Russian Infrastructure Investment Propelling Northeast Passage

As we have previously noted, Russia continues to invest in the Northeast Passage:

“If Russia gives the green light to develop this as a full commercial transit route, it would make Sovcomflot’s whole investment case completely different,” said Chris Weafer, chief strategist at ING Bank NV in Moscow. “It would make it more attractive to potential investors.”

Sovcomflot, along with companies such as OAO Novatek, is sending test cargoes via the Arctic route, which Prime Minister Vladimir Putin has vowed to transform into a year-round passage. To make it work, Russia must revamp ports, install rescue systems and build icebreakers for as much as 30 billion rubles ($1.1 billion) each to provide safe passage for tankers.

The future of the Northern Sea Route will depend on Russia’s energy plans in the Arctic and demand among shippers for transit — neither of which is clear as yet.

“We’re preparing infrastructure and icebreakers,” said Alexander Poshivai, head of shipping at the Federal Agency for Sea and River Transport. “We have to be ready, it’s a strategic route.”

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