Featured image: Korean Ministry of Fisheries and Oceans representative presents Stena Bulk VP with a plaque to commemorate successful pilot service along Northern Sea Route. (c) South Korea Ministry of Oceans and Fisheries.
On Tuesday, after 22 days at sea, the first-ever South Korean pilot service of the Northern Sea Route (NSR) reached its destination in Gwangyang, South Korea. Korean shipping line Hyundai Glovis chartered a Swedish oil tanker to carry 44,000 tons of naphtha, a light derivative of crude oil, from the Russian port of Ust-Luga, 110 kilometers west of St. Petersburg on the Gulf of Finland. At Ust-Luga, the privately-owned company NOVATEK – Russian’s second-biggest gas producer – has a gas condensate transshipment and fractionation complex, which opened in June 2013.
A spokesperson from Hyundai Glovis remarked to Yonhap, “The sailing signifies developing a new route in South Korean logistics history.” This development has long been in the works, for one of South Korea’s chief interests in the Arctic concerns shipping. South Korea can essentially be thought of as an island. With no open land border to Asia due to North Korea’s looming presence on its northern border, South Korea must import and export almost all of its goods by sea. While the Strait of Malacca and Suez Canal have historically served as the main throughways on the way from the Korean Peninsula to Europe, the NSR has attracted more interest from South Korea as of late. The country is not too far away from the route’s southeastern terminus in Vladivostok, Russia. Shipping from Busan, South Korea to Rotterdam, The Netherlands via the NSR is typically up to 40 percent shorter than the traditional route through the Suez Canal.
Transferring northern know-how to South Korea
Yet whereas South Korea, China, and Japan all share an interest in using the NSR for faster imports and exports, South Korea’s interest extends beyond trade to encompass commercial shipping and shipbuilding. Significantly, the South Koreans are attempting to acquire northern shipping skills. Rather than rely on other shipping lines to transport products between Europe and Asia, the South Koreans are learning to chart Arctic waters themselves. Hyundai Glovis, a subsidiary of Hyundai, doesn’t yet own a proper ice-class oil tanker, so it chartered the MV Stena Polaris from the Swedish company Stena Bulk to ship the naphtha. Stena Bulk has experience doing business with the South Koreans, for in June 2012, its ship, Stena Poseidon, delivered jet fuel from the Yeosu refinery to Porvoo, Finland.
The collaboration between Stena Bulk and Hyundai Glovis exemplifies the type of knowledge transfer that is occurring more and more between Arctic and Asian states. Whereas the Asian states can often provide technology and infrastructure (after all, South Korea is home to the world’s three largest shipbuilders: Hyundai, Daewoo, and Samsung Heavy (source: FT) and builds more LNG tankers than any other country in the world) to the Arctic, the people of the Arctic are the ones with the experience and know-how necessary to infuse infrastructure with human capital.
Erik Hånell, President an CEO of Stena Bulk, commented to The Maritime Executive: “One of the objectives of this special voyage through the North-East Passage is to transfer operational and technical experience from Stena to Hyundai Glovis. Accordingly, the focus is mainly on the experience we have gathered during all the years we have been operating in the icy conditions in the North-East Passage.”
New dynamics in the western NSR?
The MV Stena Polaris‘ voyage also defines a new route in Russian logistics history. Whereas most ships transiting the NSR from west to east depart from Murmansk or Arkhangelsk, the tanker sailed from westernmost Russia and around Scandinavia, rounding the northernmost point of Europe at Norway’s Nordkapp. More transits of this nature are likely to occur, too. In February 2013, NOVATEK signed a contract with South Korea’s Yeochun Naphtha Cracker Center to supply it with naphtha, a product that can be used to crack hydrocarbons (i.e. break down large hydrocarbon chemicals into smaller, more useful ones). NOVATEK also is hoping to receive tax breaks for naphtha exports from President Vladimir Putin.
I’ve heard speculation that plans in Russia to close the liquefied natural gas (LNG) terminal on the White Sea and instead construct an LNG terminal at Primorsk, also on the Baltic Sea, could decrease the amount of shipping along the NSR. If this happens, Russia may seek to ship more LNG westward to Europe rather than east to Asia. Yet the foreseeable growth of the port and city of Ust-Luga, both only established after the fall of the USSR, could help counter any decrease as Asia seeks its naphtha exports. The relatively rapid rise of Ust-Luga also shows how quick geo-economic shifts can be in the north as commodities rise and fall. LNG exports from the Snøhvit terminal in Hammerfest, Norway have room to grow, too. What’s more, of the 40 ships that have transited the NSR so far this year, only one was carrying LNG. The rest were generally transporting other liquid fuels or cargos, so changes in the location of LNG terminals are not likely to dramatically affect the current number of ships transiting the NSR. Finally, the more crude oil Korea and Japan import, the more refined hydrocarbons like jet fuel they can re-export out to places like Finland. So eventually, we could actually see a boost in east-west transit instead of empty repositioning voyages, increasing overall traffic along the NSR.
The pilot services makes an appearance in Korean social media
One of the most exciting developments related to Hyundai Glovis’ pilot service of the NSR is the growing prominence of the Arctic in South Korean social media. The South Korean ministries are extremely well-connected with active Twitter and Facebook accounts – unsurprising given that the country is one of the most technologically savvy in the world. The Ministry of Oceans and Fisheries posted the following (very cute) infographic on its Facebook page with the title, “Arctic Sea Route Trial Sailing Records:”
(I can’t really imagine a similarly cute and helpful infographic coming from the American government to describe any commercial development, let alone in the Arctic. Anyone remember the brouhaha over the seemingly innocuous “MyPlate” infographic, which replaced the food pyramid, courtesy of the U.S. Department of Agriculture?).
The timeline at the bottom of the South Korean sailing route infographic reads:
- Departs Ust-Luga –>
- 4th day: Skaw (for fueling) –>
- 9th day: Kirkenes (a pilot comes on board) –>
- 12th day: Enters the Kara Sea (entering the NSR) –>
- 15th day: Bering Strait (clears the NSR)
- –> Yeosu
While it’s interesting that the South Korea government is promoting public awareness of the pilot service through social media, it’s eye-opening to see how the public is receiving news of the voyage, too. One person commended, “Good news! I’d like to have active development of our country [on the] competitive Arctic route!” Another wrote, “It’s cool that [shipping] will be reduced [by] 12 days. There will be enormous economic impact, too.” By no means do the handful of comments, likes, and shares on a Korean ministry’s Facebook page represent the sentiments of the broader population. But it’s still neat to see Arctic affairs gaining steam in a country that is an increasingly important actor in the Arctic.
With Swedish help, South Korea completes its first pilot service of Northern Sea Route