Development of Oil and Gas Exports from Northern Russia

(By Anders Backlund ; INSROP Working Paper No. 22 – 1995,III.01.3)

Northern Russia and especially the Timan-Pechora and Yamal Regions are today centres for extensive activities concerning the exploration of their vast oil and gas reserves. This study has evaluated both the technical and the economic feasibility of seaborne transportation of the products to the market. Emphasis has been put on the European market.

Year-round operation of cargo vessels in the Russian Arctic has been a fact for more than 20 years. Especially on the route from Murmansk to the mouth of the Yenisey River a continuous traffic has been going on with 15,000 tdw vessels (the SA-15 class) carrying ore and container cargo. Valuable information has been collected from this operation.

Since the design of the vessels, icebreaking technology has advanced considerably. Reconstruction of icebreakers and cargo vessels has brought new knowledge of the operation of vessels in ice. All in all it can be concluded that the year-round operation of vessels in the Russian Arctic and especially in its western part is technically feasible.

To evaluate the economic feasibility, calculations have been made concerning the transportation of LNG from the Yamal Peninsula to Europe. The calculations show that the seaborne transportation alternative is economically feasible. The calculations also point out the importance of the different cost factors: capital costs and costs related to the infrastructure (icebreaker assistance, NSR-fees etc.). Especially the infrastructure fees are of importance as they have been under constant change during the past years and as they today play a significant role in the feasibility. It is obvious that the pricing policy must be re-evaluated thoroughly so that the transportation of goods by vessels is promoted

Anders Backlund, 1995, Development of Oil and Gas Exports from Northern Russia, INSROP.©