Opening the Northern Sea Route for bulk commodities Unlocking the potential for bulk transportation from northern Scandinavia and the Kola Peninsula

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1 Opening the Northern Sea Route for bulk commodities Unlocking the potential for bulk transportation from northern Scandinavia and the Kola Peninsula to the Far East

2 The CHNL vision To be the preferred knowledge network for creating and developing efficient and sustainable logistical solutions for the High North through practically oriented research projects in interaction between businesses, academic institutions, organizations and public authorities The international gateway to relevant knowledge about logistics in the High North An international independent non-profit Foundation

3 projects Shipping in Arctic Waters A dynamic web based knowledge platform Logistics operations in the High North (Industry case studies within Field, Bulk and Project Logistics) Circumpolar Maps Development of educational programs for logistics in Russian universities

4 Shipping in Arctic Waters cross disciplinary - holistic approach Part 1: Part 2: Part 3: Part 4: Part 5: Part 6: Part 7: Part 8: Definitions of the Sea Routes in Arctic Waters and Adjacent Waters The Geopolitical and Economic potential of the various Sea Routes in the Arctic (NSR, NWP and Trans-Arctic Routes) Arctic Resources: mineral and biological Environmental challenges and other operating conditions Shipping and alternative modes of transport a comparison Logistics, technical and competence issues Legal, jurisdictional and Human Rights issues The three alternative routes compared

5 Logistics operations in the High North Case studies within: Field Logistics - oil & gas Bulk Logistics - wet & dry, gas Project Logistics - plant & equipment

6 Logistics operations in the High North General Challenges: The need for new rules, regulations, and operational standards both for the overall logistics systems and for ships and their equipment Development of practically oriented decision making models The CHNL approach: Practically oriented case studies based on real projects and the real needs of the industries

7 Projects - Workshop, Kirkenes, April 29, 2010 Case: Opening the Northern Sea Route for regular oil, gas and dry bulk transportation between Europe and Asia Shipment of iron ore concentrate from Kirkenes to China Case study method: To invite all relevant participants in the value chain around one table to identify and discuss the critical issues for carrying out bulk transportation from northern Scandinavia and the Kola Peninsula to the Far East. The ambition is to perform a commercial passage during 2010 or 2011

8 To invite all relevant participants in a value chain around one table Cargo owner- Ship owner- Traders ice breakers brokers Insurance CP& law Classification - public authorities research institutions

9 projects What is a successful outcome of today s workshop? That we have: An opinion as to whether it makes sense to pursue the Northern Sea Route as a regular commercial option during the ice free season - No fatal show stoppers identified! A list of concrete issues which need to be clarified before the Northern Sea Route can be considered a regular international trade route ie. a predictable commercial alternative to the Suez and Cape of Good Hope routes. Indications of research topics which need to be investigated in order to make the Northern Sea Route a regular international trade route.

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12 Distances from Kirkenes to China From To Route Distance Kirkenes Qingdao NSR 6,650 Kirkenes Qingdao Suez 12,405 Kirkenes Qingdao Cape Good Hope 15,842 Kirkenes Singapore NSR vs Suez - 1,000* *Difference. The NSR is appr. 1,000 nm shorter than through Suez 31 May

13 Ice routing is essential Operational knowledge is vital Multiyear ice is much more difficult than1-year ice Features as growlers and bergy bits are extremely dangerous

14 Not only ice difficult depths and different routes further charting essential Laptev Sea Lena

15 Is the Northern Sea Route ready for international commercial traffic? Open and important questions: Which operational requirements and additional costs apply? Will Russia simplify the application regime? Will ice breaker fees be open and standardized? Will the fleet of polar icebreakers be renewed? Need for? Ice classed fleet Infrastructure Regulatory regimes Operational knowledge Is there a need for an international information office?

16 In the medium term: Regional destination transport will be the most relevant activity NP Transport of oil, gas, minerals and equipment by: Shuttle tankers Shuttle LNG carriers? Shuttle bulkers? Purpose built offshore vessels Specialised multipurpose vessels

17 Destination shipping The Varandey offshore terminal in the Pechora Sea which opened in June 2008 serves the Conoco Philips/Lukoil JV Naryanmarneftegaz capacity 12.5 millons tons a year. Transportation has been subcontracted to Sovcomflot. More than 120 liftings of crude oil have been performed so far.

18 Destination shipping Norilsk Nikel has introduced double acting ice breaking multipurpose vessels of Aker Arctic design for serving their mining operations in Siberia. Such expensive specialised vessels should keep time outside the ice area to a minimum and therefore tranship their cargo as close to their area of operation as possible.

19 Destination shipping December 2005, first transhipment of Siberian gas condensate outside Kirkenes. This transhipment contract with Russia s second largest gas producer, Novatek, serves cargoes shipped through Vitino in the White Sea and has been performed in sheltered waters close to North Cape, Norway for the past four winter seasons.

20 How to join the CHNL network? Business Partner Influence the scope and focus of initiated research projects Defining and participating in industrial cases relevant for your company Possible membership of the Board or the Council Project Partner Participation in an industrial case relevant for your company Knowledge Partner For universities, research institutes and professors Possible participation in the Scientific Committee and the Council Participation in the industrial cases Subscriber To our dynamic cross disciplinary WEB based WIKI For more information please contact Kristin Omholt-Jensen, MD, CHNL