Russia's oil and gas become more accessible through Northeast Passage
Climate change is influencing the Arctic faster than the rest of the world. As a result, traffic on Arctic routes is becoming more intensive. For Russia, it brings additional advantages, as fossil fuel exports via the Northeast Passage are more flexible than through pipelines.
Russia has transported a record amount of natural gas through the melting Northeast Passage this year, reports Quartz. The route, which is the shortest way to move goods between northern Europe and Asia, stays ice-bound for most of the year. An alternative way runs through the Suez Canal and around India and is about two weeks and 2,400 nautical miles longer.
However, climate change is making the Arctic route more suitable for ship traffic. The average number of days when ice covered less than half of the Northeast Passage rose from 84 per year in the 1980s to nearly 150 in the 2010s. The first non-stop voyage through the passage was made by a Chinese vessel in 2015. Since then, the route has seen thousands of trips with a record of 2,700 journeys set in 2019. This year, the passage has remained open for record 112 days allowing Russia to export an all-time monthly high of liquefied natural gas (LNG) through the route to Asia. In September, Russia’s Yamal LNG Terminal shipped record 700,000 tonnes of LNG to Asian markets.
Global demand for natural gas keeps increasing in a bid to move away from dirtier coal. Thus, gas-rich countries like Qatar, Russia and the US are fighting for the liquified natural gas export market. The shift towards gas is especially strong in Asia with China topping the leader board. According to recently announced ambitious climate goals, the People’s Republic plans to double its gas consumption in the next 15 years. China imports most of its gas via pipelines from other Asian countries and southern Russia. However, the market situation is likely to change if Arctic gas becomes more accessible through the Northeast Passage. Besides, cheaper transit between gas fields in western Russia and ports in China may give Russia an opportunity to beat its competitors for Asian markets.
According to Quarts, an ice-free passage was a prerequisite for Russia’s Yamal LNG Terminal, which is located on a vast natural gas reserve on the Yamal Peninsula, much too far from China for a pipeline. The facility has nearly tripled the country’s LNG export capacity since its launch in 2017. In 2018, German energy economists called the ice-free route a “game-changer” for global LNG supplies pointing out that the Yamal Terminal would allow Russia to directly challenge US ambitions in the Asian gas market. America’s competitiveness as an LNG exporter to Asia is currently unclear, as the country’s first West Coast export terminal in Oregon has been put on hold by local officials this year amid climate concerns.