Russia Orders 10 More LNG Carriers to Expand Arctic LNG Operations
As part of Russia’s ongoing efforts to develop its northern oil and gas fields and promote Arctic shipping, Sovcomflot (SCF Group) and NOVATEK announced a deal to build 10 additional icebreaking Arc7 LNG carriers at the Zvezda Shipbuilding Complex. As part of the agreement, it was also announced that SMART LNG, a joint venture of SCF Group and NOVATEK, signed long-term time charter agreements for the vessels with Arctic LNG 2, the operator of the Arctic LNG 2 project.
This latest contract is part of a program that was launched in October 2019 to develop Russia’s LNG shipment capabilities. Initially, one LGN vessel was ordered domestically followed by four additional orders in January 2020. The SCF Group said that the orders were part of its growth strategy with a special focus on operations in challenging climatic and ice conditions.
“Shipbuilding and time charter contracts for 15 Arc7 LNG carriers, signed between 2019-2020, enable the Russian shipping community to play a role in transporting cargoes of strategic importance for the Russian economy,” commented Igor Tonkovidov, President and CEO of SCF Group, in the company’s press release. “We are pleased to see that this new generation of Arctic LNG carriers, which will contribute significantly to growing the cargo traffic along the Northern Sea Route, was designed based on SCF’s long-standing experience of safely operating vessels in ice conditions. Equally significant is the fact that the cooperation between SCF, NOVATEK, VEB.RF Group and Russian shipbuilders paves the way for establishing the domestic production of LNG carriers, which entails adopting advanced technologies and engineering solutions.”
Sovcomflot and Novatek announced the formation of the SMART LNG joint venture in October 2019 saying that it would focus on managing the construction and operations of Arctic ice-class LNG carriers to service Novatek's LNG projects in the Russian Arctic region, including the Arctic LNG 2 project. At the time, they said a total of 17 new-generation Arc7 LNG carriers were planned to be built at the Zvezda shipbuilding complex and expected to be delivered from 2023 to 2026. The vessels’ technical specifications will differ from the LNG carriers of the Christophe de Margerie series which was built in Korea.
Bringing the project domestically fits with the Russian strategy of developing its domestic shipping industries. The growth of the yards at Zvezda, which was a former military base, and the tanker construction projects have a high priority with the support of the President of the Russian Federation Vladimir Putin. Zvezda is also building a class of 12 Aframax class tankers for Rosneft. The Rosneft Oil Company is also leading a consortium of investors developing the Zvezda Shipbuilding Complex.
The first tests of the North Sea Route begin a decade ago when SCF Group working with NOVATEK completed several experimental transits leading to the development of the deep-water route for commercial shipping north of the New Siberian Islands archipelago. In May 2020, the LNG carrier Christophe de Margerie completed the earliest eastbound transit of the Northern Sea Route and its 45 voyage since the start of Yamal LNG’s operations. Putin has called for the development of the route, setting the goal for 80 million tons of cargo to pass through the Arctic by 2024.