Northern Sea Route Reduces LNG Tanker Bunker Bill By 40%

The Ob River is due to arrive in Japan in early December.

A liquefied natural gas (LNG) tanker chartered by Russian gas company Gazprom is due to arrive in Japan in early December, becoming the first ship of its kind to sail across the Northern Sea Route (NSR) and saving 40 percent on its bunker bill in the process, the BBC reports.

The Ob River, owned by Dynagas Ltd. (Dynagas) of Greece, sailed from Norway on November 7, and has been accompanied by a Russian nuclear-powered icebreaker.

The ship has a maximum capacity of 150,000 cubic metres of gas and a crew of 40.

The NSR, which can be navigated more easily than in past years because of the melting of Arctic ice, is a far shorter route than the standard path leading through the Suez Canal.

"There is an observable trend that the ice conditions are becoming more and more favourable for transiting this route," said Tony Lauritzen, commercial director at Dynagas.

"You are able to reach a highly profitable market by saving 40% of the distance, that's 40% less fuel used as well."

Last month Nordic Bulk Carriers A/S (Nordic) confirmed it was also getting fuel savings of 40 percent from its use of the NSR this year, and although it saw more ice that expected at the start of the season, will complete more journeys than it had planned.

The voyage across the Arctic also reflects new market trends, as the U.S. produces more shale gas, reducing its imports of LNG, while Japan moves toward the use of gas as an alternative to nuclear power in the wake of the Fukushima disaster.

"The major point about gas is that it now goes east and not west," says Gunnar Sander, senior adviser at the Norwegian Polar Institute.

"The shale gas revolution has turned the market upside down; that plus the rapid melting of the polar ice."

Earlier this month, Russian gas producer OAO NOVATEK (NOVATECK) announced an agreement with State Atomic Energy Corporation ROSATOM for icebreaker support on the NSR.

Japan has also been looking at the route as a fuel-saving alternative to the longer journey through the Suez Canal.