Arctic Sea Routes Opening Up For China

July 21, 2011 Posted by China Briefing Reading Time: 2 minutes

Jul. 21 – The use of Arctic shipping routes is doubling this year as global warming makes it more convenient to traverse the Arctic Ocean when servicing Russia, Europe and Eastern China.

Escorted by Russian ice-breakers, the Arctic routes are being used from now until October. The first vessel to use the route this year is a Singaporean tanker, carrying gas condensate from the Russian Novatekc Purovsky gas processing plant to the city of Ningbo on China’s eastern seaboard. The arctic route cuts the time taken for the delivery from Murmansk to 22 days, about half of the normal voyage time when sent through the Suez Canal, as has previously been the case.

Other foreign owned shipping companies are also planning to use the arctic route, including Tschudi Arctic, which uses Hong Kong registered cargo ships to transport iron ore from Norway to Qingdao. Tschudi Arctic’s Chairman Felix Tschudi has stated that increased development of mineral, oil and gas resources in the arctic region would result in a higher volume of shipping through the northern sea route.

Russia of course will also want to have a say in this, and it is likely that the use of icebreakers to accompany vessels will be mandatory – and chargeable. Russia’s Rosatomflot possesses a fleet of ice-breakers specifically for the purpose, and the cost of using these as escorts is still cheaper than the Suez option. Gas deliveries from Russia to China are also likely to use the northern routes, as well as improve delivery schedules to Europe. The main beneficiary is set to be Russia’s Sovcomflot, a state-owned shipping line which has been earmarked to provide year-round Arctic shipping routes at the request of Russian Prime Minister Vladimir Putin. Sovcomflot is also looking into raising money via an IPO in order to expand its fleet, possibly to be launched in Hong Kong.

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