Moscow sees huge new business opportunity in northern shipping routes. But figuring out the best ways to travel via the Arctic is a massive, and chilly, undertaking.
MOSCOW — When, in the 1990s, the Northern Sea Route administration left its headquarters in central Moscow for good, polar explorer Artur Chilingarov took a wooden door sign with him as a souvenir.
Even then, he was sure the Northern Route would one day be reborn. "I always knew that the Northern Sea Route would exist," the ice explorer says. "Logically, there had to be a time when we decided to extract the oil in the far northern shelf, and the only route that would allow that is the Northern Sea Route."
Motivations for reopening the route are purely pragmatic. According to several estimates, about one-fifth of the world's oil and gas reserves are located in the Arctic region. It's thus no surprise that Russia is in the process of trying to regain control over 1.2 million square kilometers of ocean area that was previously controlled by the Soviet Union.
Should we be surprised that the Arctic is becoming the site of major geopolitical intrigue? Russia is sending researchers to the far north and building military bases. The Northern Seas are increasingly frequented by both military and civilian ships.
And so last year, the Northern Sea Route administration was indeed reestablished, as the nation eyes the Arctic again. But there is one fundamental difference between the missions now and the Soviet-era work on the Northern Sea Route: This time, the main actors are corporations, not the government.
Right now, the biggest construction project in the Arctic is not a military base. It's a natural gas liquefaction plant, located in a settlement that was considered dead just eight years ago but is now teaming with life.
"Now, 40-ton concrete blocks are being brought here for the factory construction," explains Karen Stepanyan, vice director of sea deliveries for Sovfracht, the company providing logistical support for the construction. There are also five-ton factory modules that are assembled overseas and delivered ready-to-use. There is a ship with ice protection being specially constructed to help build the project.
Lukoil is managing another major construction project in the North. In 2008, the company opened an oil terminal in the Barents Sea, which made the Guinness Book of World Records for being the northernmost, year-round oil terminal. As part of the project, Lukoil is building its own icebreakers, or ice-protected ships.
Even before that, Russian nickel mining company Norilsk Nickel built its own fleet of six icebreakers allowing the company to provide its own shipping services.
"Their ships are very interesting," Stepanyan explains. "Their icebreakers are on the stern, so when they are going through ice, they go backwards. That means that the icebreakers don't make the ships lose speed when they are sailing through ice-free water."
Stepanyan's company, Sovfracht, also has three icebreakers, but they are simpler and older. But even with that modest fleet, the company has become the primary transit operator on the Northern Sea Route, renting out its icebreakers to most of the government construction projects along the route. Even the government projects on the Northern Sea Route, it seems, are entrusted to private companies.
In August, the warmest month in the Arctic, the thermometer was showing 2° Celsius (35° Fahrenheit). A long ship approached the island and stopped several kilometers away, unable to get closer because of the depth. Small barges went out to meet the ship and brought back several small cranes, which were then used to unload the remaining containers. That's what a shipment looks like in these remote islands, where there are no docks of any kind.
"Until last year, no one on the Novosibirski Islands had any infrastructure," says Dmitri Purim, also from Sovfracht. "Now we are the only ones who have some. We have tractors and barges. Imagine being surprised by a tractor! But this isn't some farm in suburban Moscow. The closest tractor is 5,000 kilometers away. Tools are valued differently."
It's true that everything is different in the Arctic. Even during the warm season, only about 10 days a month are suitable for unloading. And winter can start abruptly. This year, the frost came early and two ships had to be left abandoned for the winter at the islands while the crew was evacuated by helicopter. It is sometimes possible to work in the winter, and in Soviet times it was relatively common to carry deliveries over the ice that forms around the island.
Sometimes, Stepanyan says, he envies his Soviet predecessors. "If only I were given unlimited financial resources, like the Soviets were. But we have bids, and we have to count the money. There are times when we know that something has a simple solution, but we have to find a more complicated but cheaper way to do it."
The price of icebreakers in the Northern Sea Route increased substantially in 2014, largely because of reduced government subsidies. But there is a ceiling on what they can charge. They don't want the Northern Sea Route to be more expensive than sending the ship through the Suez Canal. The route's primary focus isn't to compete with the Suez, but as long as the infrastructure has to be built, why not try to steal some of the traffic?
The Northern Sea Route's main advantage is the distance it saves. From Murmansk to Japan through the Suez is 12,800 sea miles, while over the Northern Sea Route it is only 5,800 sea miles. A longer distance means more spent on gas and crew. There also aren't any Somali pirates in the Arctic. But there are other serious disadvantages for freight companies.
"A standard route is one thing. On the Northern Sea Route, there is a risk of losing the ship," Stepanyan says. "Insurance companies take that into account, and it increases insurance costs."
There are also technical challenges. Large modern ships rarely have serious ice protection, and suitable ports for them along the Northern Sea Route are only just being built.
A real increase in traffic on the Northern Sea Route started in 2010, when it was discovered that the polar ice caps were melting and leaving large areas of the route ice-free. Even if the navigation period would never be longer than a half year, the melting of the ice caps sparked new interest in the route. Most of the transit there so far has sailed under the Russian flag, although ships from other countries have made the trip too.
Nonetheless, transit through the route decreased in 2014, as there was less global trade with China and Korea, and there was also much more ice on the route last year than in the previous one. But looking for the long-term future, the development of infrastructure has kept churning onward.