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The US Coast Guard identified a potential chokepoint in the Bering Strait thanks to increased oil and gas shipments, a new report showed on Monday.
In a rather imperfect combination of events, the Coast Guard explains in its newest report, Arctic warming has increased shipping through this narrow and shallow strait, increasing the likelihood of collisions and groundings. This increase in shipments through the narrow waterway is mostly due to increased shipments from Russia’s massive Yamal terminal.
These Arctic shipping routes save time over other routes such as through the Straits of Malacca and the Suez Canal.
The US Geological Survey estimates that the Arctic still holds more than 10 percent of the world’s undiscovered oil, and roughly 30 percent of the world’s undiscovered gas.
Russia’s Yamal LNG has the capacity of 17.4 million tons, shipping its first cargo near the end of 2017. And while that’s significant, Russia isn’t finished yet, and is contemplating tax breaks to companies who invest in the Arctic, according to Deputy Prime Minister Igor Trutnev, cited by The Moscow Times.
These tax breaks are significant, and may represent a reduction of two-thirds. Its Natural Resources Ministry, according to The Moscow Times, has stressed the need for $165 billion in private investments in this region over the next decade. These projects include oil and gas extraction, as well as coal.
What’s more, Russian President Vladimir Putin is calling for major development in the area including a sizable increase in shipping through its Northern Sea Route by 2024, in what may add to the congestion in the area.
The increase in Yamal traffic may see the Bering Strait added to the list of other critical oil chokepoints, including the Strait of Hormuz, the Strait of Malacca, the Suez Canal, and Bab el-Mandeb. Any disruption in these chokepoints could disrupt the global flow of oil.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.