Hyundai Takes Advantage of Arctic Sea Route

By MarEx 2013-10-22 07:52:00

South Korea has taken delivery of its first cargo shipped by a Korean firm via the Northern Sea route, as the government looks to increase use of the new shipping route opened up through the Arctic.

A vessel chartered by Hyundai Glovis took 35 days to deliver a 44,000 ton cargo of naphtha from Port Ust Luga in Russia to Gwangyan Port, about 350 km (220 miles) south of Seoul, arriving late Monday, the Korean Ministry of Oceans and Fisheries said on Tuesday.

Cargoes of coal, diesel and gas have made the trip through the new route opened by climate change, which offers a shorter journey between Asia and Russia, although shippers face high insurance costs, slow going and strict environmental rules.

The ministry said the government intended to strengthen cooperation with Russia and other countries around the Arctic area, and would support Korean shipping companies to help them tap into the Northern Sea route.

"The available period of operation at the Arctic Sea and the size of cargo volume are increasing and many countries are pushing ahead with resource exploration in the Arctic area," the ministry said.

The route would be available for trips to Korea for 4-5 months a year, although Seoul currently had difficulties securing cargoes and had a lack of ice breakers.

The naphtha cargo, delivered for South Korean petrochemical producer YNCC, had been expected to take 30 days, but was delayed by bad weather, while Russian ice breakers were on call at ice-bound areas.

Asia is structurally short of naphtha and routinely takes from Europe, including Russia.

Rosneft and Novatek regularly ship naphtha to Asia from Nakhodka and Ust-Luga respectively, where the latter has a term agreement with YNCC.

Naphtha from Tuapse is also shipped to Asia when demand for the light fuel falls in Europe. 

Copyright Reuters 2013.

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