A new breed of ice-breaking LNG carrier designed to spend more time in ice and geared for year-round operations will start moving through the Northern Sea Route (NSR) by mid-2023.
This new Arc7 fleet will be largely controlled by a Sovcomflot-Novatek joint venture — Smart LNG — and its chairman Sergey Frank, a former Sovcomflot (SCF Group) chief executive who is now non-executive chairman.
Talking to TradeWinds about the new fleet's progress and his passion for the NSR, Frank also spoke in his capacity as chairman of the Northern Sea Route Public Council think tank.
Fascination
Frank first went to the Arctic in 1977. The region had always held huge fascination for him — a spark lit by his maritime college tutors who had served on shipping convoys in the region during World War II.
He said cargo shipped through the NSR has seen a near fivefold increase since 2016, rising from 7.5 million tonnes just before the start-up of the Yamal LNG project to 33 mt last year.
The largest contributor is LNG, followed by oil-based, mineral and transit shipments, such as towage and kit needed to build plants.
He said there is every sign — based on sanctioned projects — that it will grow again this year.
But the next big expansion is likely to come in 2024 with the start-up of the Novatek-led Arctic LNG 2 project, when NSR volumes are expected to grow to 80 mt — a more than tenfold expansion on 2016’s figures.
Frank cited four factors behind the growth.
He said climate change is opening a window for safe navigation along the route.
A shorter shipping distance between the West and Asia is another strong driver.
He added that advances in technology are allowing vessels to operate safely in Arctic waters with design and equipment that is already of a far higher specification than that deployed on commodity shipping.
While the installation of infrastructure along the route is also developing “relatively fast” and on schedule, Frank also cited the new generation of ice breakers under construction and next level satellite coverage and onshore support bases for search and rescue as underpinning the momentum.
Philosophical
He said the good news for shipping is that this infrastructure will not only provide support for vessels in harsh winter conditions but potentially for new seasonal summer transit trades, which will be attractive and affordable for existing vessels.
He sees this as a more realistic scenario than companies building specialised Arc7 ice-class fleets.
There is a space and there is a place for the Northern Sea Route within this balanced and integrated transportation system of the 21st Century
Sergey Frank
Frank said the industry has already witnessed the demand for route alternatives when the Suez Canal was blocked by the grounding of the 20,388-teu boxship Ever Given (built 2018) on 23 March.
He repeatedly turned to Greek philosophy, quoting Heraclitus’ theory that everything flows and nothing stays still.
He said NSR transit movements will grow, explaining that it could be a very interesting channel for shipping companies from the west coasts of the US and Canada, and north-west Europe, which could use the summer season to reposition vessels.
Exotic
He conceded that the route might not be for everyone, adding that in the shipping community, there will always be those ready to accept risk, those that avoid it and local specialists.
But he said: “There is a space and there is a place for the Northern Sea Route within this balanced and integrated transportation system of the 21st century.”
However, he is frustrated by those who will not consider the NSR and its potential to cut shipping distances.
“It is a bit exotic that we are seriously talking about how to populate Mars but we don’t understand a lot about what is basically a stone’s throw distance from us,” he remarked.
Smart LNG currently has 14 Arc7 vessels under construction at Russia’s Zvezda Shipbuilding Group.
"When the next generation of Arc7 LNG carriers and the new ice breakers come into service in 2023, we will be much better prepared to launch a year-round navigation in the eastern sector of the NSR,” Frank said.
But he added that it is important to respect the Arctic.
“Every voyage gives us more data, more facts and more understanding," he said.
“We need to make our next steps very accurately and after a thorough analysis. We are not in the race to make achievements every next month. It is not a sport, it’s a serious business.”
