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Expert Assessments of the NSR Efficiency

 

Russian oil companies are increasingly using the Northern Sea Route (NSR) to export oil, with a significant rise in shipments to China this year. This route is expected to continue developing, with the Russian President inviting international cooperation. Regnum news agency explored the prospects for NSR energy shipments and potential improvements to the route.

Photo by Svetlana Shevchenko / RIA Novosti

In 2024, Russian oil companies increased exports to China via the NSR by 30%, reaching 1.9 million tons. Russia also aims to expand cargo shipments to India, as stated in a joint announcement by the Russian President and Indian Prime Minister Narendra Modi.

OPEC recently revised its forecast for oil demand growth in China. In 2024, Chinese demand is expected to rise by 580,000 barrels per day, reaching 16.94 million barrels, while India’s demand will increase by 270,000 barrels, totaling 5.61 million barrels per day. In 2025, China’s demand is expected to increase by 410,000 barrels per day, reaching 17.36 million barrels per day, while India’s demand will grow by 240,000 barrels per day, totaling 5.85 million barrels per day.

However, the near-term increase in Russian exports to China is likely to be moderate. Igbal Adil Oglu Guliyev, Deputy Director of the International Institute for Energy Policy and Diplomacy, MGIMO-university, says that the growth may not be rapid due to adjusted Chinese demand. Currently, much of the oil is shipped from Murmansk, reflecting a shift from Baltic ports.

Stanislav Mitrakhovich from the National Energy Security Fund believes that Russia’s production capabilities are sufficient to meet demand in China and India. Mitrakhovich also noted that if demand rises, Russia can adjust production levels accordingly.

The NSR’s development involves expanding logistics. Seven nuclear icebreakers and five electric-diesel icebreakers currently operate along the route. Rosatom plans to add two more nuclear icebreakers over the next two to three years. Further, the company is exploring non-nuclear icebreaker construction to enhance nuclear fleet efficiency.

Russia’s 2035 NSR development plan, approved in August, outlines 150 projects to improve infrastructure, icebreaker fleets, and shipping safety. However, achieving targeted cargo volumes by 2030 remains challenging due to access limitations to Western technology and shipbuilding resources. Additionally, the route's seasonal nature limits year-round shipping.

While natural challenges persist, the NSR offers a secure alternative for energy exports amid global instability. With fewer political risks than some southern routes, the NSR may gain appeal as a reliable shipping option in the future, despite Arctic weather challenges and seasonal limitations.

Additionally, there are challenges due to the lack of year-round navigation along the route. Until this is resolved, shipments remain limited.

Source: Regnum.

30.10.2024