1. The 6 th Open Assembly of the Northern Research Forum Open Assembly Panel: International law, “Soft Laws” and Governance on ice: Economic, Cultural and Political Implications Arctic Shipping Development Prospects Evaluation: Nuclear Icebreaker Fleet in the Northern Sea Route Khomiakova Tatiana tkhomiakova@yahoo.com Hveragerði, Iceland 3 - 5 September, 2011

2. 1. Data and Methodology This research is supported by the unique database of potential investment projects in all sectors of Russia’s economy and, in particular, infrastructure development projects in all regions of Russia till year 2020. The database has been collected in the course of the structured request to the Federal authorities, regional authorities and business in Russia. The research methodology comprises of: 1) qualitative methods 2) mapping and geographic analysis techniques (MapInfo); 3) quantitative methods. 2

3. Transport Corridors, Natural Resources Development Territories, Processing Industry Territories in Russia till Year 2020 - - - Northern Sea Route Natural Resources Development Territories: extraction of fuel and energy mineral resources extraction of fuel and energy mineral resources precious metals and precious stones extraction, precious metals and precious stones extraction, extraction of widely-spread resources, extraction of widely-spread resources, extraction of other resources extraction of other resources Source: Author Source: Author 3

4. Natural Resources Development Territories Generating NSR Cargo Flows 1) Oil and gas Yamal Peninsula - main Arctic energy province for decades to come hydrocacrbon reserves of the Yamal Peninsula - 50 trillion m 3 hydrocacrbon reserves of the Yamal Peninsula - 50 trillion m 3 up to 65 million tons of gas will be supplied to the Asian- Pacific markets after the construction of several LNG plants up to 65 million tons of gas will be supplied to the Asian- Pacific markets after the construction of several LNG plants 2) Non-ferrous Metals, Ferrous Metals and Other Ore Minerals about 85% of nickel, 60% of copper reserves, and over 95% of platinum is concentrated in the Norilsk industrial region; about 85% of nickel, 60% of copper reserves, and over 95% of platinum is concentrated in the Norilsk industrial region; manganese ores and complex ores in Novaya Zemlya; manganese ores and complex ores in Novaya Zemlya; ore minerals in Taimyr and Northern Yakutia. ore minerals in Taimyr and Northern Yakutia. 4

5. New Opportunities for the NSR The NSR cargo load will intensify owing to new railway siding to the White Sea, Barents Sea and Kara Sea. 5

6. Nuclear-Powered Icebreaker Fleet in Russia 6 Nuclear IcebreakersNuclear Container Carrier “Sevmor- put” (1988 4 Icebreakers of Arctika Type: i/b “Rossia” (1985), i/b “Sovetsky Soyuz” (1989), i/b “Yamal” (1992), i/b “50 Let Pobedy” (2007) 5 Special Vessels 2 Icebreakers of Taimyr Type: i/b “Taimyr” (1988), i/b “Vaygach” (1990) (river icebreakers) 2 Decommiss- ioned Special Vessels: mv “Lepse” and mv “Volodarsky” 3 Decommiss- ioned icebreakers: i/b “Lenin” (1959), i/b “Sibir” (1978), i/b “Arctika” (1975) Rossita Nuclear Icebreaker Fleet (operated by Rosatomflot) 10 Nuclear IcebreakersSpecial Vessels 4 special technolo- gical vessels 6

7. Annual Freight Traffic Activity on the NSR, million ton Year Freight Traffic Activity 1987 6.579 (max) 1998 1.458 (min) 20001.587 20052.023 20092.0 20101.8 20113 20125 2015 202075 202590 2030100-130 Source: Cited as in “СМП вновь оживает” (NSR is revitalizing again, April 29, 2011) for years 1987-2010 and author’s estimates for years 2011-2030 7

8. Transit Potential of the NSR as Nexus between Europe and Asia-Pacific Region 5 years ago, UN estimated transit fotreign cargo: 5-6 million ton a year in the eastern direction 5-6 million ton a year in the eastern direction 2-3 million ton a year in the western direction 2-3 million ton a year in the western direction The transit routes through the NSR: are quite attractive for foreign cargo owners are quite attractive for foreign cargo owners have great potential to attract transit cargoes in the Arctic have great potential to attract transit cargoes in the Arctic In August 2010, a pilot transit of the Arctic ice class 1А Super (Arc5) tanker «SCF Baltica» on the NSR tanker delivered 70,000 of gas condensate of “Novatek” company from Murmansk to Ningbo (China) via the NSR 8

9. Requirements for an Economical Usage of the NSR operational perspective ice route optimization system operational perspective ice route optimization system administrative perspective regulation and fee structures administrative perspective regulation and fee structures 9

10. 4 Sateges of the Nuclear Icebreaker Fleet Development till Year 2030 Stage 1. Years: 2010-2015 Stage 2. Years: 2015-2020 Stage 3. Years: 2020-2025 Stage 4. Years: 2025-2030 1010

11. Stage 1. Years: 2010-2015 Brief Characteristics of Stage 1Measures to be Implemented The annual total freight traffic along the NSR may exceed 5 million ton in year 2012 and 20 million ton in 2015. Stage 1 is characterized by: 1)stabilization of commercial demand for nuclear icebreaker fleet services at a relatively low level, 2) growth of commercial demand for nuclear icebreaker fleet services is possible by the end of the period. 3) services volume growth for state needs. 1. Bringing the number of nuclear icebreakers in line with the existing demand for services and performance of public duties. Staff restructuring. 2. Construction of 1 universal new series nuclear icebreaker with the overall power of 60 MW will be launched in 2012 and will be completed in 2016. 3. Activities deployment on utilization of the decommissioned nuclear icebreakers. 4. Remedial maintenance base modernization launch, primarily, the security equipment modernization (operations with radioactive waste and spent nuclear fuel). 5. Relationship restructuring between the nuclear icebreaker fleet operator – Rosatomflot – and the State. 6. Start of work on the formation of PPPs to enhance the major customers’ products logistics effectiveness. 1

12. Stage 2. Years: 2015-2020 Brief Characteristics of Stage 2Measures to be Implemented The annual total freight traffic along the NSR may reach 45 million ton by year 2020. Stage 2 is characterized by: 1) moderate growth in demand for commercial services, 2) significant amount of services for State needs. Nuclear Icebreaker Fleet will participate in the expanding use of the NSR for international cargo transit between Europe and Asia. 1. Maintain the number of nuclear icebreakers in accordance with the demand for commercial services and guaranteed execution of public duties by carrying out nuclear icebreakers’ life extension. 2. By the year 2020, construction of 3 universal nuclear icebreakers of type LK-60 N with the overall power of 60 MW each. The nuclear icebreakers are slated for delivery in year 2016, 2018 and 2020. 3. Activities on utilization of the decommissioned nuclear icebreakers (if necessary).. 4. Maintenance (repair & servicing) facilities moderni- zation completion, including facilities for the safety. 5. Establishment and execution of government orders system improvemnent. 6. Rosatomflot participation in the formation of transport and logistics system in the Western Arctic on the condition of PPP. 1212

13. Stage 3. Years: 2020-2025 Brief Characteristics of Stage 3Measures to be Implemented The annual total freight traffic along the NSR may reach 75 million ton by year 2025. Stage 3 is characterized by: 1) the strong growth in demand for commercial services in the Western Arctic, 2) gradual growth in demand for commercial services in the Eastern Arctic. The volume of services for the State needs will remain. Nuclear icebreaker fleet will take part in advancing the NSR use for Nuclear icebreaker fleet will take part in advancing the NSR use for international cargo transit between Europe and Asia. 1. Maintain the number of nuclear icebreakers in accordance with the demand for commercial services and guaranteed execution of public duties by construction of new nuclear icebreakers. 2. Activities on utilization of the decommissioned nuclear icebreakers (if necessary). 3. Maintenance facilities (including facilities for safety) readiness for the complete cycle maintenance for a new generation nuclear icebreaker placing into operation. Scaling up the use of maintenance facilities. 4. Rosatomflot participation in formation - on the condition of PPP – of the integrated transport and logistics system throughout the NSR. 5. Rosatomflot contribution – on the condition of PPP – to growth in international cargo transit on the NSR. 1313

14. Stage 4. Years: 2025-2030 Brief Characteristics of Stage 4Measures to be Implemented The annual total freight traffic along the NSR may reach more than 100 million ton by year 2030. Stage 4 is characterized by: 1) moderate growth in demand for commercial services in the Western Arctic, 2) faster growth in demand for commercial services in the Eastern Arctic. The volume of services for the State needs will reduce. Nuclear icebreaker fleet will be involved in the NSR’s steady tranformation into a year-round trsansportation route. 1. Maintain the number of nuclear icebreakers in accordance with the demand for commercial services and guaranteed execution of public duties by construction of new nuclear icebreakers. 2. Activities on utilization of the decommissioned nuclear icebreakers (if necessary). 3. Maintenance (repair and servicing) facilities (including facilities for safety) readiness for the complete cycle maintenance for a new generation nuclear icebreaker placing into operation. 4. Rosatomflot participation in development – on the condition of PPP - of the integrated transport and logistics system throughout the NSR. 5. Rosatomflot contribution – on the condition of PPP – to growth in international cargo transit on the NSR. 6. Construction and placing into operation of at least two new generation serial nuclear icebreakers. 1414

15. 7. Conclusions intensity of transportation has a decisive impact on where northern cities and Arctic regions will prosper intensity of transportation has a decisive impact on where northern cities and Arctic regions will prosper construction of 3 new universal nuclear icebreakers is of paramount importance in accordance with the projected freight traffic on the NSR construction of 3 new universal nuclear icebreakers is of paramount importance in accordance with the projected freight traffic on the NSR 75 million ton in 2020, 90 million ton in 2025, > 100 million ton in 2030 75 million ton in 2020, 90 million ton in 2025, > 100 million ton in 2030 the resource extraction companies (e.g. Norilsk Nickel) outline the importance of nuclear icebrekers on the NSR for rescue operations and safety provision the resource extraction companies (e.g. Norilsk Nickel) outline the importance of nuclear icebrekers on the NSR for rescue operations and safety provision not only safety, but also regulation and fee structures are crucial for economical use of the NSR, particularly by foreign cargo and ship owners not only safety, but also regulation and fee structures are crucial for economical use of the NSR, particularly by foreign cargo and ship owners to base at least one nuclear icebreaker in the Eastern Arctic to base at least one nuclear icebreaker in the Eastern Arctic 1515