Infrastructure of the Northern Sea Route and Environmental Protection in the Arctic (Federal Media Monitoring: August 19-25, 2013)

  • Print
Details
Category: General
Published on Tuesday, 07 January 2014 03:30
Hits: 1172

26 August 2013

The passage of a Chinese cargo ship along the Northern Sea Route is an important step in increasing the attractiveness of the northern route for transit goods. However, Russia, like other Arctic countries, might not be ready for the opening of the Arctic and an increase in traffic along the Northern Sea Route. Delays in funding the construction of icebreakers mean that in the medium term the Northern Sea Route may be left without proper icebreaker support. And the lack of a system to prevent oil spills is threatening the state of the environment in the Arctic, but this problem is gradually being addressed at national level in Russia as new rescue centres are being opened.

During the last week, the federal media attention was engaged by the following events:

  • The government decision on the allocation of      budgetary investments for the construction of two serial nuclear-powered      icebreakers;
  • The International Conference Problems of      the Prevention and Elimination of Emergency Situations in the Arctic      in Naryan-Mar, and the opening of a rescue centre in the capital of the      Nenets Autonomous District;
  • The completion of the expedition Kara-summer-2013,      conducted jointly by Rosneft and the Arctic and Antarctic Research      Institute: a study of the hydrological and meteorological conditions of      the Kara Sea.
  • The refusal of the Northern Sea Route      Administration to allow a Greenpeace ship into the Kara Sea: claims by      environmentalists that the Russian authorities are encouraging Rosneft,      whose activities are threatening the natural environment of the Arctic.

Increasing the attractiveness of the Northern Sea Route for cargo transportation has been the focus of the Arctic agenda for the past few weeks. The emphasis is on the benefits of using the Northern Sea Route, which include a shorter and safer navigation route, lower financial costs for the passage of ships etc. However, the main factor attracting public attention to the Northern Sea Route was the start of navigation of the Chinese cargo ship Yong Sheng from the port of Dalian to Rotterdam along the northern route, which is of symbolic significance. It is supposed that the interest of the country with the world's largest economy towards the Northern Sea Route will mean that it will become, if not a competitor to the Suez Canal, then at least a very busy transport artery. In the Russian media, the attitude towards the prospect of China transferring a portion of its freight transport to the Northern Sea Route is divided. On the one hand, there are fears that Chinese expansion is a threat to Russian interests in the Arctic; on the other hand, there is the view that cooperation with China could be commercially profitable for Russia.

  • The financial point of view is as follows.      The passage of a ship through the Suez Canal costs 160,000 dollars. Use of      the Northern Sea Route is free of charge. The shipowner pays only for      rental of an icebreaker and pilot services. The rate depends on the weight      of the cargo, the ship class, the distance and the period of navigation.      On average it is 5 dollars per tonne. The Chinese will pay at least 70,000      dollars for an escort for Yong Sheng. They will save about 250 tonnes of      fuel oil, which will be approximately 120,000 dollars. And the distance      from Dalian to Rotterdam via the northern latitudes is nearly 3800      nautical miles less. It seems as if world trade is destined to grow north      (Take to the North, Itogi, 19.08.2013).
  • Beijing officially started calling its      country an Arctic State and still hopes to deprive Russia of its      icebreaking service operations, because Russia no longer has a monopoly on      this route. China leased a Ukrainian icebreaker and is building its own      heavy duty model in Finland capable of passing through ice up to 4.5      metres thick. In June, the Chinese government opened a research institute      in Shanghai, employing about 1000 researchers, founded its own scientific      station Yellow River on the Norwegian Svalbard and organised several      scientific expeditions to the Arctic (China moves up to Russia in the      Arctic, Pravda.ru, 19.08.2013).
  • "In the Arctic, Russia will have to adjust      to cooperation with China,” an expert said. “Existing capacities will have      to be used both to strengthen relations with China, and to obtain      commercial gain. In cooperation with China we could organise supply points      for ships passing along the Northern Sea Route. Joint research stations      may also be set up in order to monitor ice conditions and weather      conditions, and in the future China may be brought in to help develop      mineral resources, especially hydrocarbons. The Chinese President Xi      Jinping and Russian President Vladimir Putin agreed on the joint      exploration of oil in the Barents Sea. Finally, it is important to take      into account the possibility of attracting Chinese investments for the      development of infrastructure in the Arctic. China has vast material      resources, not to mention human resources" (China becomes familiar      with the Northern Sea Route, Nezavisimaya Gazeta, 21.08.2013).

Apparently, the Deputy Prime Minister Dmitry Rogozin is one of the supporters of close cooperation with China in terms of the development of the Arctic. At least, during his visit to China he invited Chinese industrialists to join in the construction of the super-wharf Zvezda in the Primorsky Territory, which will become a future centre for Arctic shipbuilding. The head of Rosneft Igor Sechin is also in favour of cooperation with China. At a meeting in Vladivostok he suggested that Zvezda be passed on to a consortium consisting of the oil state company and Gazprombank. This idea is fully supported by Dmitry Rogozin and the Ministry of Industry and Trade, which has its own position on the development of the Arctic shipbuilding, did not object to Mr. Sechin’s proposal. It is thought that the consortium will find it easier to source investors for the delayed construction of the shipyard, but analysts still doubt the feasibility of the idea, since shipbuilding in Russia is not a worthwhile investment.

  • Russia sees China as the most likely strategic      partner in construction of the super-wharf, which is planned to be built      in the city of Bolshoi Kamen in the Primorsky Territory, said Deputy Prime      Minister Dmitry Rogozin. "Russia’s shipbuilding industry now faces      the question of choosing a strategic partner in this endeavour. In the      past this would have undoubtedly been a South Korean company, but now we      have decided to consider Chinese companies and figure out what they can      offer in this regard," said Dmitry Rogozin (Rogozin: Russia and      China may build a super-wharf, Vzglyad, 20.08.2013).
  • The head of Rosneft, Igor Sechin, suggested      attracting private investors to the construction by creating a consortium,      in which oil companies would guarantee orders and Gazprombank would act as      a strategic financial partner. “In fact, this should lead to the creation      of a new technology centre, the construction of a marine technology      cluster and development of the shelf,” he explained. <...> “This      will enable offshore technology to be created for our companies and      brought to the Arctic before production. And it is not even a question of      national interest; it is more of a geo-strategic issue: whoever is first      to the Arctic will make a bid for leadership in the 21st century. And if      you haven’t got anything to go on, you’ll be kicking yourself,” said the      Vice Prime Minister (Just so you don’t kick yourself, Rossiyskaya      Gazeta, 20.08.2013).
  • A source familiar with the situation said      that the initiator of the Zvezda super-wharf project, the former head of      the USC, Roman Trotsenko, now works at Rosneft. "Obviously he and his      team wanted to give back control of the project,” said the source in an      interview with Gazeta.Ru. The General Director of InfraNews agency, Alexei      Bezborodov, said that Rosneft and Gazprombank will search for investors      for the project for a long time. "The USC was clearly not able to manage,      however, attracting new investors, both Russian and international, will      not be easy," says the expert. “Shipbuilding in Russia is not      profitable and not easy to understand. In terms of the legal framework and      obtaining patents and also in terms of the workforce" (Zvezda      handed over to Rosneft, Gazeta.ru, 19.08.2013).

As has been repeatedly pointed out by specialists, one of the key conditions for improving the economic potential of the Northern Sea Route is the development of its infrastructure and, in particular, of the commercial fleet, icebreakers etc. Last week, the head of the government, Dmitry Medvedev, signed a decree, according to which in the period from 2014 to 2020, 86 billion roubles will be allocated from the budget for the construction of two nuclear-powered icebreakers. The fundamental decision regarding the need for building new icebreakers was made a year ago, however, because of the position of the Ministry of Finance, suggesting that Rosatom find 70% of the required funds, the project came to a halt. According to the head of Atomflot, the cost of delaying construction of new ships could be that in 2019-20 the Northern Sea Route will be left without sufficient icebreaker support, as by that time there will be only 2 icebreakers in the ranks. It is expected that by the year 2020, freight traffic along the Northern Sea Route will be 5 times higher than at present; by this time the Yamal LNG project will have started, and there is no guarantee that by the year 2020 the weather conditions will continue to be favourable.

  • According to the expert, in order to      realize the full potential of the Northern Sea Route two tasks need to be      resolved: infrastructure must be created including a network of weather      stations and bases for the repair of ships. But the most important thing      is to build a commercial fleet, says Igor Davidenko: "We need to      actually create a new fleet for the carriage of any cargo and build new      icebreakers. We have ice breakers, they have even been loaned out to other      countries, but they are now ships of the past. It has been stated that      hundreds of new ships will be needed for the North. It is estimated that      280-300 ships need to be built quickly, I agree with this" (The      Northern Sea Route: no ice or pirates, Voice of Russia, 20.08.2013).
  • On Wednesday, Dmitry Medvedev signed a      decree defining the scope of budgetary investments into the construction      of two serial 60MW (LC-60) Project 22220 nuclear-powered icebreakers,      reports the government’s press service. In an explanatory memorandum it is      stated that the amount of budget investment in 2014-2020 in prices of      those years will be 86.1 billion roubles. This means that the entire cost      of the project will be covered by the budget. The vessels are planned to      be delivered to the customer by Atomflot Federal State Unitary Enterprise      (part of Rosatom State Corporation) in 2019 and 2020 respectively. In      spring the Ministry of Finance announced that it was not in support of the      government fully paying for the construction of the two icebreakers (Icebreakers      get a budget, Kommersant, 21.08.2013).
  • However, if a final decision on ordering      new LC-60 class nuclear icebreakers is not taken, the companies that      develop shelves in the seas of the Arctic Ocean will be left without      adequate ice support on the Northern Sea Route in 2019-2020, said Ruksha      recently while explaining the importance of the project. He also states      that Russia has already lost one year - 2019. The second and third      icebreakers were supposed to be launched in 2019-2022. The second new icebreaker      will certainly not be ready in 2019; it will not be ready before 2020 and      by that time the Yamal LNG project and a number of other projects will      have already been implemented," said Ruksha (For the Arctic and      the Northern Sea Route, Vzglyad, 22.08.2013).

Another problem associated with the opening of the Northern Sea Route and the Arctic in general is the lack of an effective system to prevent oil spills and industrial disasters in the Arctic, which could have very serious consequences for the global environment. As shown by the media, the Russian authorities and oil and gas companies understand the seriousness of the problem. Last week, at a conference in Naryan-Mar, representatives from the authorities and oil and gas companies discussed how to make industrial development in the Arctic safe. During the conference a rescue centre was opened in the capital of the Nenets Autonomous District and it is thought that the opening of similar centres along the entire length of the Northern Sea Route will make industrial activity in the waters of the Arctic Ocean safer. In addition to this, Rosneft, by conducting hydrological and meteorological research in the Arctic seas, is trying to show the public that the industrial development of Arctic Shelf is based on scientific evidence on the state of the environment in the region, and therefore has a high level of environmental safety.

  • The route is very beneficial for us, but it      also creates problems. How can we effectively monitor all the possible      types of environmental pollution? How can we react quickly to emergency      situations? At present - and this figure also was mentioned at the      Conference - the time taken for rescue equipment to reach the Arctic in      the event of a disaster is, on average, 7 days. This is not just a long      time; if we are talking about a fire on the rig, for example, or a burst      oil pipeline, it is an eternity. What can be done? This is why the      countries of the Arctic Council meet at these conferences. This is      because, if there is a major disaster - and all the Arctic countries agree      on this point - no one country will be able to cope on its own (Emergency      Arctic, Rossiyskaya Gazeta, 22.08.2013).
  • The Arctic zone of Russia contains nuclear      power stations and nuclear-powered icebreaker and warship bases, as well      as chemically hazardous and explosive items and important elements of      communication, which could be sources of anthropogenic disasters. The      centre was opened during the international conference Problems of the      Prevention and Elimination of Emergency Situations in the Arctic,      including Issues of Oil Spills which took place in Naryan Mar on August      20-22. It is planned that a total of 10 emergency rescue centres will be      set up in the Arctic. The main facilities will be in the major centres in      Naryan-Mar, Dudinka and Pevek. EMERCOM (Emergency Ministry) bases will      also appear in Murmansk, Arkhangelsk, Vorkuta, Nadym, Anadyr, Tiksi and      the town of Providence (First Arctic EMERCOM centre opened in      Naryan-Mar, Vzglyad, 20.08.2013).
  • Rosneft has made another step towards the      practical development of the Arctic Shelf. The expedition      Kara-summer-2013, held jointly by the state company and the Federal State      Budgetary Institution Arctic and Antarctic Research Institute has now come      to an end. Over a period of 30 days, from on board the scientific      expedition vessel Akademik Fedorov, the expedition team carried out      extensive research of the hydrological and meteorological conditions of      the Kara Sea, monitored the outlet glaciers of the archipelago of Novaya      Zemlya and also performed a comprehensive analysis of ice conditions and      determined the drift of icebergs and their morphometric characteristics.      On the East coast of Novaya Zemlya, where for almost 20 years there have      been no regular observations, freestanding meteorological stations have      been set up, which now transmit data on the weather conditions in the      western part of the Russian Arctic (Akademik Fedorov evaluates the ice      conditions, Trud, 20.08.2013).

But, as recent events have shown, international environmental organisations do not trust Rosneft’s statements, basing their scepticism on data which indicates that the state company occupies one of the top spots in terms of oil spills. One year ago, Greenpeace attacked Gazprom Neft as it was about to start production on the Prirazlomnaya platform; now it is Rosneft’s turn. After the visit to the Barents Sea, which was detailed in a previous review, the Greenpeace ship Arctic Sunrise was going to sail to the Kara Sea, but this was stopped by the Administration of the Northern Sea Route, as it did not believe that the ship conformed to the ice conditions in the Arctic Ocean. This led to a dispute in which Greenpeace accused the Russian authorities of encouraging the environmental “irresponsibility” of the oil company, in response to which Rosneft ironically offered to give the ecologists a television set in order to receive objective information. Following this, the Greenpeace ship defied the ban by the Russian authorities and headed into the Kara Sea, which is involved in yet another scandal concerning the development of the Arctic.

  • Foreign representatives of Greenpeace said      more bluntly: "The refusal to allow the Greenpeace icebreaker access      is a thinly veiled attempt to stifle peaceful protest and keep      international attention away from Arctic oil exploration in Russia,” said      the Coordinator of Greenpeace Arctic programme Christy Ferguson from on      board the Arctic Sunrise. “The Arctic Sunrise is a fully equipped      icebreaker with significant experience of operating in the Arctic Ocean,      and it has a higher ice classification than many Rosneft vessels. Ferguson      said the decision to ban was contrary to international law and the right      to freedom of navigation. "It confirms once again the relationship      between the Russian government and the oil companies," she said (Arctic      not for the "greens", Gazeta.ru, 21.08.2013).
  • Rosneft was surprised by statements from      Greenpeace that the exploration of the Barents Sea is detrimental to the      environment. Rosneft conducts work in compliance with all international      requirements and standards, said the company’s official representative,      Vladimir Tyulin, to Prime agency. "If Greenpeace employees spend all      of the organisation’s money on propaganda and are unable to follow the      news, Rosneft is willing to give the organisation a TV at least to give      them access to objective information," he said (Rosneft wants to      give Greenpeace a TV for "objective information",      Kommersant, 21.08.2013).
  • Oil spills are a regular occurence at the      company’s facilities, argues Greenpeace, and the total amount is      supposedly such that Rosneft occupies first place in terms of spillages      among the world's largest oil companies. It is not difficult to imagine      what will happen with the Arctic waters, if such careful workers set about      exploring the deposits at the bottom of the sea. By some strange      coincidence, this unenviable leadership of Rosneft is barely featured on      the television programme Oil on the channel Rossiya 24. At least the      various successes and triumphs of Rosneft are mentioned in this programme      much more often. This is probably exactly what Rosneft considers      “objective information” (Rosneft covers up an Arctic disaster,      Sobesednik, 23.08.2013).