Russia is spending billions to replace its ageing fleet of Soviet-era nuclear icebreakers in a bid to keep the Northern Sea Route clear. Photo: AFP / Ekaterina Anisimova
By Conor McCann for the ABC
Russia is operating more icebreakers along its Arctic coast now than at any time in the country's three-decade, post-Soviet history.
Some are among the world's most-powerful nuclear vessels, and the country has plans to build even more, having committed to investing at least $US35 billion (NZD$57 billion) into its frozen northern waters until 2035.
President Vladimir Putin is betting big on developing the world's next major shipping route, that will cut 4000 nautical miles off the standard journey between Europe and Asia through Egypt's Suez Canal.
If Russia's gamble pays off, within the next decade there are plans for 200 million tonnes of cargo per year to be moving through these waters, adding more than $500 million to Russia's GDP.
And the extra revenue would come at a critical juncture for Moscow as the repercussions of the Ukraine invasion bite into its national budget.
What is Russia's Northern Sea Route?
The Northern Sea Route (NSR) is the Arctic shipping lane that runs along Russia's northern coastline from the Kara Sea, along Siberia, to the Bering Strait.
It is one of two potentially navigable waterways through the Arctic that connect the Atlantic and Pacific oceans, the other being Canada's North-West Passage.
The NSR has, historically, been largely unnavigable, particularly in the winter months when it becomes clogged with sea ice.
This densely packed ice is often metres thick and, in parts, classified as multi-year, meaning it has remained frozen for multiple seasons.
Only relatively recently have the effects of climate change begun to warm the Arctic, changing its frozen landscape in ways that make use of the NSR potentially economically viable.
Two-thirds of the Arctic seas are now ice-free during the summer, and the amount of dense, multi-year ice has declined as the annual extent of ice cover recedes.
Russian President Vladimir Putin. Photo: AFP / Sputnik
Reviving a Soviet ambition
The NSR has long been an economically attractive asset for the country.
From as early as 1932, the Soviet Union had ambitions of turning the NSR into a viable shipping lane, nationalising Arctic shipping companies, and establishing a government department tasked with developing the route for trade.
Its use peaked in 1987, and continued until the dissolution of the Soviet Union in 1991.
In 2011, Vladimir Putin - who was prime minister at the time - touted the benefits of redeveloping the NSR in order to meet growing Chinese fuel demands.
That same year, climate scientists warned that the Arctic could be free of summer ice within a decade.
Two years later, Putin - be then president again - reinstated a permanent naval presence in the Arctic as part of his efforts to secure the region, reopening military bases that had been abandoned with the fall of the Soviet Union.
At the time, he claimed that the remilitarisation was needed to pursue Russia's economic aims, which it delegated to Rosatom, a state-owned corporation that maintains the world's only fleet of nuclear icebreakers.
Since 2018, Rosatom has operated under a mandate of developing infrastructure along the route.
Vladimir Putin's big gamble
Russia's hopes for year-round shipping through the NSR have not been without setbacks.
Despite a notable increase in shipping through the warmer months, dense sea ice packing tightly into the coast has nearly stalled winter shipping in some years.
In 2021, Russia dispatched icebreakers in November and December to assist dozens of vessels either stuck in the ice or unable to navigate though it.
Conditions were already growing unfavourable in October of that year for most ships without the highest ice-class rating.
Difficulties persisted into January 2022 as nuclear-powered icebreakers were tasked to retrieve a convoy of cargo vessels two months behind schedule on their shipment, with more vessels stuck elsewhere along the route.
These tough seasons coming despite the continued Arctic thaw - along with the fact that Rosatom's Soviet-era ships are ageing - have likely contributed to Russia's push for new icebreakers.
Arctic bet paying off
International use of the NSR has been steadily increasing in recent years as thawing conditions make the passage more economically attractive, and natural gas exploitation increasingly more viable.
According to monitoring by Nord University's centre for high north logistics, the total cargo transited through the NSR in 2021 reached 2.5 million tonnes carried by 85 vessels, of which only 12 were Russian flagged.
This trend was expected to continue through 2022, however, Russia's invasion of Ukraine in February, and the international sanctions and condemnation that followed, reduced international transit traffic to zero.
Despite this, use of the NSR in 2022 actually exceeded Russia and Rosatom's expectations.
"The EU has banned coal imports, has banned first crude oil, and then refined oil product imports, but has never touched gas," said Lauri Myllyvirta, lead analyst at the centre for research on clean air and energy, which has monitored Russian energy exports throughout the war.
Much of Europe has been historically dependent on Russian natural gas, a third of which is used for power generation, with the majority going towards integral - and difficult to replace - home heating.
Russian gas exports had already been weaponised against Europe before the 2022 invasion of Ukraine, Myllyvirta said, with the Kremlin first throttling supplies in the summer of 2021 before terminating them entirely to certain countries as the invasion began.
"And, so, Europe has, throughout this invasion and this crisis, been in that mode of basically buying all the gas that it can from everywhere that it can," he said.
While Russian gas exports to Europe via pipeline dropped to a post-Soviet low in 2022, due in part to the destruction of the Nord Stream pipelines and supply throttling, exports of liquid natural gas (LNG) increased significantly, with European buyers purchasing about 17 million tonnes - a 20 percent increase over the previous year.
The bulk of this gas was shipped by Novatek, Russia's largest LNG producer, from the Yamal LNG project on Russia's Arctic coast.
In total Novatek shipped more than 20 million tonnes along the NSR in 2022, and in a January statement, Rosatom announced that in excess of 34 million tonnes of cargo, in total, had been shipped.
Revenue from NSR much needed
The revenue from NSR shipping has become even more important for Russia since Moscow sent tanks rolling into Ukraine a year ago.
International sanctions and increased spending on the war effort are biting deep into the national budget.
This week, Moscow reported the federal deficit had widened to $US34.19 billion in the first two months of the year.
Its finance ministry said that the country's National Wealth Fund stood at $US147.2 billion, as of March 1, down from $US155.3 billion a month earlier.
Moscow has forecast its annual deficit for 2023 to be about 2 percent of GDP, but analysts have warned it could be as high as 3.5 percent.
Continued repercussions from invasion
As Russia's war in Ukraine enters its second year, the sale of Russian LNG to Europe is not expected to stop any time soon.
While claiming it would exit its Russian operations in 2022, Shell - the world's largest trader of LNG - continued to receive the commodity from Russia as part of a long-term contract.
Other major energy companies have indicated that they would continue to purchase Russian LNG, so long as it was not being directly sanctioned.
However, while Europe remains the top buyer for LNG, the total volume is falling, as leaders find other sources, including Australia, and citizens begin transitioning to alternative heating methods.
Meanwhile, Myllyvirta said that it is already often cheaper for European consumers to buy products from China than from other European nations.
And - as the continent confronts the impacts of its historic energy reliance on Russia - countries may also be wary of handing over shipping infrastructure.
"Of course, you can see faster shipping being attractive and that becoming a factor in geopolitics," Myllyvirta said.
"But, after the way that Russia weaponised gas supply to Europe, I think there's a very high degree of sensitivity to any kind of any kind of dependency or vulnerability."
- ABC