November 15th, 2019

Russia looks to Japan icebreaking tankers to unlock Arctic gas

Japanese marine shipper Mitsui O.S.K. Lines is  breaking new ground in the Arctic Circle by teaming up with one of  Russia's largest natural gas producers to export the fuel through the  icy seas rather than pipeline, in a venture that promises lower costs  but also risks running afoul of American sanctions on Moscow.

In  September, Russia's Novatek and MOL announced plans to have icebreaking  LNG tankers transport the fuel along the Eurasian Arctic coastline  to floating storage units that will assist transfers of the cargo to  conventional tankers. The project is expected to cost as much as 160  billion yen ($1.47 billion) with operations to start by 2023.

A  joint venture will be established and the Japan Bank for International  Cooperation may offer financing  The Japanese company will make the  final decision on the investment next year, expecting to take a stake in  the project of at least 30%.

Right  now, the only way to transport LNG from the Arctic is by using  icebreakers, which are notorious for poor fuel efficiency and high  shipping costs.

To solve the problem, MOL and Novatek  will construct floating storage units that will transfer LNG from  icebreakers to conventional carriers. The terminals will be located at  Kamchatka, in Russia's far east, and in Murmansk, in the northwest. This  will minimize the use of the high-cost icebreakers.

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