The Arctic and the New Silk Roads

Pubblicazioni Easternational

In a world where everything has been explored, the Arctic represents the new frontier. The area, rich in raw materials, is also a key transit point to link the Atlantic to the Pacific Ocean.

The Arctic Route is the maritime corridor that links Europe to Asia through the Russian Arctic waters. It has always been considered out of reach but, due to climate changes, technological advancement and huge investments, it will be increasingly relevant.

It is so important for two reasons: it allows to cut travel times from Europe to China (30% to 50%) thereby proportionately reducing costs, and it also allows China to diversify its Silk Road routes, mainly the maritime ones, in terms of the percentage of transported goods.

The Russian Federation is investing a lot on the opening of this route. The state-owned Rosatom, the industrial giant in the field of atomic energy, is in charge of the infrastructure management through its subsidiary Atomflot, a company building nuclear icebreaker that, by 2020, will almost have made 20 of them, some of which will be able to break through a 2 meters thick ice. Responsible for laying the foundations of this huge infrastructure business is Dmitry Rogozin, a leading figure in the Russian military establishment and now head of the Space Agency. His profile shows well the broad strategic importance that this route represents for the future of the Russian Federation.

The main geographical points of reference are the construction sites of St. Petersburg, in the West, and those under construction at Primorsky Kray, near Vladivostok, in the Far East. One of the most important ports is Murmansk, near the border with Norway, the most northern metropolis in the world, which is a major commercial port for minerals, raw materials, fishery resources and chemicals.

Another fundamental hub under construction is the port of Sabetta, in the Siberian peninsula of Yamal, where the largest natural gas reserve in Russia is located, with its 55 trillion square meters. To give an idea of the dimensions, the Qatar reserves are estimated to be 25 trillion square meters. Here there is a LNG terminal owned by the Russian company Novatek, the French Total and the Chinese CNPC.

To supply this reserve, Russia, France, China and Korea have equipped themselves with the latest generation of ships, capable of passing through more than 2 meters thick ice, and then keep the route open all year round, including the Christophe de Margerie, also famous for having delivered Norwegian gas from Hammerfest (in Norway) to Boryeong (South Korea) in 19 days: 30% less time than the traditional route of the Suez Canal, passing through the Arctic route.

The Russian trade grows by 9% annually on this route, doubling the tonnage transited in 10 years (decade 2006-2016).

If exports have been driven so far mainly by hydrocarbons, this system of infrastructures is also greatly benefiting trade in fishery resources, tourism and the agri-food sector where Russia, thanks to sanctions, has innovated its production system and is today one of the largest grain exporters in the world, thus finding itself in a very favorable position to supply the Asian markets.

If the growth forecasts for the next few years are met, 9% per annum will be an extremely conservative number. Where are the opportunities for Italian companies? Above all, in the trade and business sectors. If it is true that this route could bring significant savings to our exporting companies, it is equally true that this gigantic infrastructure system also faces large challenges, that require the know-how and technology that our entrepreneurial sector have, starting from the maritime sector. Navigation systems, shipbuilding, technology, software, port management, logistics, railways, machinery, research and development are all areas where our companies can and must be able to act as protagonists.

Areas of interest

Infrastructures (38)
Trade (40)
Direct Investments (52)
Geopolitical aspects (32)

Geographical areas

Italy (41)
China (70)
Russia (7)
Europe (46)
Asia (33)

Reserved area