With the January 14th announcement between BP and Russia’s state-controlled oil company Rosneft to develop offshore exploration blocks in Arctic Russia, the importance of the Northeast Passage received another boost.By George Lauriat, AJOTOn January 14th BP agreed to form a joint venture with Russia’s state-controlled company Rosneft to develop three of Rosneft’s offshore exploration blocks in Arctic Russia. The fields which could hold as much as 60 billion barrels of oil stand to significantly boost the Russian economy and the need for transportation along Russia’s long (nine time zones) and desolate Northeast Passage. The oil blocks are located on the Kara Sea on Russia’s Arctic continental shelf, and BP’s initial exploration costs are estimated to be in the neighborhood of $2 billion. The impact of this deal reaffirms the importance of Russia’s Arctic transportation system. The Russians have been navigating the trans Arctic for decades. The so-called “Northern Sea Route” was established by the former USSR in the 1930s to help supply the area, and stretches over 3,100 miles across the Russian maritime Arctic. The Russian Far Eastern ports of Vostochny, Nahodka and Vladivostok, all have been important staging areas for year-round supply efforts to the Arctic outposts up and running. However, most of these trips were to destinations rather than trans-Arctic. Manhattan Redux Last August, in a voyage similar in purpose to the goals of the SS Manhattan over forty years ago, the Russian shipping company Sovkomflot in conjunction with the OAO, a natural gas producer, sent a 100,000 dwt Russian tanker loaded with gas condensate from Murmansk to China via the Arctic sea routes. The tanker, like the Manhattan before it on the Northwestern Passage, was the largest commercial vessel to transit the Northeast Passage. Fesco (Far Eastern Shipping Corporation of Vladivostok) has for decades run regular services to Russia’s far flung Arctic communities. Essentially the ships have become the lifeline for the Arctic’s working populations. To accomplish this task, FESCO has one of the world’s most sophisticated ice breaking operations. In addition, the company deploys a fleet of nearly forty ships in the tramp sector, with a number of these vessels being specially designed for Arctic operations. The Arctic ships have specially designed bows and are reinforced to handle the ice and arctic temperatures. If the increase in transits along the Northeast Passage develops as expected, FESCO stands to be one of the largest beneficiaries with its combination of experience and existing units. But the polar boom in Russia could also signal a boom in Alaska. The economies of Russia’s Far East and Alaska are closely tied and during the “Arctic” recession which hit a couple years earlier, the fallout was felt on both sides of the Bering Straits. A petroleum fed reversal of fortune would be welcomed.