#CommercialRoute – Russia begins Summer exports to Asia via the Northern Sea Route
Russia has just shipped its first liquefied natural gas cargo of the year via the Northern Sea Route (NSR) to the Arctic. The LNG carrier Fedor Litke was loaded at the Sabetta terminal of Novatek’s Yamal LNG plant, and left the plant on June 4, bound for Asia. The redeployment of Russian energy flows to Asia, under pressure from Western sanctions, is prompting Russia to develop maritime traffic beyond the Arctic Circle. The Northern Sea Route has the potential to reshape global trade flows. It offers an alternative to the current route between China and Europe via the Strait of Malacca and the Suez Canal, cutting journey times by two weeks and costs by 20%. As a reminder, blocking the Strait of Malacca, an area dominated by US allies, could hinder 90% of China’s total trade and 80% of its crude oil imports. For six months of the year, navigation through the NSR is handled by Russia, which has the world’s largest fleet of icebreakers. The volume of goods transported on this route is constantly increasing. It was around 4 million tonnes in 2014, rising to 35 million tonnes by 2021. The development plan approved by the Russian government targets 200 million tonnes by 2030.
#Gas – Will Europe go without Russian gas?
Gas prices in Europe have doubled in ten days, according to the Financial Times. These price variations reflect the uncertainty prevailing on European markets in terms of supply, despite high storage levels, and demand in Asia which remains weak. On June 15, futures contracts on the European reference market, the Title Transfer Facility (TTF), jumped 30%. Competition between Europe and Asia for liquefied natural gas will not be as intense as last year, according to industry analysts. They estimate that Europe has already reduced its consumption of gas for industry and power generation compared with last year. Despite the war in Ukraine, Kyiv continues to collect transit duties on Russian gas delivered to Austria, Slovakia, Italy and Hungary. However, given the geopolitical context, it is unlikely that these supplies will be continued beyond 2024. According to Economics Minister Robert Habeck, stopping these imports could force Germany to reduce or even halt its industrial production. TurkStream would then remain the only pipeline to supply the European continent with Russian gas. Before the outbreak of war in Ukraine, Russian gas pipelines supplied 40% of EU demand.
#Trade – Russia and Iran step up trade via the Caspian Sea
Maritime trade between Iran and Russia via the Caspian Sea has been on the increase in recent months. This sea route is of strategic importance to both countries, as it is sheltered from the eyes and influence of the West. The Americans suspect Teheran of using it to deliver weapons to Moscow. And the countries bordering the Caspian Sea, such as Azerbaijan, Turkmenistan and Kazakhstan, have neither the means nor the incentive to interfere in these exchanges. Ships crossing this landlocked sea regularly deactivate their Automatic Identification System (AIS) signals, according to data from Lloyd’s List Intelligence. In recent years, the Iranian government has invested in improving the Russian port of Astrakhan in order to circumvent international sanctions affecting the country, according to Bloomberg. The aim is to double the port’s loading capacity to 85,000 tonnes per month. The Iranian shipping company Khazar-Ship plans to increase its fleet to 27 vessels in the near future, with 15 vessels already having been integrated in 2022. The Caspian Sea is one of the main routes of the International North-South Transport Corridor (INSTC), which Vladimir Putin believes will eventually make it possible to “connect St. Petersburg to Bombay in 10 days”.