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Russia and China set up Arctic shipping joint venture

China’s Arctic Silk Road ambitions are becoming reality. Russian state-run shipping major Sovcomflot and energy firm Novatek signed an agreement with Chinese state-run shipping conglomerate Cosco Shipping and Silk Road Fund to establish joint venture Maritime Arctic Transport at the  St Petersburg International Economic Forum on Friday.

The focus of the joint venture is to manage an icebreaking tanker fleet of Arctic ice-class vessels, comprising existing and new vessels, engaged in the transportation of LNG for current and planned Novatek projects including Yamal LNG, Arctic LNG 2 and others.

“The sheer scale and level of technical complexity of the new international project to provide safe, year-round, transportation for LNG across the Northern Sea Route have required the combination of a whole range of intellectual, technological, human and financial resources, from leading Russian and Chinese organisations and businesses,” said Sergey Frank, president and CEO of Sovcomflot.

“We are pleased to participate in this Russian-Chinese consortium in such an important energy project for the economies of our countries. We are pleased to contribute to the joint venture the unique experience and expertise accumulated over ten years by Sovcomflot, gained whilst successfully operating a unique fleet of specialised vessels, serving large oil and gas projects in the Arctic and subarctic marine basins,” Frank added.

Frank said the project’s transport and logistics, which are consolidated around a single operational platform, will contribute to increased efficiency, safety, and further optimisation of the entire cargo transit traffic system through the waters of the Northern Sea Route, including the Polar Silk Road project.

In the meantime, Sovcomflot signed an agreement with Gazprom Neft Marine Bunker to cooperate on LNG fuel bunkering.

The agreement reinforces the mutual interest of both parties regarding their cooperation in the bunkering of Sovcomflot’s tankers with LNG fuel.

“We are confident that LNG fuel is the optimal solution from both environmental and economic perspectives for large-tonnage sea transportation, primarily in areas of the world’s oceans with existing regulatory restrictions on emissions and a high intensity of shipping movements, such as in the Baltic and North Seas, as well as in the Arctic Sea basin. Sovcomflot has been systematically working on switching its tanker fleet to LNG fuel for a number of years, and we welcome the opportunity to expand cooperation with Gazprom Neft in this area, combining the efforts of our companies to introduce advanced environmental standards into the Russian shipping sector”, said Igor Tonkovidov, executive vice president of Sovcomflot.

Additionally, Sovcomflot secured an agreement with VEB.RF Group to finance the construction of three new LNG-fuelled MR tankers.

The three 51,000 dwt vessels are currently under construction at Zvezda Shipyard with delivery scheduled for 2022-2023.

Jason Jiang

Jason is one of the most prolific writers on the diverse China shipping & logistics industry and his access to the major maritime players with business in China has proved an invaluable source of exclusives. Having been working at Asia Shipping Media since inception, Jason is the chief correspondent of Splash and associate editor of Maritime CEO magazine. Previously he had written for a host of titles including Supply Chain Asia, Cargo Facts and Air Cargo Week.
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