Northern Sea Route cargo turnover fivefold increase expected

Northern Sea Route cargo turnover fivefold increase expected

April 14, 2022

The transportation along the NSR is still inferior in terms of economic efficiency to the transportation of goods through the Suez Canal, but it has sufficient profitability.

#ARCTIC. #SIBERIA. THIS IS TAIMYR. “Freight turnover has grown fivefold in five years. Over the next five years, we expect another fivefold increase in cargo turnover along the Northern Sea Route. The priority is measures aimed at the development of investment projects, the Northern Sea Route, the environment for the life of people living in the Arctic zone of the Russian Federation”, said Alexey Chekunkov, minister for the Far East and the Arctic Development.

According to Aleksey Chekunkov, the government plans to allocate 560 million rubles of subsidies annually for regular freight transportation along the NSR.

Experts note that transportation along the NSR is still inferior in terms of economic efficiency to the transportation of goods through the Suez Canal, but it has sufficient profitability.

The target loading of the NSR at 80 million tons by 2024 is maintained in accordance with the previously outlined plans, while energy resources will make up the main load of the route – the government is implementing a set of state support measures for oil and gas companies. There are no significant postponements for such projects implementation, plans to ensure the traffic along the NSR remain unchanged: by 2024 – 80 million tons, by 2030 – 120 million, and by 2035 – 180 million tons.

The main oil project for loading the Northern Sea Route is going to be Rosneft company’s Vostok Oil in Taimyr. The project has the potential to supply 30 million tons of oil by 2024 and up to 100 million tons after 2030. This project alone is able to bring the Northern Sea Route to the planned volumes and even surpass them. One of its most important advantages is that it can supply raw materials to any market, both in the eastern and western directions, experts say.

In total, liquefied natural gas plants and Vostok Oil alone will be able to provide more than 60 million tons of cargo through the Northern Sea Route by 2024. According to experts, the difficulties with the northern territories development are primarily associated with a lack of labor resources and a decrease in mining.

Plans to load the NSR may be affected by the suspension or delay in the railways and LNG and oil transshipment terminals construction, the ports modernization and infrastructure for bunkering ships.

“The Northern Sea Route is shorter than the route through the Suez Canal, and the transportation of goods along it is not supposed to be more expensive. If this requires some kind of special state program or support, this has to be done”, Yury Trutnev, deputy prime minister, plenipotentiary representative of the president of the Russian Federation in the Far Eastern Federal District, commented on the situation.

Earlier, we told that the modern Northern Sea Route has broken all Soviet records in terms of cargo turnover.

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Text: Denis Kozhevnikov, Photo: author

April 14, 2022

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