LNG

The Northern Sea Route (NSR) from Arctic Russia to North Asia has reopened earlier than in recent years, providing scope for LNG shipments to be re-directed from the Atlantic Basin to Pacific Basin as prices remain low, though are rising faster in Asia.

The NSR is officially defined by Russian legislation as lying east of Novaya Zemlya archipelago and specifically running along the Russian Arctic coast from the Kara Sea to the Bering Strait to enter the Northern Pacific Ocean.

The 172,600 cubic metres capacity Arctic-class LNG carrier “Christophe de Margerie” left the Yamal LNG export plant in Northern Siberia, operated by Novatek, on May 18 and is scheduled to arrive at the Chinese Tangshan import terminal on June 11 after a transit of 23 days.

The Tangshan terminal is in the northern Chinese Hebei province and is operated by PetroChina.

Shipping data shows that the “Christophe de Margerie” is accompanied by another tanker and two nuclear-powered ice-breakers, the “Yamal” and the “Vaygach”.

It is only in recent years that the NSR has started to be used earlier by LNG carriers pushing ahead to deliver cargoes to North Asia.

The 172,600 cubic metres capacity LNG carrier “Vladimir Rusanov” was the first vessel to use the NSR in 2019, having lifted a cargo at the Yamal plant in mid-June.

However, the “Vladimir Rusanov” is in Western European waters and scheduled to discharge a cargo on May 24 at the Montoir-de-Bretagne terminal in Western France.

According to analysts, the early availability of the NSR, coupled with a slowly opening Europe-Asia LNG arbitrage window - at historically low values - will result in a redirection of many Yamal cargoes away from Europe and to be pointed at North Asia.

Three other carriers are currently heading back to the Yamal plant's port at Sabetta from Europe and at least one could lift an Asia cargo.

They are the two 172,000 cubic metres capacity vessels, the “Georgiy Brusilov” and the “Vladimir Vize”, and the 172,600 cubic metres capacity carrier “Vladimir Voronin”, with arrivals scheduled before the end of May, according to shipping data.

The re-opening of the NSR comes as the Platts Japan-Korea Marker spot cargo price for North Asia cargoes for July is at $2.280 per million British thermal units and at $2.425 per MMBtu for August, higher than several weeks ago.

That’s as the European LNG price indicators, the UK National Balancing Point and the Dutch Title Transfer Facility, were lower at the equivalents on May 20 of $1.40 per MMBtu and $1.55 per MMBtu respectively.

There is currently a wider debate in Russia about accommodating much more energy shipping traffic on the NSR as usage increases.

Russian oil company Rosneft is progressing with the development of its Vostok Oil Project, a venture that is projected to deliver 25 million tons of shipments from a special seaport via the NSR by 2024.

The oil project is based on the development of several fields, including at least three in the Vankor area.

Vostok Oil will also include the development of 15 new industry towns, two airports and about 800 kilometres of new pipelines.

The traditional NSR that has been the main reference point in Russian Arctic shipping is now being debated by the government.

Growth in shipments on a wider route have been rising. Russian government data shows that in 2019, a total of 31.5 million tons of shipments were transported on the NSR, an increase of over 55 percent from 2018.

Most of the extra shipments were LNG from the Yamal plant.

Now the Russian government is referring to the Northern Sea Transport Corridor and has drawn up a report on increasing traffic volumes.

According to the Association of Sea Trade Ports, the transport corridor will be clearly referred to in the new Russian Arctic Strategy, a document that now awaits approval by the government.

The document has been written by the Russian Ministry of the Far East and Arctic and was submitted to the government on 7th of May 2020. The strategy covers the period until 2035.

Teekay LNG, the shipping company with almost 50 LNG carriers in its fleet, said it secured new fixed-rate charters for two of its majority-owned LNG carriers successfully refinanced its existing $225 million unsecured revolving credit facility.

Oct 22 (LNGJ) - Teekay LNG, the fleet owner and operator of several Ice-class carriers serving the Yamal plant in Russia, has seen the vessels unblocked and is no longer caught up in a controversy over US sanctions imposed against units of Chinese shipping line COSCO for allegedly shipping Iranian oil.

   Under the US sanctions on Iran over its nuclear policies, the US Department of the Treasury’s Office of Foreign Assets Control included COSCO Shipping into the Iran-related Specially Designated Nationals (SDN) list, as well as Teekay LNG Partners. Teekay LNG, through its affiliates and joint ventures, owns four Arc7 LNG tankers conducting shipping services for the Yamal export plant.

   Russian natural gas company Novatek, operator of the Yamal plant, issued a statement saying Yamal LNG had received notification from TC LNG Shipping, the joint venture owning the Arc7 ice-class tankers, that the venture was no longer considered “blocked” under the US sanctions rules.

Novatek, operator of the Yamal LNG plant and lead developer of the Arctic II LNG project, has signed an agreement with Japanese shipping company Mitsui OSK Lines to cooperate on the construction of LNG trans-shipment stations on the Kamchatka Peninsula in the Russian Far East and near the Barents Sea port of Murmansk.

Dynagas LNG Partners, the US-listed owner of six modern LNG carriers chartered to companies such as Russia’s Gazprom, posted a 55 percent plunge in annual revenue, with the Chief Executive saying the slump was only short term.