Artur Gavlyuk: “Each navigation has its specific features”

Navigation has started at inland waterways of the Russian Federation. The fleet passing the Volga-Baltic waterway contributes to total turnover of vessels and throughput in Big Port of St. Petersburg and increases general growth of Russian export. Artur Gavlyuk, Managing Director of one of Russia’s largest shipping companies - North-Western Shipping Company OJSC - tells about NWSC’s plans for the navigation-2009.

- Mr. Gavlyuk, will this navigation differ from the previous ones and what will it bring for the company?

— Each navigation has its specific features. Navigation-2009 is no exception in this respect. Its major feature is associated with the financial crisis amid which shipping companies start operation while a decline in production is registered in all industries both in Europe and in Russia. That is why it is difficult to make long-term forecasts.

— What types of transportation are to be carried out by NWSC in navigation-2009? Are there any problems with fleet loading due to the economic situation?

— The entire foreign trade fleet will be put into operation in the Southern Basin and it be fully loaded mainly by export grain to be delivered to the ports of Turkey, Syria, Egypt and Israel.

The company participates in intergovernmental program for the development of Kazakhstan’ shelf which has been involving the company’s entire tugboat fleet for several navigation periods.

From April 13 of the current year the company continues transit tugging of barges loaded with equipment for construction of oil production facilities at the Caspian Sea. All in all our fleet carried out three tugging operations from Rostov, Astrakhan and Italian ports with Kazakhstan as the point of destination.

In May, NWSC tugboats will deliver ice-class rescue vessels from Poland to St. Petersburg and then to Astrakhan and further to Kazakhstan. Those vessels will operate at the shelf of the Caspian Sea.

Also in May, 2 barges built for transportation of construction materials under the order of OMS-Shipping will be delivered from Nevsky Shipbuilding Yard (NWSC subsidiary) to Kazakhstan  .

In navigation-2009 the company plans to increase its earnings from tug fleet operation (including Volga Shipping vessels used under bareboat charter) by 71%, year-on-year, to $4.8 mln.

Delivery of modular sections from Italian and Norwegian ports to Kazakhstan for construction of oil production facilities will be carried out by Rusich-type vessels in navigation-2009.

Within the framework of the government program aimed at regional development North-Western Shipping Company will transport 12 heat exchangers from Novorossiysk to Astrakhan for Nevinnomyssk SDPP in Stavropol. 3 vessels of Volgo-Don project will participate.

The volume of direct cargo transportation from Russian river ports to Europe has not been determined yet. As of today, it is decided to deliver metal from Severstal in Cherepovets to the Baltic ports by batches of about 3,000 t and fertilizers from Solikamsk plant to European ports.

We continue transportation of general cargo (equipment for medical and chemical industries) from Europe to Moscow, Perm, Yaroslavl and other ports of the Russian Federation.

NWSC has certain problems with adequate loading of vessels traditionally transporting cargo in the basins of the North and the Baltic Seas so the company’s freight management sets itself a task to develop new traffic directions to be profitable in the current economic situation.

When navigation opens at the Far North in late June-early July we will start transportation to the region of the Kara and White Seas for construction of Gazprom production facilities.

— What are your forecasts regarding traditional transportation of timber from the North-Western inland ports to European ports?

— Last year RF Government announced introduction of new export duties for round timber. With this in mind wood processing plants of Sweden and Finland — major buyers of Russian timber — adjusted their production plans which resulted in severe cut of contracts for timber transportation. In late 2008, introduction of new export duties was postponed for quite a long period — up to 12 months – but shipping companies will be unable to recover former volumes of timber transportation.

The heaviest drop is registered at Saimaa direction. In navigation-2009 we expect only 20—30% of the last year’s volumes. That is why STK vessels, which are to be put into operation in the first decade of May, will not be fully loaded.

The forecast related to delivery of timber from the river ports of the North-West region to Scandinavian seaports is quite optimistic. We are sure there will be no sharp decline of volumes in this direction. In May we deploy Volgo-Balt and Omski vessels to transport timber to Sweden.

— One of Sovcomflot vessels registered with the Russian International Register of Vessels (RIRV) has recently been admitted to coastal shipping. Are NWSC sea-and-river going vessels registered with RIRV and working in the Far North in summer likely to obtain and additional permit for coastal shipping in the nearest time?

— We count on obtaining all necessary documents after NWSC signs contracts for transportation of equipment and construction materials to the shelf of the Kara and White Seas and applies to Russia’s Federal Agency of Marine and River Fleet.

It is of utmost importance for a shipping company to have its RIRV vessels allowed for coastal shipping as it preserves all tax reliefs (for income, property, transport and other taxes), which has a positive impact on corporate income.

— So called Bunker Convention (International Convention on Civil Liability for Bunker Oil Pollution Damage) comes into effect on May 24 in Russia. Are our vessels ready for operation in compliance with the requirements of this Convention?

— All the vessels of our company are insured according to P&I standards which automatically means their prompt re-certification to meet all international conventions.

Since the Bunker Convention was not ratified by RussiaSt. Petersburg. immediately after it came into effect in European states (November 21, 2008), North Western Shipping Company obtained certificates for all vessels registered with Cyprus Maritime Administration on February 20 for one year. Upon their expiry the company will obtain certificates from Maritime Administration of Big Port of

Interviewed by Galina Ovechkina,