Russia and China can change the world with the help of Ice Silk Road

Russia and China will make Northern Sea Route become the new Suez Canal

As it can be seen from last year's experience of cargo transportation along the Northern Sea Route, the limits of navigation are expanding due to climate change. New opportunities are opening up for the development of the natural resources of the Arctic and the development of international shipping. At the same time, the risk of aggravation of rivalry between Russia and Western countries in the region is growing.

The volume of cargo transportation along the Northern Sea Route grows steadily from year to year. Even the pandemic did not stop it from gaining 4.7 percent in 2020 as compared to the previous year. The first shipment of liquefied gas from the port of Sabetta (the Yamal Peninsula) to the east took place already in May, although it usually happens in July. The Christophe de Margerie gas carrier carrying gas from the Yamal LNG plant traveled to China accompanied by an icebreaker. Many other ships followed.

The experiment with the passage of the Christophe de Margerie and the Nikolay Evgenov LNG tanker on the Northern Sea Route in January 2021 without accompaniment was a success too, although this has never happened before. 

As representatives of Novatek noted, the ships independently passed the ice-covered part of the NSR along the routes recommended by Atomflot's headquarters of marine operations and the Arctic and Antarctic Research Institute. The voyages took place two months after the traditional completion of the navigation season in the eastern part of the Arctic. 

Gas in exchange for technology

The congestion of the Suez Canal and the prospects for the development of a shorter Arctic route arouse increasing interest in the Northern Sea Route on the part of large foreign companies and many countries of the world. In particular, Japan would like to actively cooperate with Russia in trade and economic spheres in the Far East and the Arctic. Japan developed and presented a concept of such cooperation aimed at expanding interaction in the field of energy, logistics, port and transport infrastructure, fish processing industry, urban environment and tourism.

Japan's plans also include active participation in the development of the Northern Sea Route. Mitsui and Jogmec consortiums have been participating in the Arctic LNG 2 project since 2019 - they already use the NSR for the supply of liquefied gas. Japanese Ambassador to Russia, Toyohisa Kozuki, is convinced that the Northern Sea Route logistics is 40 percent more efficient than traditional shipping routes. Within the framework of Russian-Japanese cooperation in the Arctic, it is planned to launch a regular container line on the Northern Sea Route.

Against the backdrop of Western sanctions, Russia's and China's interest in mutually beneficial bilateral cooperation has been growing. In particular, the two powers are interested in the development of oil and gas resources in the Arctic. The two powers are determined to work on the implementation of the Ice Silk Road megaproject. China could provide new technologies, equipment and investments for the development of the Arctic, the creation of the infrastructure of the Northern Sea Route and ice-class ships. Russia could provide China with energy resources in return.

Interest of global investors

Leonid Mikhelson, chairman of the board of Novatek, noted that new technologies for the construction of LNG lines and the further development of the NSR give Russia an opportunity to dominate on the world's LNG market, primarily in the Asia-Pacific region. At the same time, it is important to achieve competitive transportation costs to the growing Asian market. The Novatek management proposes to decrease icebreaker assistance tariffs and port fees as cargo turnover grows.

The development of the Northern Sea Route is an additional impetus to the LNG industry, says Leonid Mikhelson. Each new LNG project attracts more than 1.5 trillion rubles in investments.

To implement the Northern Sea Transit Corridor project, it is planned to set up joint ventures with the participation of foreign investors, transshipment hubs and a fleet of Arctic container ships. According to Alexander Neklyudov, CEO of Rusatom Cargo (part of Rosatom State Corporation), transport and logistics complexes are necessary for the transshipment of container cargo from small capacity feeder ships to Arctic-class container ships. One of the world's largest port operators – DP World and Creon Energy Fund investment company – intend to act as strategic investors and participants of the would-be joint venture.

The head of DP World, Sultan Ahmed Bin Sulayem, sees many advantages over the Suez Canal in the Northern Sea Route: navigation through the waters of multiple countries, narrow straits, sea areas controlled by pirates - all this is fraught with excessive risks and threats. If provided with all necessary modern infrastructure, the Northern Sea Route could become a much more attractive path for cargo transportation.

Russia's plans to develop the riches of the Arctic and create a northern trade artery of global importance bother aggressive political circles in the United States and their uncomplaining partner countries. US Navy Secretary Kenneth Braithwaite stated bluntly that warships of the United States and its allies would be patrolling off the Russian shores in the Arctic to prevent Moscow's advance in the North.

According to experts, the region contains as much as 30 percent of undiscovered natural gas and 13 percent of oil reserves of the entire planet. The US worries that the Arctic will show a disproportionately large influence on global economy in the future while taking six percent of the surface of the planet. The United States and its NATO partners have been building up their military presence in the Arctic lately, which is fraught with future conflicts.

  • US Marines and British troops are permanently deployed in Norway;
  • B-1B strategic bombers have also been deployed there;
  • NATO allies also increase the quantity of naval manoeuvres in the Arctic waters close to Russia.

According to the Russian Ministry of Defense, NATO submarines have doubled the frequency of their visits to Norwegian ports over the past ten years.

The demonstrative activities of NATO allies in the Arctic have inevitably provoked a response from the Russian military. Russia's Northern Fleet plans to carry out a number of Arctic missions and conduct various tactical exercises this year. 

To protect the Northern Sea Route, the Pacific Fleet practiced the quick deployment of its forces in the region. In late March, the whole world could watch the footage of three Russian nuclear submarines simultaneously emerging from under the ice during exercises in the Arctic. There is no doubt that Russia's decisive actions to protect its interests in the Arctic will cool down the hot heads of NATO hawks.

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Author`s name Alexander Shtorm
Editor Dmitry Sudakov