PortandTerminal.com, June 7, 2019
The developers of the Northern Sea Route have teamed up with DP World to run ports that Russia plans to build along the northern sea route in the Arctic.
In the past decade melting ice-sheets have opened up previously inaccessible Arctic shipping lanes. That has created an opportunity for Russia to disrupt the traditional Suez Canal route from Asia to Europe that takes 48 days with a quicker passage of just 35 days by using what is called the Northern Sea Route (NSR).
DP World, one of the world’s largest port operators, wants to run the ports that Russia plans to build along the northern sea route in the Arctic to shorten shipping times between the east and west, its chief executive told Reuters in an article published today.
Russian President Vladimir Putin has made developing the northern sea route (NSR) – which requires new ports and heavy icebreakers to move goods – one of his priorities, with supporters dubbing the route “the northern Suez Canal”
Russia’s future lies in the Arctic. It will become an essential corridor to extract and transport resources to Asia and EuropeMalte Humpert, Senior fellow at the Arctic Institute
DP World agreed this week with the Russian Direct Investment Fund (RDIF), Russian state nuclear firm Rosatom and Nornickel, one of the world’s top nickel and palladium producers, a joint project to pursue the integrated development of the NSR.
The deal is not legally binding and the parties will first study options for developing the route and may set up a joint venture later to develop freight transit via the NSR.
A disruption in shipping
“This is going to change the (economic) growth for Russia. Russia is creating the fastest route between the North Far East and Europe,” DP World Chief Executive Sultan Ahmed bin Sulayem told Reuters in St Petersburg.
Novatek, Russia’s biggest private gas producer, is already using the route to ship its liquefied natural gas (LNG) to Europe and Asia, saving on costs and making its LNG competitive on the global market.
“Ports are surrounded by other infrastructure which creates additional value, creates cargoes and high-value cargoes,” bin Sulayem said, adding DP World was interested in operating ports along the NSR.
“We have expertise and want to provide our expertise in running and managing and developing and investing into industrial infrastructure (along the NSR as well).”
Novatek wants to use nuclear icebreakers to keep the NSR open all year for its LNG in 2023-2025 and is preparing to build more LNG exporting capacity in the Arctic. Russia plans to move other goods via the NSR too.
Bin Sulayem said the NSR would allow DP World to create a truly global operation.
“I am expanding in India, Italy, Pakistan, Egypt, Africa, in the UK, Ecuador. We were always missing Russia, Russia is a link,” he said.
Bin Sulayem said it was to early to talk of possible stakes in potential future joint ventures. “The (Russian) government will decide which land to give us and we will prepare the projects, we will attract the customers, we will work with industries how to attract, to produce something that we know.”
“We are at early stages (to talk about any stakes), we will need to sit with the partners and see, but we will always abide by rules which are laid (by Russia).”
RDIF head Kirill Dmitriev told Reuters separately on Friday the NSR could cut shipping times between Asia and Europe by half.
I am expanding in India, Italy, Pakistan, Egypt, Africa, in the UK, Ecuador. We were always missing Russia, Russia is a linkDP World Chief Executive Sultan Ahmed bin Sulayem
DP World has a portfolio of more than 70 operating marine and inland terminals in 40 countries across six continents. The company business also includes industrial parks, logistics and economic zones, maritime services and marinas.
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