By Dina Khrennikova and Olga Tanas (Bloomberg) —
Russia’s largest liquefied natural gas producer plans to start shipments to Asia across the Arctic in midJune, one month later than last year, following a shortage of tankers for the experimental journeys.
Novatek PJSC, which in 2020 made history by sending the earliestever cargo to Asia across the Arctic in midMay, didn’t repeat the feat this spring because its limited fleet of tankers needed to ensure reliable supplies to a booming Asian market. While the Arctic provides a shorter passage to Asia, it’s riskier in spring than the traditional route through the Suez Canal due to thick ice.
“I wish I could do the same this year,” Novatek’s Chief Executive Officer Leonid Mikhelson told reporters at the St. Petersburg International Economic Forum last week. “Yet we simply had no tanker capacity in May for the shipments.”
With Arctic ice warming faster than the rest of the world, Russia aims to make its Northern Sea Route a rival to the Suez Canal. The next LNG shipment across the Arctic will set sail as Chinese importers are in the market seeking cargoes of the powerplant fuel ahead of the summer, when demand for airconditioning is expected to increase.
Novatek’s Yamal LNG facility on an Arctic peninsula has been operating at 114% of its production capacity, which has increased with the recent launch of a fourth train, Mikhelson said. The Russian producer has a fleet of just 15 Arc7 iceclass tankers to ship the increased LNG volumes, he said.
To speed up the tanker turnaround, Novatek relies on socalled transshipments, with cargoes arriving to European terminals from Yamal on iceclass tankers, then reloading to regular LNG vessels and shipped to Asia via the Suez Canal.
The Arctic route stretches more than 3,000 nautical miles (5,550 kilometers) between the Barents Sea, near Russia’s border with Norway, and the Bering Strait in the Northern Pacific. It’s the shortest possible route between Asia and Europe.
Novatek expects yearround eastbound navigation across the Arctic starting in the 20232024 season, Mikhelson said.
This task is “entirely feasible from the technical point of view,” given Russia’s plans to increase the fleet of iceclass LNG tankers and more powerful icebreakers, said Sergey Frank, Chairman of Smart LNG, which will own and operate a fleet of vessels serving Novatek’s second LNG facility.
The length of the last navigation season was also recordbreaking, with Novatek making eastbound journeys via the Arctic through January. Mikhelson also aims to stretch the coming season.
“We will look to make the late journeys in JanuaryFebruary,” he said.
–With assistance from Anna Shiryaevskaya and Irina Reznik.
© 2021 Bloomberg L.P.
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