World Energy Outlook 2011.pdf - Thomas Piketty

Box 8.5 The “Northern Route” to market
The “Northern Route” (or Northeast Passage) from the Atlantic to the Pacific across
the Russian Arctic seas has fascinated mariners and traders for centuries, though
it has never been more than a marginal route for global trade because of the very
harsh environment. The gradual reduction in Arctic ice cover, due to climate change,
is however likely to increase the number of ice-free sailing days in the summer and to
lessen the need to call on ice-breaking assistance. This has attracted the attention of
potential producers of LNG in Russia’s remote Arctic north, not least because demand
for imports in their initial target market, North America, appears to have evaporated.
A demonstration of this renewed interest was Novatek’s deliveries of condensate
from Murmansk to China across the Russian Arctic in the summer of 2010 and again in
July 2011, the latter being one of the earliest ever summer shipments along this route.
If passable, the Northern Route provides by far the quickest sea route from Europe to
Northeast Asia: the Novatek shipments took around 22 days, half the time required
for the next best itinerary via the Suez canal. For LNG suppliers, the Northern Route
would mean a sea journey from Murmansk to Chinese LNG terminals only around 30%
longer than the journey from Qatar. But this route is still a long way from reliable yearround
operation and its regular use will involve significant additional expense: it would
require special ice-strengthened LNG carriers, presumably with lower capacities than
typical carriers because of size constraints to negotiate the narrow straits, 26 and the
use of accompanying icebreakers (whose services also come at considerable cost),
if only for insurance purposes. Seasonal contracting would see the Asian market
favoured during the summer months, when the Northern Route is open, and sales into
Europe or the Atlantic basin at other times. To avoid interrupting production because
of transport unreliability, expensive additional storage would be required.
8
Unconventional resources
Because of the large conventional resources of oil and gas, unconventional resources
have received comparatively little attention in Russia and the extent of the existing
unconventional resources is generally poorly known. Nonetheless, Russia has considerable
potential in these areas; as technology improves and costs come down – mainly due to
investments in other regions of the world – so the opportunities for Russia to develop its
unconventional potential will grow.
Extra-heavy oil and bitumen
© OECD/IEA, 2011
Bitumen and extra-heavy oil resources are known to be extensive in Russia, but there are
significant discrepancies between the published estimates. BGR gives 345 billion barrels
26. The size restrictions are a maximum draft of 12.5 metres (m) and maximum beam of 30m (Ragner, 2008); this
compares to 12m draft and 50m beam for a Q-Flex LNG carrier and a similar scale (12m and 53m) for a Q-Max.
Chapter 8 - Russian resources and supply potential 315