Sovcomflot announces deals for ice class ships and LNG bunkering

Malcolm Latarche
Malcolm Latarche
ShipInsight

10 June 2019


Russian ship operator Sovcomflot rounded off a busy week with several announcements after its LNG-fuelled tanker Gagaring Prospect carried off the Next Generation Ship Award at Nor-Shipping.

During the 2019 St. Petersburg International Economic Forum, Sovcomflot along with Russia-based natural gas producer NOVATEK signed a four-party agreement with China’s COSCO, and the Silk Road Fund to establish a joint venture Maritime Arctic Transport.

Sovcom
From l to r Sergey Frank President and CEO Sovcomflot_ Leonid Mikhelson Chairman of the Management Board of Novatek_ Xui Lizhong from COSCO_ Wang Yanzhi from the Silk Road Fund

The agreement was signed by Sergey Frank, President and CEO of Sovcomflot, Leonid Mikhelson, Chairman of the Management Board of NOVATEK, Xui Lizhong, Chairman of the Board of Directors of COSCO Shipping Corporation and Wang Yanzhi, President of the Silk Road Fund.

The focus of the Maritime Arctic Transport joint venture is to manage an icebreaking tanker fleet of Arctic ice-class vessels, comprising existing and new vessels, engaged in the transportation of LNG for current and planned NOVATEK projects including Yamal LNG and Arctic LNG 2.

Sergey Frank, President and CEO of Sovcomflot, said, "The sheer scale and level of technical complexity of the new international project to provide safe, year-round, transportation for LNG across the Northern Sea Route have required the combination of a whole range of intellectual, technological, human and financial resources, from leading Russian and Chinese organisations and businesses.”

“We are pleased to participate in this Russian-Chinese consortium in such an important energy project for the economies of our countries. We are pleased to contribute to the joint venture the unique experience and expertise accumulated over ten years by Sovcomflot, gained whilst successfully operating a unique fleet of specialised vessels, serving large oil and gas projects in the Arctic and subarctic marine basins,” he added.

“The project's transport and logistics are consolidated around a single operational platform that will contribute to increased efficiency, safety, and further optimisation of the entire cargo transit traffic system through the waters of the Northern Sea Route, including the Polar Silk Road project", emphasised Frank.

At the same event, Sovcomflot and VEB.RF Group announced the signing of agreements whereby VEB Leasing will finance the construction of three new LNG-fuelled MR tankers.

Sovcomflot initially placed the order for these three tankers with the Zvezda Shipyard in December 2018. The delivery of the vessels is scheduled for 2022-2023. Each tanker will have a deadweight of 51,000 tonnes and they are intended to transport petroleum products and gas condensate, operating under 20-year time charter agreements with NOVATEK. The vessels will have an Ice Class 1B classification, enabling them to provide safe and reliable year-round transportation for hydrocarbons in challenging ice conditions, in particular within the Baltic Sea.

To secure fuel for its growing LNG-fuelled fleet, Sovcomflot also used the St Petersburg event to sign an agreement with Gazprom Neft Marine Bunker. The agreement reinforces the mutual interest of both parties regarding their cooperation in the bunkering of Sovcomflot's tankers with LNG fuel. Sovcomflot has been systematically working on switching its tanker fleet to LNG fuel for a number of years

Andrey Vasiliev, CEO of Gazprom Neft Marine Bunker commented, “The stringent tightening of environmental standards under the international MARPOL convention presents a serious challenge both for market players in maritime transportation, and for water-transport fuel-supply companies. Gazprom Neft’s response to this challenge has been a project to develop Russia’s first LNG bunkering barge and become actively involved in the process of developing Russian regulation governing the use of LNG as a marine fuel. I have every confidence that joining forces with Russia’s largest shipping company –which already has extensive experience in using LNG-powered vessels – will prove a further step forward in developing a domestic LNG bunkering market and allow Gazprom Neft to take the lead in this new market sector.”