By 2030 the cargo turnover of Russian ports will increase by nearly 84% and reach 1 billion metric tonnes, while their capacity amounts to 1.4 billion metric tonnes, compared to the current 800 million tonnes, according to the “Strategy for the Development of the Russian Sea Port Infrastructure until 2030”, which was recently approved by the Russian government. According to state plans, the implementation of the strategy will help to address the four main challenges facing the Russian ports which comprise: an increase of port capacities, ensuring of safe operation of ports’ infrastructure, increasing competitiveness of domestic ports in the global market, as well as the improving of their management by the state.
The collapse of the Soviet Union resulted in a significant decline in the volume of cargo trans-shipment at Russian ports and reduced their overal effectiveness, however, since 2000, the situation has started to improve. In 1992, up to 50.7% of Russian cargo was shipped through ports of neighbouring countries, but by 2011 cargo traffic through Russian ports has increased two-fold.
Today, the share of ports of neighbouring countries is estimated at not more than 21% of the entire Russian cargo volume. However it’s only the beginning, and, in accordance with state plans, by 2030 up to 90% of cargo volumes of Russia will be passed through national ports. In addition, 15% reserve capacity will be ready in case of peak traffic or force majeure. According to the Strategy, there are plans to develop cargo flows, by paying particular attention to the development of ports, which account for the majority of export and import cargo traffic and transit.
Currently, the bulk of cargo trans-shipment at the 64 Russian seaports comes from the ports of the Baltic and the Azov-Black Sea region, with 35% and 32% respectively of the total volume of trans-shipment in 2011. At the same time the Far Eastern Russian ports account for 23%, while the ports in the Arctic Basin and Caspian ports contribute respectively 8% and 2% to the total volume.
Port Development
Among the key Russian ports are the northern ports of St Petersburg and St Petersburg region, the Far Eastern ports (Vladivostok, Nakhodka), as well as the southern ports (Novorossiysk, Taman). Most of Russian ports specialise in the trans-shipment of exporting raw goods cargo, including crude oil, petroleum products, liquefied natural gas, coal, timber, etc. According to analysts of the Russian Ministry of Transport, the development of national ports is an objective necessity, given that due to the collapse of the Soviet Union, Russia has lost its key ports in Ukraine and the Baltic States. In the case of the latter, in recent years Baltic ports have been able to offer real competition to Russian ports in the region. Despite a significant increase in terms of delivery and longer distance, the ports in Finland, Latvia, Lithuania and Estonia, sometimes look economically more attractive for international cargo carriers than their Russian rivals. This could be explained by certain problems which remain typical for Russian ports and for which solutions are planned by the government in their national strategy.
Alexander Davydenko, head of the Federal Agency of Sea and River Transport commented: “Among the main weaknesseses of Russian sea ports are their climatic and geographical location and in particular their low depth. The majority of Russian ports were built in the 1960’s-70’s and do not meet modern requirements in terms of the depth at the berths and harbours. Another problem is outdated infrastructure. The latter resulted in the fact that many modern large-capacity ships are not able to enter Russian ports.” The new strategy also involves that the ports of the Baltic and the Black Sea regions will become the main centres of cargo trans-shipment for Russia. It is planned that their turnover will grow by 69% to 313 million tonnes, and by 74% to 301 million tonnes respectively. The majority of transferred cargo is expected to account for hydrocarbons and fertilizers.
The Baltic ports will also be developed, while, according to the state, their current growth rates remains low. Russian analysts believe that the domestic Baltics ports and especially the big port of St Petersburg and a new port at Ust-Luga are strategically better positioned than their Finnish and Baltic competitors. However, lack of capacity and poor transport infrastructure did not allow to unlock their potential, while high risks deter potential investors. However there is a possibility that much can change in the near future, thanks to planned implementation of certain investment projects, which will help to significantly increase the capacities of Russian Baltics ports. For example, a large complex for the trans-shipment of crude oil and petroleum products will soon be launched in the port of Ust-Luga. The new complex will be operated by the Neva Pipeline Company and will have the capacity of 30 million tonnes.
In addition to the Neva complex, two terminals for the trans-shipment of LNG will also be commissioned in Ust-Luga in the near future. The new terminals will be operated by Russian oil and gas producer Novatek, as well as petrochemical giant Sibur and will have the capacity of 6 million and 4 million tonnes respectively.
In addition, another potential investor, Russian NCSP Group, one of Europe’s largest stevedore and port services providers, is planning to build a terminal for the trans-shipment of fertilizers in the Primorsk port, Russia’s largest oil port on the Baltic Sea. At the same time in the case of Black Sea and Azov ports, it is planned that their turnover will be increased through the rise of grain trans-shipment. As part of these plans, a new grain terminal with the capacity of 14 million tonnes will be built in Taman, Russia’s third largest port. The strategy involves that the volume of cargo trans-shipment through the Far Eastern ports will be increased by 87% to 234 million tonnes, which will be mainly due to the planned construction of new coal terminals.
At the same time, the turnover of Arctic ports will be increased by 2.8 times up to 113 million tonnes (mainly due to the planned launch of the Novatek LNG terminal in the Yamal Peninnsula with a capacity of 15 million tonnes). Finally, the cargo turnover of the Caspian ports is expected to grow by 2.2 times to 24 million tonnes. In addition to establishing new capacities, the strategy also involves simultaneous construction of all the necessary port infrastructure and in particular railroads and pipeline networks. There are also plans for the reconstruction of the approach channels and icebreaker support.
Victor Olersky, Deputy Minister of Transport of Russia and one of the main developers of the strategy, comments: “In order to improve the competitiveness and attractiveness of the Russian ports in the international arena, there is a need to synchronise port infrastructure with rail, waterway, and road transport. It is also very important to attract extra-budgetary funds for investment projects. The ratio of state and private investments for the funding of the strategy by 2015 will be 1:2, while by 2030 it should be 1:3.”
Total volume of investments in the implementation of the strategy is estimated at 430 billion rubles (USD14 billion), of which 300 billion rubles (USD10 billion) will be private investments. In the case of private investment, one of the ways of their attraction will be allowing stevedoring companies to enter into concession agreements with the government on the construction of port facilities with the aim of their further lease. Currently, stevedore companies have an opportunity to enter only in investment agreements. The new mechanism will enable the state to attract private capital in the establishment of port infrastructure as compensation for their rental payments in the future. Russian analysts believe that this state initiative may associate with significant benefits for national port
s, as private companies are ready to invest in the development of port infrastructure. According to some Russian media reports, so far, the volume of private investments in the development of the national port infrastructure is already 10 times higher than those invested by the state. Analysts from the Russian Ministry of Transport also believe that the implementation of the strategy will not only allow to significantly increase port capacities and the volume of trans-shipped cargo, but also increase the operation factor of national trans-shipment complexes to a 75-80% level.