Oil shipments from Russian ports to China via the Arctic Northern Sea Route (NSR) have risen by a quarter to a record 12.5 million barrels (about 1.7 million metric tons) during its navigable period this year, preliminary data from energy consultancy Kpler and LSEG showed.

The NSR connects Russian ports with China during the summer months, saving vessels 7-10 days at sea compared to travelling via the Suez Canal. About 10 million barrels were shipped on the route last year.

Moscow has pushed for the development of the route because it gives direct access to the ports of trade partner China, while allowing ships to avoid sailing close to the borders of European Union member states, which have imposed sanctions on Russia’s oil trade.

However, the growth in oil shipments to China via the NSR is less than expected by market participants given the security risk to vessels transiting the Red Sea and the strengthening of Russian-Chinese trade.

“As Chinese buying plunged to the lowest this year in the summer months, it’s a small miracle that NSR transit volumes didn’t decrease along the way,” said Victor Katona, head of crude analysis at Kpler.

The launch of exports from Rosneft’s Vostok Oil project was expected to add 30 million metric tons of oil per year to NSR shipments, but some analysts are sceptical that the project was on schedule.

Rosneft did not immediately respond to a comment on the project’s status.

Traders also said that the high cost of transiting the NSR, with shippers having to use ice-class vessels and ice breakers, and the need to obtain permits from Russia’s Rosatom were other factors limiting export growth on the route.

Many tankers that crossed the NSR this year remained off the coast of Russia’s Far East, delivering oil from the port of Kozmino to China.

In total, 15 oil tankers – Aframax (80,000-120,000 tons), Suezmax (120,000-160,000 tons) and smaller Panamax (60,000-80,000 tons) and Handymax (30,000-60,000 tons) – have sailed the northern route since it opened towards the end of July. The route will close this week.

At least three of the tankers have sailed the route twice, according to LSEG and Kpler data.

The tankers have delivered Urals, ARCO, Varandey and Novy Port oil, mainly from Murmansk and Primorsk to the Chinese ports of Zhoushan, Huizhou, Tianjin and Qingdao, according to LSEG and Kpler data.
Source: Reuters (Reporting by Reuters reporters in MOSCOW and Gleb Stolyarov; Editing by Kirsten Donovan)