Relevant topics

2018 December 17

Northern ruble is warming

Enormous investments in creation and development of port facilities is required for the development of shipping on the Northern Sea Route. Among key projects are the Utrenniy terminal, oil terminal of Taimyr, Northern Latitudinal Railway and its extension to Sabetta. However, financial and shipbuilding capacity of the country cannot cover all the plans as scheduled.

The Gulf of Ob is the key

Sabetta is the key port on the Northern Sea Route. In the future, its development will not only depend on liquefied natural gas (LNG) with handling other types of cargo. The Northern Latitudinal Railway 2 project is to be implemented for that purpose. It foresees connection of the port with a network of Russian railways. Yamal Governor Igor Artyukhov said at the Transport Week 2018 that the NLR-2 project is on the agenda. However, construction works under NLR-1 have not been started yet. Ac to the official, they are to begin before the end of 2018. The project foresees modernization and construction of railway infrastructure with a total length of 498 km, or 2,353.3 km taking into consideration the approaches.

As Aleksandr Misharin, Deputy General Director of Russian Railways, said at the Government meeting on 11 December 2018, reconstruction of Labytnagi – Kotlas – Konosha line is planned in the context of the NLR project. That will integrate railway systems of Russia’s European part, Ural and Western Siberia. Total volume of cargo traffic through the created railway corridor is forecasted to make 24 million tonnes per year. Investments are estimated at RUB 236 billion with the construction works to be implemented in 2018–2022. 

According to Sergey Minkov, chief analytical expert of the Comprehensive Research Department at the Institute of Natural Monopolies Research (IPEM), gas condensate will make the bulk of cargo traffic on the Northern Latitudinal Railway – its share will exceed 50%. The expert also says the railway will also transport crude oil, oil products, polyethylene, ferrous metal etc.

The Northern Latitudinal Railway 2 project foresees the construction of Bovanenkovo-Sabetta branch and reconstruction of Obskaya-Bovanenkovo branch. According to earlier statements, that will let increase throughput of port Sabeta to 70 million tonnes due to attraction of dry bulk cargo.

Besides, there is a plan to build the Utrenniy terminal on the Gydan peninsula as part of the Arctic LNG 2 project. NOVATEK CEO Leonid Mikhelson earlier said the terminal construction is divided into two phases. The first one foresees building of facilities needed to accept construction cargo, the second one – creation of conditions for accommodation of large ships in the port’s water area. The berths of the terminal are to stretch for 3 kilometers, twice as much as in Sabetta.

The terminal is to be completed by 2024. It is to have annual capacity of 21.6 million tonnes. Financing is estimated at RUB 152.7 billion including RUB 112.2 billion to cover the construction of federally owned facilities.

As Leonid Mikhelson said at the Government meeting on December 11, NOVATEK projects will ensure the NSR cargo traffic of 46.5 million tonnes by 2024 with the Utrenniy terminal accounting for a half of the traffic.

A reconstruction of an access canal in the Gulf of Ob estimated at RUB 8.3 billion is needed for implementation of those plans as well as construction of transshipment facilities in the Murmansk Region and Kamchatka as we wrote earlier >>>> 

NOVATEK CEO also emphasized that the plan of activities on the development of the Northern Sea Route foresees state financing in the amount of RUB 216 billion by 2024. However, the budget does not foresee financing of activities that should be implemented to ensure the throughput by 2024.

Not by gas alone

Apart from gas terminals, coal and oil terminal are to appear along the Northern Sea Route. Chaika terminal is to be built by VostokCoal at Dickson port to ship coal produced at Lemberov River field. The terminal is to handle 10 million tonnes of coal per year with private investments to make RUB 18.6 billion. The terminal is to be put into operation in 2021. The Severnaya Bay terminal with the same or higher capacity is planned for construction not far from the Chaika terminal. 

Besides, Taimyrneftegaz is going to build oil terminal “Tanalau” in Dudinka port to ship oil from the Payakhskoye field. The Tanalau terminal with annual capacity of 7.5 million tonnes is to be put into operation in 2022. Private investments are to total RUB 9 billion.

Dredging is to be conducted to build the mentioned terminals. When speaking at the Government meeting, Energy Minister Aleksndr Novak said this issue is to be addressed.

Nevertheless, successful implementation of all mentioned projects can hardly ensure achievement of the NSR traffic target of 80 million tonnes per year set for 2024. That means that transit and short-sea traffic should be attracted to achieve the target. For example, fish can be transported along the Northern Sea Route as we wrote earlier >>>> 

Besides, implementation of those plans depends on construction of icebreakers in Russia which is often behind schedule as it was emphasized at the meeting. 

To summarize, it can be said that financial and shipbuilding capacity of the country cannot cover all the plans as scheduled.

Vitaly Chernov

Issues related to construction of hydraulic engineering structures and dredging in Russia will be discussed at the 2nd Dredging and Hydraulic Engineering Structures Congress which will be held in Moscow on 20 - 21 February 2019 >>>>