Arctic Meltdown

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Information about Arctic Meltdown
Education

Published on June 25, 2009

Author: futuresgroup

Source: slideshare.net

Arctic Meltdown 26 Feb 2008

This is a summary of an external report ‘Opening Arctic Sea Routes’ completed in July 07.

Recent news headers of melting Arctic from the Economist

Arctic Meltdown: Arctic may be ice free by 2040 in summer Why the fuss? An ice-free Arctic may radically change shipping routes, Singapore will no longer be a nexus of East-West shipping. The Arctic may be ice free earlier, by 2020. Sea Lanes in Existing hub and spoke shipping system Opened up Transpolar Route in ice-free Arctic Europe to East Asia is faster via Arctic. Maritime sector is 7% of SGP economy. What would a reroute of trade routes mean?

Structural Changes In the Arctic Environment

Climate Change: The ice is melting …. But how fast? • On average, ice cover has shrunk by 7% per year. Open water in Arctic is increasingly rapidly in summer. Permafrost is melting over larger and larger areas. • By 2040, the Arctic Ocean could be virtually ice free in summer.

Arctic’s oil and gas: Where and when will they be developed? • Huge potential (25% of world’s undiscovered reserves), and huge uncertainties over when and who will develop them. • Russia has the largest potential (official Russian strategy points that offshore production will be 20% of 2020 Russian oil and gas production). More than two-thirds of Russia’s resources are on the Arctic shelf. • Greenland and Russian oil and gas development will provide huge opportunities for maritime players.

Geopolitical tensions over sovereignty may intensify. • International straits – Sea lanes within country’s 200 nm exclusive zone considered ‘international’? Specifically Canada and US over Northwest Passage. • Principles for drawing borders – Dispute between Norway and Russia over resource-rich ‘disputed area’. Russia will claim all of Arctic. • Territorial dispute – Denmark and Canada over Hans Island in Greenland …. Control of potential oil resources driving dispute. • Special regime – Svalbard undermines Norwegian rights to regulate fishing. • UN Law of the Sea – Greenland pursuing independence from Denmark?

Implications

Potential Arctic Sea Routes Open up • By 2040, the Arctic Ocean could be virtually ice free in summers. The Transpolar Route and the Northern Sea Route along Russia offer preferred shipping lanes. North America’s Northwest Passage is less open to shipping due to melting patterns and is more complicated to navigate.

When does it make economic sense to go via Arctic? • Basically, around South China Sea. Distance savings are not enough to change global shipping patterns. Vessel construction and operating costs (about +20%) still need to be factored in. • Peter Schwarz’s view is SGP’s position as shipping hub not likely to be negatively hit as Arctic route is seasonal. North Pacific – North Atlantic trade flows may choose the Arctic route over Suez via SGP. Around South China Sea the distance savings between Suez and Arctic route evens out. Intra-Asian trade will still buoy shipping demand via SGP.

IDEAS

Maritime Sector - New Trans-shipment Hubs • PSA International can take advantage of existing facilities in South Korea, China and Northern Europe that will benefit from Europe-East Asia via Arctic shipping growth. • PSA Singapore can also build a Northern Pacific Terminal near the Bering Straits (below) to collect cargo on the great circle route in the Pacific for transfer on to ice-class ships on the Arctic voyage. • PSA has the largest international presence, but this also applies to other SGP maritime companies.

Maritime Sector – Building ice-class vessels Special winterization solutions will rise with boom in Arctic shipping. • It is impossible to design vessel for optimum operation in both open water and thick ice, cargo chains may have ship-to-ship transfer between vessels. • Implies large investment in reloading ports and development of more sophisticated reloading technology. • Singapore ship-builders (and oil rig builders like Keppel) should start acquiring skills to construct ice-class and ice-breaking vessels. Up against Finnish, Norwegian and Russian shipyards. Start having MOUs on R&D with them and cultivate ALL possible cooperative ventures with Arctic nations to identify Singapore as a player in that region.

Maritime Sector – Be like London ….Flagging, training, education, insurance are all divorced from geography • Singapore Registry of Ships has the potential to become one the world’s leading registries for ice-class and ice-breaking vessels. • Singapore’s maritime education and training sector, marine insurance, marine arbitration all present opportunities in an opening Arctic. • Like London, a major maritime hub that has prospered despite a decline in vessel traffic, SGP can build a critical mass of lawyers, financiers etc catering to ice-class shipbuilders and multinational energy companies operating in the Arctic. By NOT being an Arctic nation, we are neutral and hence preferred. Business Times 31 Oct 07 How Singapore can meet the North-West Passage challenge Businesses here should sit up and pay attention to the global shift of balance in shipping routes - lifelines to Singapore's strategic importance as an international maritime hub By Han Kian Kwang

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