Bloomberg News

Russia to Test Ship Oil to Asia Through Arctic North Next Year

December 26, 2009

OAO Sovcomflot, Russia’s biggest shipper, will start test voyages for a commercial route through the Russian arctic, cutting the distance for oil and gas to reach China, South Korea and Japan.

“This is principally important to the future development of the Yamal Peninsula,” Sergey Frank, head of the state-run Russian company, told Russian Prime Minister Vladimir Putin today in a statement on the government Web site.

Major natural gas projects in the Arctic north, such as on the Yamal Peninsula and Shtokman in the Barents Sea, will boost Russia’s output as production from OAO Gazprom’s traditional regions goes into decline.

The distance to Asia via the northern route is two times shorter than the traditional route, Frank said, adding that test cargos are planned to sail as early as mid-2010.

While the northern offshore is primarily gas bearing, the region will likely produce oil first. OAO Gazprom Neft, Gazprom’s liquid’s arm, plans to start oil production at the Prirazlomnoye offshore deposit in the Barents Sea as early as 2011. Sovcomflot this month launched the Kirill Lavrov an oil tanker specially made for Arctic transit.

The test runs will be used to gather information to develop technology for shipping liquefied natural gas along the same route.

“The information we gather in these pilot runs we will use in building ships and equipment that will allow producers in the Yamal region to look not only at the western route but the eastern as well,” Frank said of the gas rich region.

Russia, which plans to offer shares in state companies starting next year, may offer up to 20 percent of Sovcomflot, First Deputy Prime Minister Igor Shuvalov said on Sept. 22.

To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@bloomberg.net.

To contact the editor responsible for this story: Guy Collins at guycollins@bloomberg.net.


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