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Arctic sea ice melt to open up northern LNG transits

Vessels from Russia’s Yamal LNG project should be able to perform their first commercial easterly LNG transits via the Northern Sea Route (NSR) during late Q2 or early Q3 2018 as Arctic sea ice has now begun its seasonal melt.

“The navigation season for transit passages on NSR starts approximately at the beginning of July and lasts through to the second half of November,” according to Norwegian foundation the Centre for High North Logistics.

“There are no specific dates for commencement and completion of navigation; it all depends on particular ice conditions.”

Since beginning commercial operations in December 2017, volumes from the 5.5mtpa Yamal train 1 have solely gone westwards. Vessels have delivered on a spot basis to Europe, where cargoes have either been consumed internally or re-exported to Asian and Middle Eastern markets.

Shorter journey times

Direct easterly transits from Yamal should cut journey times to northeast Asia, increasing flexibility and conferring economic benefits to shippers.

This could be particularly useful when the 5.5mtpa second train at Yamal starts up in Q3 2018.

Vessels will be able to reach Asia in 15 days using the NSR, compared with 30 days using the conventional Suez Canal route, according to France-based Total, a 20% partner in the Yamal project.

Six ice-breaker class vessels are currently operating from Yamal but nine more will be commissioned by 2019. The vessels are capable of travelling through sea ice up to 2.1m thick.

Arctic sea ice reached its seasonal peak on 17 March at 5.59 million square miles, according to NASA. This represents the second-lowest peak ice covering during the 39-year historical record, narrowly behind 2017.

The sea ice will now shrink until it reaches its minimum extent in around September.

Looking ahead, a raft of long-term agreements between Yamal LNG and contractual buyers will start up between April and the end of 2018. These include deals with Russia’s Novatek and Gazprom, France’s Total, Spain’s Gas Natural Fenosa and China’s CNPC.
Source: ICIS, By Alex Thackrah (https://www.icis.com/resources/news/2018/03/28/10207357/arctic-sea-ice-melt-to-open-up-northern-lng-transits/)

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