1. Henrik Falck Tschudi Shipping Company AS The Northern Sea Route National Institute of Research of Global Security Kirkenes June 15 th 2011

2. The Tschudi Shipping Company History The Tschudi Shipping Company dates back to 1883 when the shipping company Tschudi & Eitzen was established. The founders of Tschudi & Eitzen were both Captains onboard the world’s first sailing tankers. The company subsequently operated a wide range of vessels starting with sailing and steamships and moving on to general cargo vessels, tankers, bulk carriers, OBOs, submersible Heavy lift vessels, chemical tankers, gas carriers, tugs and barges, as well as container and Ro-Ro vessels. In 2003, the Tschudi Shipping Company AS was established. Tschudi Shipping will build on more than 128 years of direct and active involvment as owners, managers and operators of ships and cargoes. Tschudi Shipping is now owned by the fourth generation of the Tschudi family.

3. In 2006, Tschudi Shipping Company AS bought the closed down iron ore mine, Sydvaranger, in Kirkenes, Norway. In 2009, the mine reopened. By the summer 2011 nearly all shipments had gone to China.

4. SYDVARANGER AS A company within the group Bulk Logistics In the ice free port of Kirkenes Using the Kirkenes port facilities reopened for the Sydvaranger iron ore mine able to serve vessels up to 100 000 dwt with an ambition to increase this to 170 000 dwt. Silo storage capacity of 370 000 m3 offers the possibility of storage and transshipment of bulk minerals from the region both in direction the Atlantic and the NSR

5. We like to see the Earth from this Direction

6.  Increasing interest for developing the energy and mineral resources in the High North Efficient and sustainable logistics and transport solutions are the keys for unlocking the potential values  The timing for exploring the Arctic resources is “good”: Climate changes – and (maybe ) a lasting ice reduction New technological innovation High commodity prices (oil and raw materials) Growing markets in the Far East An interest for unlocking the potential resources from the Russian side The TSC rationale for focusing on logistics in the High North is:

7. To invite relevant participants in the value chain around one table: Cargo owner- Ship owner- Traders –ice breakers – brokers – Insurance –CP& law –Classification - public authorities – research institutions www.chnl.no Projects - Case workshop, Kirkenes, April 29, 2010 ”Opening the Northern Sea Route for regular oil, gas and dry bulk transportation between Europe and Asia” - Shipment of iron ore concentrate from Kirkenes to China

8. MV Nordic Barents NSR Transit September 2010 from Kirkenes to China Vessel loaded 40140 MT of iron ore concentrate from the Sydvaranger Mine

10. 07.09.10 Satellite ice image Vilkitskyi Strait, near 106 E

13. Different conditions Sep. 9 Separate ice floes and icebergs, ice fields 2-3 m thickness. Remark from vessel Sep. 10: Sailing in the wake of th Atomic Icebreaker "50 Let Pobedy" bypassing ice fields and forcing ice crosspieces

14. Growlers may cause damage to the hull if the vessel hits one at excessive speed.

15. Rain or snow and sea may cause interference making it difficulty to see smaller icebergs and growlers on the radar screen. Picture dated 12.09.10. Vsl’s pos. 73 14 N 159 30 E Radar screen image

16. Not only ice – difficult depths and different routes Northern Sea Route Tracks determines the size of vessels Hydrographic Office Stations Legend New Deepwater Track Traditional Tracks Alternative DW Track

17. Novosibirsky Archipelago Sannikov Strait (12.8 m) Dmitry Laptev Strait (7.0 m) Northern Passage (15+ m) Sannikov Strait – the Draft Bottleneck

18. A positive voyage result compared to the Suez Canal and the route via Cape ! Distance Kirkenes - Lianyungang via Suez : about 12175 nm Estimated expected speed:13 knots Estimated voyage time:40 days including 1 day at Port Said. Voyage duration via NSR (about 6500 nm) :22,5 days average speed 12.03 knots Estimated time saved via NSR:17,5 days @ 28,2 MT of fuel Estimated fuel saved (today’s prices):493 M.tons. @ USD 610/tonn = 300 000 USD The Cape Route adds another 15 days Enviromental savings, all figures approximate. NOx 50 tonn CO21557 tonn SOx 35 tonn IN ADDITION THE THREAT AND COST OF PIRACY WAS AVOIDED!

19. SAVINGS ARE TOO LARGE TO BE IGNORED

20. Murmansk Vitino Y2010 Y2011 SCF Program of NSR development Y2010  NSR voyage with Aframax size tanker drawing 11.0 m draft via Sannikov Strait in August / September - COMPLETE Y2011  Extending «navigable window»  Extending «navigable window» - voyage with Panamax size tanker (Ice class Arc-6) in May-June  Cargo parcel increase  Cargo parcel increase - voyage with fully-loaded Suezmax size tanker (Ice class Arc-4) by newly-established high latitude deepwater track in July-August Yamal

21. The NSR will create more opportunities in the years to come! The Arctic region – rich in petroleum and mineral resources – has changed from having a distance disadvantage to having a transport advantage to the fast growing markets in the Far East during the ice free season. Further cost savings can be achieved by generating return cargoes from the Far East!

22. What will influence this short term scenario? Atomflot has already received 15 enquiries for NSR passages in 2011 ! The Freight level for different cargo types Type of cargo – time sensitive cargoes vs others Time required for passage - Ice conditions and waiting time Availability of ice class tonnage in different segments and sizes – which level of ice class is required? Cost elements: Bunker prices - Insurance – Port charges - NSR Transit (laden and in ballast) and Suez canal tarifs Piracy threat – cost of insurance and protection – risk of non-delivery of cargo

23. Russian Rivers Ob/Irtyish Novosibirsk to Novy Port Yenisey Krasnoyarsk to Dudinka Lena Baikal to Tixi 50 million Russians east of the Urals Most of Russian on-shore oil activity east of Urals Several Russian mines and heavy industry east of the Urals All accessible by new transportation routes.

24. Logistical Challenges of Arctic Roads

25. Climatic developments Continued imbalance in resource production and needs – asia vs the rest Regulations – IMO Polar Code Russia’s continued interest - the next generation ice breakers Availability of suitable ice class tonnage Types of cargoes and commodity prices Freight markets Piracy and other factors influencing the cost of alternative routes The main determinant will always be predictability and a competitive cost level! What will influence the long term Scenario

26. Join us and look for opportunities in the High North!