Russia and Arctic Shipping

This is what struck me in the article:

“Only Russian vessels should have the right to carry oil and gas along the Northern Sea Route,” proposed Vladimir Putin today and "So I ask you not to view it as a branch – an industry – or a company-specific task, because it’s our shared responsibility.”

Note the word “shared responsibility”.

While he is for the country, our elected reps are for selling our country & giving tax breaks to their sponsorers and their vested interests, all in the name of profits and shareholder value, increasingly of dubious value.

And, we can’t even fund an USCG ice breaker.

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imagine if today the same event occurred in the US?

anyway here is what Vlad the Impaler had to say

Russian Shippers Place Massive Order For 60 Ice-Class Ships In Arctic Expansion

The freeing up of the Arctic sea lanes due to global warming is a huge win for Russia.

Leo Standish

Sat, Dec 23, 2017

Expected to reach full capacity by 2024, Zveda is to be one of the world’s largest shipyards in the world.

Situated on Bolshoy Kamen Bay, it was originally constructed during the Soviet era, but is now being revamped from the ground up.

Plans are already underway for the construction of over 60 new vessels, including tankers and world-class ice breakers. The Russian shipbuilding industry is intensely supported by these efforts, which also aim to make the Northern Sea Route a viable path for nautical traffic year-round with Russian vessels holding exclusive rights thereto.

The following clip is taken from Russian TV News. Full transcript below.


“Only Russian vessels should have the right to carry oil and gas along the Northern Sea Route,” proposed Vladimir Putin today. This is only one of the measures that would help keep the Russian shipyards busy first of all – the Zvezda complex in Primorye. How else can the government help shipbuilders? Today the Kremlin hosted a special meeting to resolve this issue.

The first Russian large-capacity shipyard that will produce giant tankers, gas carriers, and even drilling platforms.

Zvezda is supposed to become one of the largest shipyards in the world. But building a work yard isn’t enough, says Putin. We must make sure it’s constantly occupied.

President Vladimir Putin:
"I know there’s an already approved plan of occupying Zvezda up to 2035. We discussed it with the employees the last time I visited the shipyard. We must be committed to the plan.

Rosneft is executing it, but it does so under my authority. It’s not the task of Rosneft alone, but a task of the whole Russian shipbuilding industry. It’s a statewide-level task, including the development of our production capabilities and the creation of new workplaces in the Far East.

So I ask you not to view it as a branch – an industry – or a company-specific task, because it’s our shared responsibility.”

The shipyard in the Bolshoy Kamen Bay was built in the Soviet times, however, it’s currently being practically rebuilt from scratch. Oil industrialists fund the construction, as well as provide the initial offshore projects.

The work on four new ice-class supply vessels was started in September in the presence of Putin. Catherine the Great, Holy Mary, Vladimir Monomakh, and Alexander Nevsky will be seaworthy by 2019. Rosneft ordered 24 vessels in total, including 5 Aframax-class tankers that run on sustainable gas fuel. Another 15 Arctic-class LNG tankers are on order by Novatek.

But in order to make Zvezda profitable by 2017, many more ships must be built.

Igor Sechin, CEO of Rosneft:
“Rosneft will fulfill its contracts by providing orders for Zvezda. We are talking about 50-60 vessels here. Gazprom will order approximately 32 vessels. By the end of the year, the main contracts will be prepared and signed by Novatek, Sovkomflot, and other clients.”

Vladimir Putin:
“I’d like to remind you of the mutual responsibility shared by shipbuilders and their clients. When clients place an order, they must be sure that shipbuilders are committed to the contract. They must know that they’ll receive the product of the required quality at an economically sound price and in due course. The owners of the shipyard must ensure adequate financing contingency.”

The shipyard should be operating at full capacity by 2024. Putin has always made it clear that he personally monitors the construction of the largest Russian shipyard in the Far East. But today’s meeting in the Kremlin must give an impulse to the development of the entire Russian shipbuilding industry.

The shipyards in Kaliningrad, Murmansk, and St. Petersburg have plenty of orders. The world’s largest nuclear icebreaker Sibir was recently launched by Baltiysky yard. Three more are pending. Engineers are already designing blueprints for an icebreaker twice as powerful: Lider – a true arctic off-roader.

Notably, the new Zvezda is well-equipped to build it. There is a process underway for Zvezda to receive a nuclear shipbuilding license, given that Russia is actively trying to make the NSR a global year-round traffic artery.

Ships sailing under the Russian flag were promised an exclusive right to store and ship hydrocarbons in order to support the Russian shipping business.

can you just imagine? What a Christmas that would be!

This type of shipbuilding and operating support is exactly what we need in the US.

Imagine if 1/3rd of US exports and imports was reserved to US built , US owned, managed, and manned ships.

It would result in 0 % American built ships carrying % of the cargo to/from USA because you couldn’t compete on cost and service. It is exactly what you don’t need.

What you DO need is to be able to compete on level terms with other flagged fleets.
Until you can you will always be the losers in international trade.

You can not live on previouse glory and present propaganda and expect to win anything.

We can never compete on cost, There will never be any significant US import/export cargo carried on US flag ships without a government mandate reserving a certain percentage of the import/export cargo to US ships.

Without that, the 60 or so US ships left in foreign trade will not be replaced. In 30 years there will be Zero US ships in US commercial import/export trade

I disagree. There will still be some foreign companies that find US subsidies and preferensial cargoes attractive enough to set up American subsidiaries where they can transnfer some second hand ships into.
Getting preferential treatment like that is not found anywhere else.

I’m a bit skeptical about the “built from scratch” Zvezda Shipyard and Putin’s announcements about protectionism in the Arctic. Few weeks ago, the first batch of Arctic LNG was loaded on a South Korean-built, Cyprus-flagged icebreaking LNG carrier full of European technology. Now those fifteen tankers, the only ships in the world capable of exporting natural gas from the perennially frozen Sabetta, should be banned from Russian waters? Sure, every week Zvezda announces an order for ten or fifteen ships to some Russian company, but can they really build them using predominately Russian technology? Sure, given enough time and money everything is possible, but just a look at the current icebreaker projects - the ones every article remembers to mention - shows that the Russian shipbuilding industry still has issues to solve in terms of schedule, budget etc.

Of course, I’m ready to stand corrected when I see something else than just propaganda words…

A few years ago US flag Cargo preference for food aid was cut in half overnight with vey little discussion by Congress. The Farm Lobby and the “Lets feed the world for free” people have been trying to eliminate it entirely. As the number of US flag ships in foreign trade drops from the current 60 or so, it becomes more and more likely that food aid cargo preference will be eliminated.

As the number of US flag ships drops, and the few remaining US flag ships become mostly foreign owned (Maersk, etc.) anyway, there will be less and less reason to keep the military cargo preference. The US military is just like other shippers, it wants the cheapest price, it (wrongly) doesn’t care if the ships are all foreign flag.

With only about 60 ships and steadily declining, at some point policy makers will realize that the US flag fleet is already gone. As you say, many are already foreign owned. They will claim that the US just cannot compete in shipping even with preferences and subsidies. There will be a shift in policy to accept US owned, but foreign flagged and foreign manned ships.

Without a major change in policy that really values and protects US flag shipping, and accepts that it will always be higher cost, it’s pretty much going to disappear.

The small vessel Jones Act trade is really all we are going to have left.


However, there is a loophole in the new law, which enables several key stakeholders to continue their already ongoing shipping operations with foreign-registered vessels.

The law states that the companies which before 1 February 2018 have entered into contract agreements over the use of foreign-flag vessels will be allowed to continue operations.

As expected.

The Russians have been playing a long game for years in the Arctic.

They have learnt how to operate modern vessels with JVs such as that with Swire. Even when under SPO management they were fully Russian manned.

The Zvezda project is a natural step, South Korea is just a hop away and there is a relationship with the Korean yardsm who know they have to co-exist.

This is a long term strategy that makes the issues with US policy making all the more serious. Eastern Russia is almost an empire on its own, it was largely forgotten but the sleeping giant is awakening. Shakhtersk is presently a sub port of Vanino and Gavan, with the second largest natural deep-water harbour in the world, largely undeveloped.

East Mining Company is expanding almost exponentially on Sakhalin:

Do you believe that?

Half a dozen nuclear ice-breakers by 2025, in addition to the existing fleet and the LNG ice class vessels.

I wonder what will happen to the employees if Rosatom does not come up with a plan how to finance the new icebreakers outside the state budget? Can I hear the gulag’s gates closing? Apparently someone powerful is dreaming of a fleet of these nuclear-powered behemoths they refer to as “Leader”. Coincidentally, someone in the Navy refers to the proposed nuclear-powered cruisers with the same name - a similar pipe dream?

Also, it’s rather amusing to see the Russian people of power dream of new aircraft carriers knowing the state of the country’s only such vessel, the smoking rust bucket Admiral Kuznetsov that is always accompanied by a tugboat in case something goes wrong again when it leaves port. What will happen to the employees of the Zvezda shipyard when someone realizes just having world-class shipbuilding facilities does not mean you can pull off that kind of project successfully when you have to start pretty much from scratch. After all, Kuznetsov was built in what is today Ukraine (at least as of this morning - who knows where the tanks are rolling by lunchtime)…

One word - Sabetta

What do you mean? It looks like an ok place to work and reminds me a lot of the Alaska North Slope.

Nuclear-powered icebreakers are expensive to build, maintain and operate despite their seemingly unlimited endurance, not to mention getting rid of them in the end. You could build large LNG-powered icebreakers at a fraction of the cost for local traffic in Sabetta, the Gulf of Ob and the Kara Sea where fuel is readily available, leaving the full-length NSR transit for the nukes. Even then, I’m not sure if they need those huge Liders (Leaders) or could they do with just the current Arktika/LK-60Ya design.

Understand the tugs are Ice class and there is a port icebreaker.

I expect they are probably running on LNG condensate from the plant. I worked on AHTS in the Gulf of Thailand and that was how they were fuelled.

Having looked at the design the Liders have an enormous beam of 40 meters. The Northern Sea Route is draught restricted to IIRC 12.5 meters or so.

There has been talk by the likes of COSCO of building ‘Karamax’ container ships around this restriction but with a wide beam to compensate.

… congressmen were jailed for campaign bribery and general corruption.

That might be a start in obtaining support for all of American industry. As long as the American citizen taxpayer is ignored by the lawmakers in favor of their corporate sponsors we will never see anything even close to what Russia has proposed.

Which way are you trolling today? Either zero American ships or some foreigner who sees a gold mine?

As long as the Jones Act exists (and may it ever be a barrier to those who want to sell what is left of American industrial capacity) the same ship you say a foreign front company would buy is available to a real American company to carry those same cargoes to and from the US. The only difference is American mariners get paid an American salary in order to pay American taxes and live their version of the American dream.

Why do you campaign so strongly for turning American mariners into unemployed welfare recipients and/or turning the USA into a nation more closely resembling an African kleptocracy? Are you running for congress?