THE COMMERCIAL POTENTIAL FOR LNG SHIPPING BETWEEN EUROPE AND ASIA VIA THE NORTHERN SEA ROUTE

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Z. Raza
H, Schøyen

Abstract

Thawing sea ice in the arctic due to global warming has opened up new horizons for an environmentally friendly and cost-efficient trade route between Europe and Asia. As an alternative to the Suez Canal, the Northern Sea Route (NSR) offers a 50% shorter sailing distance between Northwestern Europe (Hammerfest, Norway) and Northeast Asia (Tobata, Japan). The shorter distance via the Northern Sea Route comparatively accelerates the route’s cost efficiency. In comparison to the traditional route of Suez Canal, cost savings by using the (NSR) could be as large as about 4.7 million US dollars for a full round voyage between the mentioned ports. This may attract the maritime actors to make the required investments. The contribution of this paper is a comparison of transport cost components for the full round voyage of an LNG carrier traversing the Northern Sea Route and the Suez Canal between Europe and Asia. The total savings made in respect of cost by using the Northern Sea Route are determined by citing the most recent interviews with arctic shipping experts and the existing literature. Sensitivity analyses are conducted to assess the impact of key cost components on the overall shipping cost picture. The main research question is “How much is the economic potential of using the Northern Sea Route as an alternative to the Suez Canal for LNG transportation between Europe and Asia?”

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Author Biographies

Z. Raza, Buskerud and Vestfold University College, Norway

Faculty of Technology and Maritime Sciences

MSc in Maritime Management

H, Schøyen, Buskerud and Vestfold University College, Norway

Faculty of Technology and Maritime Sciences

Associate Professor