Russia invests billions into Arctic dredging projects

Russia invests $15 billion into NSR, including some dredging projects. Credit: Murmansk Sea Port

“Dredging operations in the Gulf of Ob along the Northern Sea Route (NSR) are slated to begin in August 2019,” said Maxim Akimov, deputy prime minister of Russia, during a government meeting in Moscow on 18 July. The federal government has approved funding for part of the project, allocating RUB3.84 billion (USD59 million) to it, Akimov added.

The project is part of an important dredging campaign on the NSR, as dredging near the Sabetta seaport in the Gulf of Ob is necessary to launch the Arctic LNG 2 project of the Russian oil extracting giant Novatek. “This project would secure a cargo flow of 50 million tonnes per year for the NSR by 2024,” said Alexander Krutikov, deputy minister for the development of the Russian Far East and the Arctic.

In total, Russia’s federal government will contribute RUB100 billion by 2021 for the construction of a new cargo terminal at Sabetta seaport. This will include funding for dredging operations. The overall costs of dredging projects in the port, including for the new cargo terminal, is estimated at RUB12.3 billion.

“Russian state-owned nuclear corporation Rosatom, which was appointed to run the development of the NSR, estimated the need in dredging in the Arctic at 26 million m3,” said Mikhail Belkin, director of the NSR department of Rosatom. On the new cargo terminal in the Sabetta seaport, the required amount of dredging operations is around 12.5 million m3. With the expected average pace of 1.4 million m3 per year, the project could take up to nine years to complete.

Dredging in the NSR is associated with certain difficulties, in particular the harsh weather conditions in the Arctic. “The construction season here lasts only for 10 weeks a year,” Akimov said.

Russia could put 100 new commercial ships on the NSR by 2024, Russia’s Deputy Prime Minister Yuri Borisov said. These would be primarily tankers designed to carry oil, LNG, and other resources, he added.

The overall investment of the NSR development over the next five years is expected to be around RUB900 billion, research conducted by the Russia’s Transport Ministry showed.
Dredging in the Sabetta seaport has to be done so that the port could serve these high-capacity tankers, Russian government officials explained. There are 61 promising oil and gas deposits on the Arctic shelf and their development could give a strong impetus to the increase in cargo flows in the NSR.

Russian President Vladimir Putin earlier forecast that the cargo flow on the route could jump from around 20 million tonnes in 2018 to 80 million tonnes in 2025. Russian government ministers believe that this goal is attainable with the support of private investors.

Dredging in the NSR would cost the federal budget USD16 per cubic metre on average, according to Yuri Stepanov, spokesperson of the Russia’s Federal Agency for Maritime and River Transport. “This figure falls within the normal price range for the global dredging industry, where costs range between USD5 and USD20 per cubic metre,” Stepanov said.

The new projects on the NSR would support the dredging industry in Russia. Russian seaports agency Rosmorport plans to order four dredging vessels from Russian shipyards by 2030, Vasily Strugov, director of Rosmorport, said during a press conference in Moscow in February 2019. He added that the expected amount of dredging works in Russia in 2019 was estimated at 12.1 million m3.

“Aside from the NSR projects, this year dredging is also planned for the seaports of Kaliningrad, Gelendzhik, Vanino, Big Port Saint Petersburg, and Kholmsk,” Strugov concluded.