Northern Logistics Route: Should One Expect a Breakthrough?

The Northern Sea Route and the Arctic in general were made a state priority even before the conflict in Ukraine.

The inclusion of these subjects in strategic planning documents, among other things, was evidence thereof. For instance, Vladimir Putin’s inauguration decree of May 2018 clearly set the task of raising cargo traffic along the NSR to 80 million tonnes by as soon as 2025. The result, however, proved not so impressive: just 38 million tonnes.

The severance of economic relations with the West gave the Northern Sea Route a new meaning though.

While earlier the aim was cross-border traffic and the establishment of a new efficient trade route between China and Europe, now the main emphasis was placed on a secure cargo flow from China to Russia and back.

The pressure of sanctions is mounting, calling into question the future of transport at least across the Baltic Sea through the Danish straits.

The new US President Trump’s attention to the Arctic also seems to prove that Russia is correct in being enthusiastic about the region.

The key question is: can nice talk about the NSR as a profitable and strategic route and about Russia’s return to the Arctic be converted into actual breakthroughs making it possible to carry out at least the executive’s own plans? The strategic content concerning the NSR is relatively new, but many problems are old.

The question is who has the most responsibility for this: companies in the primary industry that delay their mining and production projects; shipbuilders unable to provide the necessary number of ships; or Rosatom as the NSR operator? Let us try and look into this.

The new NESF report covers the following subjects:

Northern Sea Route in strategic planning documents

• How the NSR positioning changed
• What changes Rosatom introduced to the NSR development strategy

How Rosatom runs the Northern Sea Route

• The system of interaction between Rosatom units concerning the NSR
• Key persons responsible for the development of the project

Status on the fleet for the NSR

• The destiny of the programme to build icebreakers
• Progress on the construction of gas carriers for Novatek’s LNG projects

Sanctions and the NSR

• The influence of restrictions on projects to carry what today is the main cargo, LNG
• Prospects for commissioning new LNG plants in the Arctic

Prospects for carrying Russian hydrocarbons along the NSR

• Key oil production projects in the NSR zone: Vostok Oil and Novy Port

How much oil is shipped for export from Murmansk and other Arctic ports

• Dynamics of crude oil and LNG traffic to China along the NSR

Medium-term outlook

Contents of the report: