According to market data and LSEG on Tuesday, Russian shipping company Sovcomflot began transporting Urals crude to Asia this year via the Northern Sea Route. Melting ice has opened the Arctic transit route to transit shipments source Marine Link.
Alternative Routes Amid Sanctions
Western sanctions are complicating navigation for Russia’s fleet in European Union waters, prompting the search for alternative routes from western ports to Asia. The Northern Sea Route, despite being shorter than the Suez Canal route, remains challenging and requires icebreaker assistance for vessels along the Russian coast.
The oil terminal is usually open from July until October.
It runs about 3,500 miles (5,600 km) from the Port of Murmansk at the border between Russia and Norway to the Bering Strait in Alaska. Scientists have linked the shrinking ice in recent decades to climate change.
Political Push for Arctic Route
Vladimir Putin, the Russian president, has been pushing for the construction of this route in order to pivot Russia towards Asia during the worst crisis of relations between Russia and the West since Cold War times.
LSEG data indicates that Sovcomflot’s Aframax vessel, Viktor Bakaev, sanctioned by the U.S., has loaded 100,000 metric tonnes of Urals crude oil in Primorsk and is currently in the Barents Sea en route to Asia. Two additional Sovcomflot Aframax crude ships, Korolev Prospect and Vernadsky Prospect (both U.S.-sanctioned), are heading west from Russia’s Far East via the NSR.
According to two industry sources, these tankers will likely be loading oil at Russia’s west ports to supply Asia.
Future Expectations
The oil was not known to which Asian port it would go or whether the cargo would be loaded onto other ships in Russia’s Far East. Market sources said that the cargoes would likely go to China.
The European Union sanctioned the Russian shipping company Sovcomflot in June after Washington designated 14 of their tankers earlier this year.
Sovcomflot didn’t immediately respond to an inquiry for comment.
According to Rosatom, the open registry of Rosatom applications, the demand for shipping via the Arctic route will remain high among Russian oil companies in 2024. At least seven Sovcomflot vessels of 100,000 tonnes have received transit navigation permission along the NSR already this year.
Increased Transport Volumes
The Russians sent 0.6 millions tons of Urals oil to Asia last year via NSR. The sources expect that this year the oil volume transported through the route will increase significantly.
Rosatom, Russia’s state nuclear agency, is also responsible for navigation along the NSR. It provides tankers with icebreakers to help them on their journeys.
In 2022, Russia approved a plan of development that would see cargo volumes increase from 34,000,000 metric tons to 150,000,000 in 2030. The turnover last year exceeded 36,000,000 tons.
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Source: Marine Link
