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Thursday, October 27, 2016

Struggle of Baltic ports for Russian transit lost

Russia working to replace Baltic ports in the Russian becomes more apparent. Less than two years, Russian oil products finally leave the ports of the Baltic States. Then go to Russian ports and other cargo. The Baltic ports, in fact, lost the battle for the Russian transit. However, they still have a last hope on the Chinese.

Russia continues to work on the reorientation of deliveries of petroleum products for export through the ports in the Baltic States in favor of their own capacities. If last year in the Baltic States was handled about 9 million tons of oil products this year is 5 million tons, said the head of Transneft Nikolay Tokarev. And by 2018, it has promised to increase this traffic even to zero.

“We will reorient the cargo traffic from Baltic ports – Ventspils, Riga – our Baltic ports, it is Ust-Luga and Primorsk and Novorossiysk

“We are going to upload your ports because there is surplus capacity,” – said Tokarev at a meeting with President Vladimir Putin. “In accordance with the instructions of the government, we will reorient the cargo traffic from Baltic ports – Ventspils, Riga – our Baltic ports, it is Ust-Luga and Primorsk and Novorossiysk”, – he said.

According to him, now you can download highway oil production at 32 million tons. Part of the capacity that is not demanded for the transportation of oil will be used for transportation of petroleum products. “This will happen in the direction of Primorsk to 25 mln tons of diesel fuel will supply, and in the direction of Novorossiysk Volgograd plant and the group’s refinery in Krasnodar region,” – said Tokarev.

Transneft plans to increase oil transportation via oil trunk pipelines. “This year we plan to provide transportation of the order of 482 million tons of oil. This is 1.5 million tons more than in the previous year. Of them for export – 238 million tons, in the domestic processing of 244 million tons,” – said Tokarev.

Transneft plans look quite realistic. “Since the company is already implementing two investment projects, “North” and “South” associated with an increase in capacity for pumping of petroleum products to the ports of Primorsk and Novorossiysk,” – said the chief editor of “PortNews” Vitaly Chernov.

This year the volume of transshipment of oil products via the port of Primorsk is expected to reach 15 million tons in the first half has already exceeded to 7.55 million tons). In 2017, the volume of transshipment of diesel fuel will increase to 17 million tonnes in 2018 – up to 25 million tons. While the Baltic ports, on the contrary, lose the Russian exporters.

The Baltic region in Soviet times was a monopolist in the sphere of transit of oil and oil products to Europe. And the main place was occupied by the Latvian port of Ventspils, as it is here in Soviet times was laid a pipeline. Before the collapse of the USSR Latvians handled more than 30 million tons of Russian oil and oil products per year. The download of this port the Russian oil Latvia earned 10% of the budget of the country.

However, every year Ventspils is increasingly losing Russian oil and, consequently, revenues. Thus, the volume of transshipment of Russian oil products through the Latvian port of Ventspils in 2016, according to the forecast, will be reduced in 2.1 times – up to 2 million tons, said Chernov. In comparison with the Soviet times – a catastrophic decline.

Previously, Russia simply did not have the necessary facilities for handling its raw materials, which allowed the Baltic States to live at the expense of transit from Russia. And, most likely, Moscow would not have to change anything, if not for the constant political conflicts, inspired paranoid-minded neighbors.

The reorientation of Russian cargo from Baltic ports to the Russian began, of course, not today. Russian ports year after year occupy the Baltic States have their own threads. More clearly, this trend began to lurks after the commissioning of the Ust-Luga port. He refocused on not only light oil but also fuel oil cargo flows of Baltic ports of Klaipeda, Ventspils and Tallinn, said Chernov. “Immediately to rebuild the logistics is impossible, because it requires the creation of appropriate port facilities, warehouses, roads, reservoirs, service companies and other”, – says Chernov.

Meanwhile, over the past 10 years, freight traffic through Ust-Luga has increased more than 20-fold from 3.8 million tons in 2006 to 87.9 million tons in 2015. And the process continues. Overall in the first half of 2016, the turnover of the Latvian ports decreased by 15.1 percent to 31.7 million tons, according to the transit policy Department, Ministry of transport. While the turnover of Russian seaports in the same period increased by 6% to 344,5 million tons. In particular, ports on the Baltic sea showed a revenue growth of 2% to 116,4 million tons.

Coal is also moved to the Russian terminals in Rosterminalugol and Port Vysotsky. Leaving the Baltic ports and fertilizers. Export of fertilizers from Russia is growing, and along with volumes increasing and the transhipment in the Baltic sea. Almost all Baltic ports showed growth flow last year, while cargo traffic of fertilizers in other basins is almost unchanged. The most significant growth in 2015 was in sillamäe and Ust-Luga. For example, the largest agrochemical holding “FosAgro” informed of the shipments exported through the ports of Kotka, Muuga and Riga. However, now the company completely moved its cargo from Baltic ports to the domestic and commissioned the terminal complex “Smart Baltik Terminal at the port of Ust-Luga.

“Before Russia passed through the Baltic ports almost all types of cargo – oil, oil products and coal to containers and cars. Now commodity goods intercepted Russian ports, container flows and the supply of cars fell sharply (because of the crisis),” – said Chernov.

However, he adds, a certain portion of container turnover (about 100 thousand TEUs per year) continues to go through the Baltic ports due to customs procedures in Russia, as well as competition in the field of port and logistics services. “The flow of Russian goods, seems to is always to go through the ports of the Baltic States. In addition, there are terminals that are associated with Russian investors. But overall it will be insignificant, and in case of any complications Russia can easily refuse services of Baltic ports”, – said the interlocutor of the newspaper VIEW.

Loss of Russian cargo for the Baltic ports is a serious. “In monetary terms, the losses amount to tens of millions of dollars per year”, – said Chernov. Now these millions flow smoothly into Russia.

It can be stated that the Baltic States struggle for Russian cargo, in fact, lost. The final victory of Ust-Luga and other Russian ports – only a matter of time. And the blame for this Baltic business should own the politicians, not wanting to engage at least a constructive dialogue with the neighbor who fed them.

But new fighting erupted for the goods not from Russia, but from China and Kazakhstan. The Baltic ports are urgently trying to find a replacement for the Russian exporters. In particular, they are negotiating with China, hoping to join Chinese project “New silk road”. “Of course, they will try to compete by creating a better environment for shippers,” says Chernov. However, Russia does not intend to give up and also wants to get Chinese goods. Moreover, the development of the Northern areas of the “New silk road” through the ports of the Finnish Gulf and the Baltic sea is an attractive option for the delivery of goods with a minimum number of transit countries. However, the Russian ports should work on to improve administrative and customs procedures for business, not to stay on the periphery of a large-scale Chinese project.


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