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The Northern Sea Route has become as smooth as silk
In 2024, Russian oil companies increased crude supplies to China via the Northern Sea Route (NSR) by 30% to 1.9 million tons. The main shipment was carried out through the port of Murmansk, while supplies through the Baltic ports, where Rosatom began expanding last year, were halved. The increase in supplies was also due to the need to repair the vehicle fleet in China. In the near future, experts do not expect a significant increase in oil supplies via the NSR due to weakening demand from China.
According to the Gekon consulting center (available in Kommersant), oil deliveries via the Northern Sea Route have grown by 30% this year, to 1.9 million tons. This is confirmed by Kpler data (available in Kommersant). These deliveries include the port of Murmansk, navigation along the Baltic Sea, and direct deliveries from Gazprom Neft's Arctic Prirazlomnye and Novoportovskoye fields.
In early October, the tanker NS Arctic left Murmansk with a cargo of about 100 thousand tons of oil, which is scheduled to be unloaded in China in November.
The ship Moskovsky Prospekt is expected to transport approximately the same amount of cargo from Murmansk in October. According to Kommersant's sources familiar with the situation, raw material supplies this year may exceed 2 million tons (less than 0.04% of Russian production) due to the latest voyage.
The bulk of the raw materials belonged to Gazprom Neft. Oil was also sent by Surgutneftegaz and Rusvietpetro (a joint venture of Zarubezhneft and Petrovietnam). Analysts did not pay attention to Rosneft's deliveries.
According to Gekon, this year oil companies have significantly reduced oil deliveries via the NSR through the Baltic ports (Primorsk and Ust-Luga) - by 47% - to 320 thousand tons. Shorter logistics reach China. More than 70% of the oil transported from Murmansk to China this year was transported via the NSR. The increase in supply via the NSR is also associated with another unexpected trend. Russian oil companies have changed their usual logistics plans for transporting raw materials from the Arctic region and have begun to redirect cargo to the east along the Northern Sea Route. Thus, about 150 thousand tons of oil were delivered via the Northern Sea Route directly from the Prirazlomnoye and Novovortovskoye fields. This was due to the need to carry out scheduled repairs of the fleet in China (see Kommersant of August 2).
Last year, the idea of increasing Russian oil deliveries from the Baltic ports via the NSR was initiated by Rosatom. Due to the introduction of sanctions, oil from the Baltic ports is mainly delivered to Asia via the Suez Canal, whereas previously the main sales markets were European countries. It was expected that delivery via the NSR would reduce travel time, but due to bad weather, this was not always possible. If last year Russian oil companies made six voyages to China via the NSR, then this year, according to Gekon and Kpler, there will be three.
The head of the Gekon consulting center, Mikhail Grigoriev, stated that the volume of oil supplies via the NSR this year will be higher than last year, and the interest of Rosneft and Gazprom Neft in supplies from the Baltic ports will definitely be lost.
He believes that shipping to the east will soon cease and new oil-using voyages should not be expected. For all vessels of ice classes Ice1-Ice3, the sailing period is until October 20, and for vessels of light and ice classes Arc4-Arc5 - until October 31, Mr. Grigoriev reminds.
The volumes of oil transported via the NSR depend largely on China’s demand for oil. This is because shipping to China reduces transit time by 10 days each way, adds Victor Katona from Kpler. He said that in the case of India, the NSR does not play any role. This is because the subsequent journey across the entire Asian continent would take the same amount of time and, in addition, the additional costs of an icebreaker would not be justified. According to the analyst, although oil supplies via the NSR have increased compared to previous years, “there is a feeling that with the infrastructure in place, more could have been achieved.” The main reason for the supply constraint is the weakness of the Chinese market, where imports will be lowest in the summer, and at the same time the stability and predictability of the Indian market, emphasizes Victor Katona. As a result, he concluded, India remains the most attractive market for Russian seaborne oil exports, despite the risk of shelling by the Houthi rebels.