Felix H. Tschudi,

Tschudi Shipping Company

LOGISTICAL CHALLENGES IN THE HIGH NORTH

Barentsekretariatet

Kirkenes, November 2009

CONVENTIONAL SHIPPING

ICE CLASS MULTIPURPOSE CONTAINER VESSELS TANKERS, BULK AND COMBINATION CARRIERS

PROJECT CARGOES COMMODITY SHIPPING

OFFSHORE

Anchorhandling tug supply vessels and Ocean going tugs

Tschudi Logistics

East – West

logistics between

western Europe,

Russia and the

Central Asian

Republic

Container lines

Door – door transportation

Project cargoes

Rail and road forwarding

Including Tschudi Northern Logistics based in Kirkenes and Murmansk, specialising

in cross border transportation and custom clearance

Tschudi Shipping Company focuses on the

opportunities in the north and the east and sees

the earth from this direction

Why is TSC involved in northern Norway?

Because it is the most natural platform for logistical and

industrial activity towards the High North in Norway.

THE FUTURE IS ABOUT UNLOCKING THE NATURAL

RESOURCES OF THE HIGH NORTH THROUGH LOGISTICS

SOLUTIONS WHICH ARE ECONOMICAL, WORKABLE AND

ENVIRONMENTALLY SUSTAINABLE.

This is now more realistic than ever before due to

ice reduction, technological developments and higher

commodity prices.

Northern Norway – a logistics platform

The ports of Finnmark can serve as supplement to the ice restricted Russian ports in the region serving inbound and

outbound cargoflows.

Kirkenes port, particular focus on overflow from Murmansk such as:

Oil transhipment and transhipment of bulk cargoes

and at a later stage:

Logistics related to offshore and industrial projects

The TSC rationale for focusing on logistics

in the High North is:

1. Energy resource development in the High North is now

accelerating! And it is not only about the Shtokman field!

2. Russia is at the center of this development but dependent on

cooperation with adjoining nations to realise its full potential.

3. The ongoing regional developments in the eastern and

western arctic might gradually open up for polar transit

routes.

4. Technological developments and understanding of the

environmental, legal and political ramifications of the region

are preconditions for success.

© www.akvaplan.niva.no

© Ministry of Transport of Russia

24. Oktober 2006

A company within the groupSYDVARANGER AS

Honningsvåg

December 2005, first transhipment of Siberian gas condensate

outside Kirkenes. This transhipment contract with Russia’s second

largest gas producer, Novatek, serves cargoes shipped through Vitino

in the White Sea and has been performed in sheltered waters close to

North Cape, Norway for the past four winter seasons.

Photo: MAPO

Why ship-to ship transhipment?

• Port conditions (except Murmansk) in northern Russia require ice class vessels and often shallow draft vessels

• There is a lack of ice class vessels. Such expensive vessels should be used the least possible outside the icebound area

• It is economically efficient to tranship to larger conventional tonnage for longer transport distances

• Landbased terminals are costly and have permanent environmental impact

• STS transhipment is flexible and can be adjusted to the prevailing market conditions while leaving no costly infrastructure underutilised

Etter politisk beslutningsvegring i forhold til regimet for nasjonale

laksefjorder i Kirkenes området har omlastingen de fire siste sesongene

blitt gjennomført i Sarnesfjorden i Nordkapp Havn.

Utfordring: politisk uforutsigbarhet gir manglende troverdighet!

A company within the group

SYDVARANGER AS A company within the group

BULK LOGISTICS

- using the Kirkenes port facilities of the reopened Sydvaranger iron ore mine

Silo storage capacity of 370 000 m3 offers the possibility to tranship bulk cargoes imported

in smaller size ice class vessels for re-export in larger vessels.

Ships of 120 000 dwt calling on the ice free port of Kirkenes can offer Russian exporters of

large volume bulk cargoes such as iron ore and coal additional possibilities for overseas

exports.

Norilsk Nikel – has introduced double acting ice breaking multipurpose vessels of Aker

Arctic design for serving their mining operations in Siberia. Such very expensive

specialised vessels should minimise the time outside the ice area and therefore tranship

their cargo as close to their area of operation as possible.

The Norwegian Jonas Lied and the Kara Sea Route 1912 - 18

Beluga Shipping, Germany, carried two project cargoes

from Korea to the Ob river estuary via the Northern Sea

Route this summer!

A region rich in ”hard to access” energy reserves

The High North Offshore oil and gas challenges: Harsh climate, long distances and

lacking infrastructure require new logistics systems and solutions.

Needed:

Proactive planning, investment in suitable equipment and infrastructure

Shtokman

580 km

Sydvaranger Maritime Industrial

Park in the port of Kirkenes

Potential for 800,000 sqm

industrial port area – 600m deep

water quays

POTENTIAL USE:

•Marine Transportation and

logistics including offshore

base activities.

•Service providers for the oil

and offshore industry.

•Power plant and waste

incinerator.

•Industrial use

• Challenges: Lack of proactive planning and

development of physical and administrative

infrastructure: Physical such as ports and roads

but as important; Administrative processes and a

lack of standardised rules and regulations.

TWIN CITIES WHY NOT TWIN PORTS?

Field developments which already produce or are planned to open

over the next 5 - 10 years

© www.akvaplan.niva.no

Oil transport routes

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© www.akvaplan.niva.no

Russian oil shipment for export through the Barents Sea

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2002 2003 2004 2005 2006 2007 2008 2009

millio

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© www.akvaplan.niva.no

Prirazlomnoye – the first offshore platform to operate in the Russian Arctic – 7.5 million tons a year

The Varandey offshore terminal in the Pechora Sea which opened in June

2008 serves the Conoco Philips/Lukoil JV – Naryanmarneftegaz– capacity

12.5 millons tons a year. Transportation has been subcontracted to

Sovcomflot. More than 100 liftings of crude oil have been performed so

far.

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Initiated in November 2008 by Tschudi Shipping Company in collaboration with the

Norwegian Ministry of Foreign Affairs and DnV as part of the Norwegian national

research initiative “The global Maritime knowledge hub“ based on the Norwegian

maritime and offshore clusters. The centre encourages participation from all nations

and institutions interested in the High North.

Vision:

To be the preferred knowledge network for creating and developing efficient

and sustainable logistical solutions for the High North through interaction

between businesses, academic institutions, organizations and public

authorities

The most complete and up to date access to relevant and workable knowledge

about logistics in the High North developed through cross disciplinary

knowledge exchange between the business community, the public authorities

and international academic and research institutions.

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We want to build on knowledge which already exists and develop new relevant knowledge and competence required by the users

By mapping – existing knowledge and competence Strategies and competence within companies (work in progress)Knowledge within universities, institutes and persons (work in progress)Shipping in Arctic Waters INSROP (Innovation Norway & Ocean Futures)

By building a platform together with existing initiatives and a continuously increasing network of relevant businesses and institutions in Norway and internationally

Circumpolar Map & Ocean FuturesBarents 2020 & DNVIce Load Monitoring & DNVArctic Container & DNV Northern Maritime Corridor/ STRATMOS & The Barents SecretaryBodø Graduate School of Business’ Academic Network in RussiaSINTEF / MARINTEK / HIBO / UIT etcArctic Cases

Launched by the Centre for High North Logistics together with Ocean Futures

A holistic/interdisciplinary approach to the Northern Sea Route, Trans-Arctic Ocean Shipping Routes and the Northwest Passage

The project builds on knowledge produced by the International Northern Sea Route Project – INSROP. The project was a collaboration over 6 years (1992 – 1999), between research institutes and organisations from Japan, Norway, Russia, EU, Canada and the United States

The study is comparing three different Sea Routes:The Northeast Passage (The Northern Sea Route)The Northwest PassageTrans-Arctic Ocean Routes

The research project – Shipping in Arctic

Waters

The research project - Circumpolar Maps

“Maps are powerful tools for presenting complex information in a visual form that is easy to

understand. They can summarize multiple dimensions in a simple display, something difficult to do

otherwise”.

“The World Bank”

Slide

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Project Goal

The aim of the project is to ensure that all

activities

related to oil and gas activities in the Barents

Sea, be

it on Norwegian or Russian side, should be

carried out

with an acceptable safety level.

Safety involves safety for life, environment and

Property. The project includes all aspects of

offshore

Petroleum activity, i.e. exploration, drilling,

production, transportation

and support activities such

as marine operations and

Supply services.

Need for cooperation and harmonizationIncreasing offshore activity in the Barents Sea

More activity will attract new and inexperienced actors

Need for new type of vessels

Differences in technical standards create barriers for

cooperation

Challenge to get an overview of national requirements

Russia: - from national to international standards

Harmonisation of industry standards will facilitate

cooperation and trade

BARENTS 2020 –

Goal and BackgroundThe project aims to establish

a dialogue between Russian

and Norwegian experts in order

to harmonise industry standards

for use in the Barents Sea.

• A major challenge when operating in ice is to gather information about the local ice conditions and to operate the ship within the design limits for the actual vessel (ice class).

• Experience has shown that ships operating in ice are exposed to damages to both hulland rudder/propeller, and a major cause is that the ship is

operated in more heavy ice conditions than anticipated

for the actual ice class the ship is designed for.

• A premise to reduce this type of damages, which in worst

case may lead to total loss of the vessel, is to collect

information about both the actual ice conditions along

the route and the actual loads the hull is exposed to.

• In order to reduce this type of damages, a tool which can

collect this type of information and make it

easily available at the bridge for the navigator has to be developed.

• A prototype of ILM has been installed onboard the Norwegian Coastguard icebreaker KV Svalbard. The system has been tested successfully during two winter season in the Barents Sea

Ice Load Monitoring (ILM) project

StatoilHydro ASA” supports the joint efforts of Arkhangelsk State Technical University (ASTU), Baltic State Technical University (BSTU), and Murmansk State Technical University (MSTU) in creating of a common competence arena in the sphere of logistics and transport in the North. The activities are coordinated with the Center for High North Logistics.

The STRATMOS – project:

Objective:

To enhance the network with North West Russia entities and to

pursue the Barents Sea Intermodal Service with test sailings

and Marco Polo application

Tasks:

Conduct workshop on relation building, exchange of info and

knowledge

Arrange working meetings and B2B

Prepare/carry out test consignments/sailings in the NMC-corridor

Analysis studies and reports

The history:

The EU-funded Northern Maritime Corridor (NMC) project has

initiated cooperation with the Russian Northern Sea Route (NSR)

administration. That could result in facilitated shipping between

Western Europe and Russian Arctic ports

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Founding Partners Sponsors Academic Partners

•

The most important factor for the succesful and

sustainable development of the resources in the

High North is:

Well functioning logistics in the right place

at the right time at the right price!

Without this the development of the High

North will continue to be a dream as it has

been since the time of Willem Barents!

In our opinion it’s time to wake up

and …….

Look towards the North!