Logistics challenges on the Northern Sea Route

Business Seminar on Sustainable Use of Northern Sea RouteNovember 7-10 , 2014 Tokyo and Sapporo

Mr. Sergey BalmasovCHNL’s NSR Information Office. Murmansk, Russia.

sergey@chnl.no www.arctic-lio.com

Remoteness. Long distances and lack of infrastructure.

Polar night in winter period Presence of ice

NSR GEOGRAPHICAL LIMITS

What are the main driving forces for the NSR development?

Remoteness. Long distances and lack of infrastructure.

Polar night in winter period Presence of ice

1. NATURAL RESOURCES

Oil and gas

Oil and gas

Coal

Coal

Gold

platinum

nickel

2. NSR AS IMPORTANT ELEMENT OF RUSSIAN NATIONAL & INTERNATIONAL

TRANSPORT SYSTEM

Remoteness. Long distances and lack of infrastructure.

Polar night in winter period Presence of iceBarents & Pechora seasSeismic study: 355 thousand km 51 offshore wells

Kara seaSeismic study: 83 thousand km 13 offshore wells

Laptev seaSeismic study: 17 thousand km 0 offshore wells

East-Siberian & Chukchi seasSeismic study: 14,5 thousand km 0 offshore wells

OIL & GAS PROJECTS

Polar night in winter period Presence of ice

OIL & GAS PROJECTS

Few tips for foreign ship-owners working on Russian offshore projects.

Geographic working area

Where exactly the vessel is planned to operate:

• Inside Russian territorial sea

• Within Russian exclusive economic zone

• International waters

• Crossing different zones

Different sea areas have different immigration and customs regimes.

PLEASE PAY ATTENTION TO:

Vessel’s customs status

Customs regime, applied for vessel when entering Russian waters:

• Simplified procedure (clearance using General Declaration)

• Temporary importation (monthly fees + guarantee payment)

• Special customs procedure (no fees)

• OtherConsultation with the customs broker will be very useful, customs status will influence to all vessel’s activities.

PLEASE PAY ATTENTION TO:

Bunkering options

Inform your local bunker supplier about following aspects:

• Main purpose of port call (any cargo to be loaded or discharged)

• Bunker for own use or to be delivered to other vessels

• Other details about planned vessel’s activities

Bunker price can be with or without export fees and depends on above information and vessel’s customs regime.

PLEASE PAY ATTENTION TO:

Spare parts and provision

• When planning supplies from abroad, please consider vessel’s customs status.

• Please note, offshore reefer containers are not readily available in Russia.

?

PLEASE PAY ATTENTION TO:

Crew change

• Crew change in remote areas with poor transport infrastructure requires preliminary planning and coordination with local Agent. In many cases usage of chartered helicopters is the only option.

• Getting Russian visa may take sometime, so it is better to get visas in advance.

PLEASE PAY ATTENTION TO:

Keep track on NSR Administration safety notices Tanker "Nordvik"

The captain of the vessel in violation of the Permit’s requirements entered the water with medium ice conditions, where the vessel’s ballast tank was damaged

NAVIGATION SAFETY

Internal factors: External factorsa) Tariff system a) Cargo baseb) Ice conditions & long-term ice forecast b) Freight markets c) Availability of needed infrastructure c) Geopoliticsd) Legislation d) Fuel prices e) Administration e) Large ice class vessels

Key factors influencing the development of the NSR as an alternative transit route between Europe and Asia.

Flat costal surface.

Remoteness. Long distances and lack of infrastructure.

Often fogs in summer period.

Polar night in winter period Presence of ice

NSR OPERATIONAL CONDITIONS

Port infrastructure needs to be developed

PORTS ALONG NSR

Remoteness. Long distances and lack of infrastructure.

Polar night in winter period Presence of ice

PORTS ALONG NSR

Remoteness. Long distances and lack of infrastructure.

Polar night in winter period Presence of ice

PORTS ALONG NSR

TARIFFS

NSR 7 ZONES

Iceclass

Icenavigation

mode

The Kara Sea The Laptev Sea East-Siberian Sea Chukchi Sea

West East West East West East

S M L S M L S M L S M L S M L S M L S M L

NoIN

IS

Ice1(1D)

IN

IS

Ice2(1C)

IN

IS

Ice3(1B)

IN

IS

Arc4(1A)

IN

IS

Arc5(1A

Super)

IN

IS

Arc6IN

IS

Arc7IN

IS

Arc8IN

IS

Arc9IN

IS

IN – Independent navigation, IS – with icebreaker support S – severe ice conditions, M – moderate, L – Easy

Admittance criteria for navigation in the NSR according to ice class

Source: Atomflot

1. Simplified administrative procedures: smooth application processing, no need for vessel’s physical inspection.

2. Flexible ice-class admittance criteria for ships to enter the NSR. Large size cargo ships with 1B, 1C ice class can do NSR transit in Easy ice conditions.

3. No mandatory icebreaker support for all vessels. (the need for icebreaker services is indicated in the Permit). It is possible to operate independently in Western part of the NSR (Kara Sea) in summer-autumn period.

4. Fees for icebreaker support is determined based on vessel’s GRT, ice-class, distance, and navigation period. Distance (number of zones) is unpredictable element)

5. Simplified definition for ice conditions (L-M-S Light-Moderate-Sever) does not work in October-November.

CONCLUSIONS

Thank you