NEO – The Huge Implications of Russia’s Northern Sea Route

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Russian northern sea route

by F. William Engdahl, with New Eastern Outlook, Moscow

William Engdahl

[ Editor’s note: Mr. Engdahl has given us a thorough year end review on Russia’s complex development of its northern Arctic sea transportation route, a long term investment not only for Russia, but also for its export customers and major partners.

I mention the partners to emphasize once again how US sanctions have boomeranged on US long term interests. By cutting off access to Western funding for development projects, China, and even US allies South Korea and Japan were quick to move in.

Rather than cripple the projects as the US wanted, they are in a stronger position than they would have been with Western funding, and in multiple ways.

China’s plan of letting others buy into the Silk Road assures it of long term support. And the new Northern Arctic route provides “alternate” shipping security in case a choke point were to develop along the land ones, such as in the case when Ukraine attempted to extort Moscow on its gas pipeline exports.

Russian nuclear ice breakers are under construction

The new sea route goes through Russian exclusive economic zones; although the US Navy may be able to threaten the southern routes to and from China, this northern back door will not only be a viable option, but one that is easily defended.

The cherry on top will be that oil and gas, plus other mineral exports along the shore route, will have export transportation facilities along the route. And, with Russia leading the way with their nuclear icebreakers, the Russians will have a monopoly on that market for some time.

As VT has editorialized since the beginning, the US sanctions caused Moscow some pain, but as is happening with Iran, they will be coming out of it stronger in the long run.

And what is the Trump answer to all this? So far it has been the usual huffing and puffing of a grandiose US infrastructure program, all debt-funded, of course. You just can’t make this stuff upJim W. Dean ]

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– First published … November 22, 2017

In terms of dealing with some of the world’s harshest weather conditions no country comes close compared with Russia. Now Russia has made it a highest priority to develop a Northern Sea Route along the Russian Arctic coast to enable LNG and container freight shipments between Asia and Europe that will cut shipping time almost in half and bypass the increasingly risky Suez Canal.

Toasting to a future of mutual interests and common threats

China is fully engaged and has now formally incorporated it into its new Silk Road Belt, Road Initiative infrastructure.

Before attending the Hamburg G20 Summit in July, China’s President Xi Jinping made a stopover in Moscow where he and Russia’s President Vladimir Putin signed the “China-Russia Joint Declaration on Further Strengthening Comprehensive, Strategic and Cooperative Partnership.”

The declaration includes the Northern Sea Route as a strategic area of cooperation between China and Russia, as a formal part of China’s Belt, Road Initiative (BRI) infrastructure. For its part, Russia is investing major resources in development of new LNG ports and infrastructure along the route to service a growing maritime traffic passing through its Arctic territorial waters.

The Russian Federation, under the direct supervision of President Putin is building up the economic infrastructure that will create an alternative to the Suez Canal for container and LNG shipping between Europe and Asia.

In addition, the developments are opening up huge new undeveloped resources including oil, gas, diamonds and other minerals along the Russian Exclusive Economic Zone,transversing its northernmost Siberian coastline.

Officially Russian legislation defines the Northern Sea Route as the territorial waters along the Russian Arctic coast east of Novaya Zemlya in Russia’s Arkhangelsk Oblast, from the Kara Sea across Siberia, to the Bering Strait that runs between far eastern Russia and Alaska. The entire route lies in Arctic waters and within Russia’s Exclusive Economic Zone (EEZ).

Preliminary geophysical studies confirm that vast oil and gas reserves exist below the sea floor along the Northern Sea Route of Russia’s EEZ waters, increasing interest of the Chinese government in joint resource development with Russia, in addition to the potentially shorter shipping times to and from Europe.

Malacca Straits

For China, which sees increasing threats to its oil supply lines by sea from the Persian Gulf and via the Straits of Malacca, the Russian Northern Sea Route offers a far more secure alternative, a Plan B, in event of US Naval interdiction of the Malacca Straits.

US Geological Survey estimates are that within the Russian Arctic EEZ some 30% of all Arctic recoverable oil and 66% of its total natural gas is to be found. The USGS estimates total Arctic oil recoverable reserves to be about one-third total Saudi reserves. In short, as Mark Twain might have said, there’s “black gold in them thar’ icy waters…”

The United Nations Convention on Law of the Seas (UNCLOS), to which Russia and China are signatories, but the USA not, defines an exclusive economic zone to be an area “beyond and adjacent” to a state’s territorial waters and provides the state with “sovereign rights…[over] managing the natural resources” within the zone.

China does not contest Russia’s EEZ rights, but rather seeks to cooperate in its development now formally within the BRI project.

New Shipping Lanes

The other interest in Russia’s Northern Sea Route is for more economical and faster shipping. In August this year, in a test run the Russian LNG tanker, Christophe de Margerie, delivered Norwegian LNG from Hammerfest in Norway to Boryeong in South Korea in just 19 days, some 30% faster than the traditional Suez Canal route despite the fact that the vessel was forced to go through ice fields 1.2 meters thick. The Arctic Sea part of the journey was made in a record six and half days.

The Christophe de Margerie is the first joint LNG tanker and icebreaker in the world, built to specification for the state-run Sovcomflot for the transportation of LNG from the Yamal LNG project in the Russian Arctic by a South Korean shipbuilder.

Aleksandr Galushka, Russia’s Minister for Development of the Far East

Russia is also cooperating with South Korea in development of the shipping capabilities of its Northern Sea Route. On November 6, Russia’s Minister for Development of the Far East, Aleksandr Galushka, met South Korea’s Minister of Oceans and Fisheries, Kim Yong-suk. The two countries agreed to pursue joint research into investments for an Arctic container line along the Northern Sea Route.

The joint development will include shipping hubs to be created in each end of the Northern Sea Route–Murmansk in the west and Petropavlovsk-Kamchatsky in the east. Murmansk, bordering the northern regions of Finland and Norway, has ice-free access to the Barents Sea year around.

Korea’s Hyundai Merchant Marine plans test sailings of container ships along the Northern Sea Route in 2020 with container ships capable of carrying 2,500-3,500 TEU (Twenty-foot Equivalent Unit, a measure of container size) on the route.

In July 2016, an historical shipment of two major industrial components was made from South Korea to the new Russian Arctic port at Sabetta and from there, on the rivers Ob and Irtysh to the South Ural city of Tobolsk.

New Arctic Port Investments

Murmansk

Murmansk itself is a site of one of Russia’s largest infrastructure projects. Major construction work is currently on going to complete the so-called Murmansk Transport Hub which includes new roads, railway, ports and other facilities on the west of the Kola Bay.

Murmansk is already a key hub for reloading coal, oil, fish, metals and other cargo from the European part of Russia. It will serve as the main western gateway for the Northern Sea Route to Asia.

The Russian Federation is also completing a new port at Sabetta on the Yamal Peninsula. The Yamal Peninsula, bordering the Arctic Kara Sea, is location of Russia’s biggest natural gas reserves with an estimated 55 trillion cubic meters (tcm).

By comparison, Qatar gas reserves are calculated at 25 tcm, Iran at 34 tcm. The main developer of the Sabetta Port on Yamal is Novatek, Russia’s largest independent gas producer, together with the Russian government.

Sabetta Port is also site of the major new Yamal LNG Terminal that before end of 2017 will begin transporting Yamal gas via the Northeast Sea Route to China. When at full capacity, Sabetta Port will handle 30 million tons of goods a year making Sabetta the world’s largest port north of the Arctic Circle, surpassing Murmansk.

Novatek hasalready pre-sold all its production volumes for Yamal LNG Terminal gas under 15- and 20-year contracts, most to China and other Asian buyers.

Yamal LNG is far from the only area where Russia’s Novatek is cooperating with China. On November 4, Novatek announced it had signed further agreements with Yamal partners China National Petroleum Corporation and China Development Bank for the Arctic LNG 2 project that is potentially larger than the Yamal LNG project.

The Arctic LNG 2 project of Novatekon Gydan Peninsula, separated from Yamal by the Gulf of Ob,is to begin construction in 2019.

Yamal terminal construction continues 24hrs a day

The Yamal LNG Terminal is a $27 billion project whose lead owner is Russia’s Novatek. When the US Treasury financial warfare targeted Novatek and the Yamal project in 2014 following the Crimea referendum to join the Russian Federation, China lenders stepped in to provide $12 billion to complete the project.

China’s state oil company, CNPC, had bought a 20% interest in the Yamal LNG Terminal project. The China Silk Road Fund holds another 9.9% and France’s Total 20% with Novatek having 50.1%.

Breaking the Ice, Russian-Style

Opening the potentials of Russia’s Northeast Sea Route to full commercial LNG and container freight traffic flow from the west along the Siberian Arctic littoral to South Korea and China and the rest of Asia requires extraordinary technology solutions, above all in the field of ice-breakers and port infrastructure along the deep-frozen Arctic route. Here Russia is unequalled world leader. And Russia is about to expand that leading role significantly.

Arktika-class

In early 2016 Russia commissioned a new class of nuclear powered ice-breakers called Arktika-class operated by Atomflot, the ship subsidiary of the giant Russian state Rosatom nuclear group, the world’s largest nuclear power construction company and second largest in terms of uranium deposits producing 40% of the world’s enriched uranium.

The new Arktika icebreakeris at present the world’s most powerful icebreaker of its kind and when ready for sailing in 2019 will be able to break 3 meters of ice. A secondArktika-class nuclear icebreaker is due to sail in 2020.

At present Russia has a total of 14 diesel as well as nuclear-powered icebreakers in construction in addition to the just completed Christophe de Margerie.All those 14 new icebreakers are being constructed at shipyards in the St. Petersburg area.

Rosatom to take lead

Now the Russian government is about to dramatically escalate its development of icebreaker technologies, with the clear aim of developing the shipping and resources along its Northeast Sea Route passage as a national economic priority.

In 2016 President Putin made a personal priority of overseeing building up of an ultra-modern state-of-the-art shipbuilding center in PrimorskyKrai in the Russian Far East to balance the development of western yards around St. Petersburg and buildup Russia’s economic region around Vladivostok as Russia’s economy, reacting to the incalculable Washington and its sanctions, turns increasingly to self-sufficiency in vital areas.

Illustration of the Zvezda Shipbuilding complex

The Far East shipbuilding is centered on a $4 billion complete reconstruction of the old Zvezda shipyard in BolshoyKamen Bay owned by the Russian state’s United Shipbuilding Corporation. PrimorskyKrai is also home to the Russian Navy’s Pacific Fleet.

When the giant new Zvezda yard is ready in 2020, it will be Russia’s largest most modern civilian shipyard, focusing on large-tonnage ship construction of tankers including LNG tankers, Arctic icebreakers and elements for offshore oil and gas platforms.

On November 18 Russia’s Kommersant business daily announced that Russia’s president Putin wants to turn infrastructure development for the Northern Sea Route over to state nuclear corporation Rosatom.

According to the report, Putin approved the idea, which was put to him by his prime minster, Dmitry Medvedev, and which would turn all state services for nautical activities, infrastructure development, as well as state property used along the corridor to Rosatom’s management.

Among other implications the decision to make Rosatom solely responsible for the Northern Sea Route development suggests that nuclear-powered ice-breakers are to play a far larger role in the Northeast Sea Route developments.

According to the report, which has yet to be formally confirmed, the Rosatom role was proposed by Rosatom head Alexei Likhachev and Deputy Prime Minister Dmitry Rogozin. Rogozin, sanctioned by Washington, has been Deputy Prime Minister in charge of Defense Industry of Russia since 2011.

If the new proposal becomes law, Rosatom will oversee all infrastructure and energy building along the 6,000 kilometers of the route through its arctic division.

Rosatom

According to the source, that will mean Rosatom oversees just about everything, from building ports, to building communications and navigation infrastructure, as well as coordination scientific research.

Under the plan a new Arctic Division of Rosatom would centralize ports previously controlled by the Ministry of Transport as well as non-nuclear icebreakers operated by Rosmorport and Russia’s nuclear icebreaker fleet.

The NSR Administration, the state institution responsible for safety of navigation, would also become part of this new “Arctic Division” at Rosatom. It would be a move to greatly streamline the present fragmentation of responsibility for different aspects of Russia’s Northeast Sea Route transportation development, one of the highest priorities of Moscow and a key building block in development of the China-Russia collaboration in BRI.

Taking all into account what is very clear is that Russia is developing cutting-edge technology and infrastructure in some of the most extreme climate conditions in the world, in building its economy new.

And it is successfully doing so in collaboration with China, South Korea and even to an extent with Japan, contrary to the hopes of Washington war-addicted neoconservatives and their patrons in the US military industrial complex.

F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine “New Eastern Outlook.”

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27 COMMENTS

  1. To see and understand the difference between the Eastern and Western/USA approach to life one only has to visit NEO and read the headlines of the articles under Economics. You will find stories featuring current major development projects happening now in Asia, and Russia. By contrast the only news the USA creates are terrible war stories. Where we spend $100 for “defense” the rest of the world spends .10 cents. Is there anything wrong with this picture?

  2. This is all good for the future and infrastructure. But the resources belong to people of Russia only in Constitution. In the reality several companies and their bosses own everything. Yes, they pay huge taxes to the budget, but ordinary people have nothing from it. And in the near future it won’t be changed.

    • And is that anywhere near the 10-20-30 trillion dollar debt the American people are carrying against our will?
      Does this Russian infrastructure project creates jobs? Where are our jobs? Where are the taxes paid by our corporate bosses? In a Cayman bank maybe.

    • Andrew, with all respect: What is the difference between American profits and Russian profits when the citizens of both countries do not see any of it?

  3. Well, this just proves that Russia is looking forward and that America is looking at collapse and bankruptcy.
    If all goes well the Russian people will enjoy one of the highest economies of the world while the American people will suffer economic collapse, massive debt, homelessness, unemployment and one bank failure after another. America’s cities will burn and become no go zones. Farming will come to a near stand still as farmers will not be able to finance their next season crop seeds, fertilizer or fuel. What’s left of factory production will come to a grinding halt and the price of food and any consumer goods will skyrocket. Grocery stores will be empty and the EBT cards that so many on state welfare rely on, will simply be useless which will in turn cause massive riots throughout America’s cities.
    America is about to become isolated from the rest of the world due to the corrupted leadership in Washington.
    Russia will take up that position in many ways. It will develop its resources to the point where the Russian people will enjoy a great middle class, it will become the source for moral leadership as America no longer has any moral compass, and as it’s new shipping lanes will bypass any that America thinks it controls, leaving American influence in the dust.
    Making America great again?

  4. Thank you Jim for posting this fascinating and most informative article. Try to find any articles even close to this on any of the other media. This article shows how foolish and insane the wasteful military actions around the planet of the U.S. are, killing innocent civilians and children and destroying priceless historical artifacts as in Syria all for the selfish interests of that tiny arrogant country of thieves Israel, while the rest of the world moves on to higher and better things. The U.S. has totally lost its way and will be destroyed if this is not reversed soon. These other countries China, Korea and Russia are all extremely intelligent and together they can and will bury the failed U.S. And just imagine the fury unleashed if and when fool Trump begins a Nuclear war and one of those Nukes strays over there and destroys some of Russia’s hard fought shipbuilding or natural gas plants over there. American fools had better wake up and soon. Selfish arrogant insolent Israel must be immediately removed from all influence to our corrupt government before it is too late. It may be too late now. And remember these evil crooks also did 9/11! Ignorant Americans hate vital subjects mathematics, physics and history, while these are loved subjects in Korea, China and Russia.

    • https://wikispooks.com/wiki/9-11/Israel_did_it
      Quote:
      • “Larry Silverstein – is a Jewish American businessman from New York. Silverstein obtained a 99 year lease on the entire world trade center complex on 24 July, 2001. [3] The towers were in fact close to worthless, being filled with asbestos, [4] yet Silverstein “felt a compelling urge to own them”. Silverstein had breakfast in “Windows on the World” restaurant (located in North Tower 107th Floor) every morning. [5] but broke this routine on the morning of 11 September 2001. Silverstein’s two children, who also worked in the WTC, were also absent from work that day. Larry Silverstein was paid a little over $4.5 Billion in insurance money as a result of the destruction of the WTC complex. [6] Silverstein was on personal friendship terms with Zionist media-magnate Rupert Murdoch, former Israeli president Ariel Sharon, as well as Israeli PM Benjamin Netanyahu. Silverstein was such good friends with Netanyahu that, according to the Israeli newspaper Haaretz he would speak with him on the phone every sunday. [7]
      • Video – Where was Larry Silverstein on 9/11?”

    • Everyone must remember these wise words: “The bigger they are, the harder they fall”. America and Americans must get their act together and soon, and boot out evil unindicted war criminal Israel from our country and soon, lest America take its turn in history to fall from grace as so many others have gone before. Think of it: All steel production is gone from the U.S. Almost all automobile production is gone. All television and most electronics production is gone. We are totally backward in building construction today compared to China. Read the abridged “protocols of Zion” by Henry Ford which he published in his newspaper “The Dearborn Independent” in 1921. Henry was a genius level intelligence with almost no formal education. He was right. America is degenerating down into the sewer quickly now. Better wake up you foolish Americans or your time will come even sooner than you think and it won’t be fun or pretty. Other peoples whom you have treated like garbage have long memories and will not forget how they were mistreated by thugs in your government over the decades. America is morally dead now. It could die financially at any instant when the dollar fails due to too much worthless money out there. Wake up Americans!

    • Exactly what the Kazarian zionists have done to so many countries in Europe.
      Time to kick their butts out. No matter how much they squeal.

  5. Great article – The Russian’s are looking to the future and the Americans are looking at the same ole same ole – past. I worked the Arctic and interior for decades, so I understand how the American Companies do their business. They will never be able to compete with RU because they are too greedy, anti fair labor, and are regulated by even greedier government agencies. 98% of Alaska is owned by the Government and Native Corporations and still haven’t opened up to intelligent natural resource extraction except in a few areas. This article has me wishing I was 30 something again so I could go work in the Arctic again – for a RU Corporation that is Pro Nationalistic and heading into the future. Mr. Odell would have made some good money around Valdez, AK. back in the 70s. Spacibo

    • The Russians are looking to the future for sure but…the American people will have no future to look forward to unless they regain power again.
      At this point as things continue as they have been, there will be no future for the American people. Only massive debt, homelessness and poverty.
      And a massive police state.

  6. Too bad (considering the tens, or was it hundreds, of thousands of zeks who died building it) the White Sea Canal is not useful for larger ships.

  7. The world seems to be enjoying paying for resources and
    /or help develop them. They are churning butter and making friends and partners. The US seems hell bent on producing wars. For who, for little crappy Israhell. No butter for us Americans, just debt slavery, drug addiction and taxes to support the industrial military complex through wars that help little crappy Israhell rip off more land from its neighbors. Wake the hell up Americanzzz.

  8. The economic growth is amazing but Americans continue to face economic arrest because the globalists tell our elected what to do. Opportunities for us just get wizzed away with an MIC who takes war based debt currency when the enemies should have their lights punched out, placing the US back in control of our policies. We need partners in trade, not made up enemies Enough with the Alice in Wonderland slave system that has us killing,raping,and stealing from our global neighbors for profit or for fun.

  9. Surely a great prospect to shorten travel time and reduce costs not to mention finally an opposition to the Kosher Nostra Oil & Gas services feeding their deep pockets. Only one question arises: Shouldn’t the globe abandon all fossil fuels as energy resources altogether instead of changing “companies and countries for profits”?
    Another face change of the invisible tribe comes also into mind. As long as ALL is about profits mankind always looses in the end and it does not matter if the tribe is eastern, western, white, yellow, brown or black.
    A mirage stays a mirage no matter from which angle one looks at.

  10. This is the reason why US INC wants to control all shipping passages worldwide, See Suez-canal, Street of Malaka, Street of Hormus etc. and wanted to capture the Krim.

  11. I’m thinking of moving to the arctic and opening a tiki bar for the sailors. I can sell bootleg movies, books, and pot brownies along with the margaritas. maybe get some investors for a bobsled run or perhaps those fan boats like they have in the everglades would work on the ice, snowmobile demolition derbies , the whole nine yards

Comments are closed.