the route this summer. 

Russia’s largest LNG producer Novatek looks set to send record volumes of product to markets in Asia and Europe. With 28 LNG carriers having received permits for the NSR thus far, a higher figure than during all of 2023, activity will ramp up quickly. 

In addition to existing exports from Yamal LNG the company will be aiming to finally begin production at its new Arctic LNG 2 facility, which has been sitting idle since December 2023. 

A host of Western sanctions represent a formidable challenge to establishing regular shipping from the project, but Novatek is all but guaranteed to dispatch at least ad-hoc voyages in the coming weeks and months.

It will also be towing the second production line of Arctic LNG 2 from the construction yard near Murmansk to the Gydan peninsula at the end of July and into August. The massive 400 meter-long platform will be towed by a dozen tugs and offshore vessels over the course of about two weeks. The operation will mirror last year’s tow of the first production line, a national event in Russia attended by President Putin.

Conventional LNG carriers

Due to the lack of ice-capable LNG carriers following Western blocking measures, Novatek will revert to using conventional and low ice-class tankers. Around a dozen such vessels, some of which have never traveled to the Arctic before, have received permission to enter the waters of the NSR after July 1. 

Further east along the Route, Rosneft continues work on its massive Vostok Oil project. While originally slated to come online in 2024, the present timeline for its opening remains uncertain. Construction activity has resulted in significant volumes of construction materials being sent along the route. This trend will continue throughout summer as the company continues work on port facilities and readying land-side infrastructure.

Could double this summer

Even without any exports from Vostok this summer, the route appears on track to see significant volumes of crude oil being shipped from Europe to Asia. Last year vessels carried around 1.5m tons of crude oil, a figure Russian officials aim to at least double in 2024.

 Last summer Arctic waters saw the first use of Suezmax oil tankers, some without ice-protection raising alarm bells among environmentalists. These types of tankers are able to carry up to one million barrels of oil.

Container shipping

Shipping activity in other parts of the world also stands to impact the Arctic this summer. With continued turmoil in the Red Sea arising from Houthi activity, most shipping operators have elected to re-route vessels around the southern tip of Africa adding several weeks to voyages between Europe and Asia.

As a result the Arctic may emerge as an interesting alternative for some niche operators. Chinese shipping operator NewNew Shipping completed seven container ship voyages last summer, including the much publicized trip by NewNew Polar Bear. This year the company aims to complete at least a dozen trips between China, South Korea and Russia via the Arctic. 

It is set to be joined by another Asian operator, Hong Kong-based Safetrans Shipping. The operator acquired low ice-class Panamax container vessels able to carry up to 5,000 standard container units. Its vessels received permits for roundtrip voyages via the NSR last month. With their size they will eclipse all previous container shipping activity in the Arctic.