South Korea’s Daewoo Win US$374 million Russian Arctic Ocean Transshipment Tenders For Northern Sea Passage Icebreaking Barges

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  • Terminals at Murmansk and Avachka Bay servicing Europe & Asia 

South Korean shipbuilder Daewoo has won a tender from Russia’s Novatek LNG operator in Yamal to build transshipment barges. These will significantly reduce  shipping times for LNG cargoes bound for Asia and Europe from Russia’s Yamal LNG and Arctic LNG 2 projects.

Each of the 360,000 cubic metre barges cost US$374 million. Daewoo expects to deliver the first two by the end of 2022, while holding the option for another two. The barges will allow the transfer of LNG from the icebreaking LNG carriers that serve Novatek’s Yamal LNG plant in the Russian Arctic onto general-purpose LNG carriers at intermediate positions along the route to the market.

The vessels will mainly transport LNG from an LNG loading terminal on the Gydan Peninsula in the Russian Arctic to the floating LNG storage units (FSUs) to be installed at the transshipment terminal at Avachka Bay in Kamchatka (eastbound) and Murmansk (westbound) via the Northern Sea Route. Avachka Bay is the most high-latitudinal unfrozen sea port on the Northern Sea Route, and capable of serving vessels year round, thus making the Northern Sea Passage part of the Arctic transport line.


The vessels will also service the Arctic LNG 2 project that is currently under development. This involves the construction of three LNG trains, with a capacity of 6.6 million tonnes per annum (mtpa) of LNG each, and at least 1.6 mtpa of stable gas condensate. The Utrenneye field is the resource base for Arctic LNG 2. It is located on the Gydan Peninsula, 70 kilometres across the Ob Bay from Yamal LNG.

Arctic LNG 2 Project

The Arctic LNG 2 project is 60% owned by Novatek in conjunction with France’s Total (10%), China National Petroleum Corporation (10%),  China National Offshore Oil Corporation (10%) and Japan’s Mitsui/Jogmec (10%). Capital expenditure to launch the project at full capacity is estimated at US$21.3 billion. Yamal LNG is currently being shipped to Europe as well as to markets in Asia, including China, some of the ASEAN nations, and India.

Daewoo LNG Barges

Daewoo’s floating LNG storage and transshipment units are being developed along with Japan’s Mitsui O.S.K. Lines (MOL). The barges will be able to hold the contents of two of the icebreaking vessels – enough cargo to fill three standard LNG carriers for final deliveries to EU and Asian markets. The company has been heavily involved in building LNG carriers for the Russian LNG projects. In October it received two orders for a total of six LNG carriers.  Three of the vessels are scheduled for delivery by the end of July 2023, and the other three by December 2023. Icebreaking LNG carriers cost around US$294 million. In late October MOL signed charter agreements with Arctic LNG 2 for three of the icebreaking LNG carriers being built by Daewoo.

Compared with MOL’s previous icebreaking LNG carriers, which can only sail eastbound in the Northern Sea Route during summer and autumn when the ice is thin, the new vessels will have a narrower width, hull form optimized for ice breaking, and an increased propulsion engine output which will enable the vessels to sail east via the Northern Sea Route all year round.

Reduced Shipping Times 

The combination of these icebreaking LNG vessels, which can transport LNG to the FSUs in the east and west throughout the year, and conventional LNG carriers that will transport LNG from the FSUs to their final destinations, will enable efficient year-round transportation of LNG from the Russian Arctic to areas of demand. The eastbound transportation route to Asia will reduce the distance of the voyage by approximately 65% compared to the westbound route via the Suez Canal.

In early December Novatek announced that wholly owned subsidiary Novatek Gas & Power Asia and Saibu Gas Co of Japan had successfully completed their first joint trial delivery of LNG in ISO containers (manufactured according to the specifications set by the International Organization for Standardization) to China’s Tiger Gas for subsequent sales of LNG in China.

The LNG was delivered by sea in Tiger Gas-owned ISO containers from the Japanese Hibiki container terminal to Shanghai under a spot contract. The containers were then loaded onto trucks.

Lev Feodosyev, Novatek’s first deputy chairman of the management board, said ISO containers of LNG are forecast to exponentially increase over the coming decades, allowing the company to diversify its customer base by including small-scale LNG consumers and entering the downstream markets in China and Japan.

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