Japanese and South Korean energy companies have begun shipping oil products through the Arctic’s melting ice—adding credibility to a route that could slash costs while avoiding risks associated with ferrying cargo through the Suez Canal.
The ships are taking the so-called Northern Sea Route, traders and shipbrokers in Singapore said, a shortcut between Asia and Europe along Russia’s Arctic Ocean coast. This marks the first time oil-derived products have been moved in such large volume through what maritime explorers of centuries past dubbed the Northeast Passage.
There have also been shipments by this route of gas condensate—a form of hydrocarbon—and iron ore in the past couple of years, and last year Russian gas giant Gazprom, in a test run, sent a load of liquefied natural gas to Japan. Earlier this month, Chinese shipper Cosco sent a container vessel from China to Europe along the route, which it said would not only cut shipping costs and carbon emissions, but also bring it closer to Western markets and foster economic development in Chinese coastal areas.
By bypassing the Suez Canal, the Arctic passage avoids a region where recent political unrest, including currently in Egypt, has intensified concern about relying so heavily on single route through such persistently volatile territory. A much longer route around the African continent is also available, but adds tens of thousands of dollars in shipping costs.
These latest shipments on the Northern Sea Route consist of oil products headed east to Japan from Norway and high-quality diesel headed west to Europe from South Korea. The latter is scheduled to set off this week in a 90,000-ton tanker called the Propontis, ship-tracking data showed, while one of the shipments to Japan has already arrived.
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