2017 December 21
The outgoing year features a clear trend that has emerged earlier – the decrease of interest to cost-intensive mega-projects. At the same time, high priority projects already launched are supposed to be completed. Most of projects with vague prospects were developed for the North and Far East and they are hindered by insufficient infrastructure.
Patience of Arkhangelsk
The construction of a deepwater area at the port of Arkhangelsk is a project that cannot be implemented for a long time. The challenges of the project are clear since it is linked with the cost-intensive project on construction of the Belcomur railway.
As of today, a declaration of intent has been signed and a feasibility study has been completed for a project on construction of a terminal in the Dvina Bay of the White Sea, Sergey Kokin, Director General of Arctic Transport and Industry Hub “Arkhangelsk” JSC, told in October 2017. According to him, the confirmed cargo base is 10 mln t per year, which is almost 40% of the terminal’s design capacity.
A Road Map for further activities with potential investors has been developed as well as a presentation held for the businesses and state bodies of China.
Under the most preferable scenario, designing can begin in 2018, said Sergey Kokin.
“We see the deepwater area, the future transport and industry hub as a logical development of the existing port, - he emphasized. – In this context, the development means attraction of cargo flows to the existing terminals, improvement of service quality and special work with import cargo flow.”
Victor Ikonnikov, head of the working group, Deputy Governor of the Arkhangelsk Region, Strategic Planning and Investment Policy, commented: “key issue of developing the port as a single platform is associated with the cargo base expansion and with a package of state incentives”.
Deepwater area of Arkhangelsk seaport is also considered as a potential anchor point of the NSR infrastructure. The project is included in Russia’s Transport Strategy through 2030.
Designed depth of the access canal is to make about 17 m (in Economy cargo district – 9.2 m). This depth will let accommodate 70,000 DWT Panamax ships of up to 32 m wide.
However, it is too early to speak about the project implementation before the situation with the Belkomur project is not clear. Representative of China Exim Bank said they have thoroughly considered the project on construction of Belkomur Railway and confirmed their readiness for load services. Meanwhile, speculations about shifting the Belkomur project’s implementation deadline beyond 2025 came out in mid-December 2017. According to media reports, this position is backed by Russian Railways. At the same time, Komi Government is going to sell more than 40% of the project shares to attract investments.
Chinese company COSCO earlier confirmed its interest in trans-Arctic shipping to Arkhangelsk. However, “readiness” and “interest” announced by Chinese companies does not mean they will actually enter the project. Arkhangelsk has strong rivals, that are Murmansk and the ports of the Baltic Basin, while Belkomur is too expensive amid insufficient financing.
The main idea of the Murmansk Transport Hub project is to shift the port infrastructure to the left shore of the Kola Bay. That implies the construction of a 46-km railway branch to link the Oktyabrskaya Railway with the future transshipment terminals.
As Murmansk Region Governor Marina Kovtun said at the 11th International Forum and Exhibition “Transport Week” held in Moscow in December 2017, “Coal handling being performed practically in the city center gives rise to just criticism from the citizens. In the long-term, we see the solution in shifting the cargo to the western coast of the Kola Bay”.
However, SUEK, owner of a coal terminal in Murmansk, is not likely to leave its comfort zone. Instead, it is busy with improvement of coal dust protection by installing water cannons, building a protection screen, etc. Meanwhile, the terminal continues handling coal by the grab method. When asked by Vadim Morozov, President of Russian University of Transport (Ex Vice President of Russian Railways), at the 3rd International Forum “Green Logistics: Ideas. Practice. Prospects.” in November 2017, Denis Ilatovsky, SUEK Logistics Director, said car dumpers are not installed at the terminal due to lack of free space. In return, Vadim Morozov reminded that implementation of the Lavna project beyond Murmansk, on the left shore of the Kola Bay will let solve this problem.
The search for investors for the Lavna project is underway. According to recent information, MERCURIA Group can become a majority stakeholder of the Lavna project. Victor Olersky, Deputy Minister of Transport of the Russian Federation – Head of Rosmorrechflot (Federal Marine and River Transport Agency), told IAA PortNews that MERCURIA had applied for entering the authorized capital of Port Lavna LLC in the amount of 75% minus 1 share. The agreement signing is expected in the nearest future. According to Victor Olersky, on 15 November 2017 Port Lavna LLC submitted to RF Government a private concession initiative under this project.
Murmansk Transport Hub is supposed to become an anchor project of the Kola Anchor Zone in the Arctic. It is also on the list of 17 most strategically important projects of Russia’s Arctic Zone.
However, when speaking at the VII International Forum “Arctic: Today and the Future” Marina Kovtun said that the draft law on anchor zones is not perfect when it comes to Arctic regions. The project on comprehensive development of Murmansk Transport Hub cannot be defined as an anchor project because it is implemented by several investors injecting less than 100 RUB bln each, though total investments into the project exceed that amount. Marina Kovtun believes that anchor project definition should be based on project significance for a specific rather than on the scope of investments.
To complete the MTH project as scheduled (in 2020) the Federal Targeted Programme “Development of Russia’s Transport System” should be amended for completion of design and exploration works under Phase 2 and Phase 3 in 2018.
The phantoms of the North
The Republic of Karelia is set to revive the project on construction of port Belomorsk able to handle up to 15 mln t per year, Artur Parfenchikov, head of Karelia, said at the“Arctic: Today and the Future” Forum. According to him, a deepwater port should service both cargoes and passengers as it will be located in the center of tourist routes.
Nothing has been heard about the Belomorsk project since 2015 when the authorities of Karelia announced that the port can be built by 2019. The project was estimated at RUB 17 bln. The port was supposed to be built on the basis of the coal berth and the fishing port of the town. Belomorsk Port CJSC was announced as the key investor. The access canal and the water are of the port was to be deepened to 12.5 m. The plan also included the construction of a new berth, utility networks and a state border check point so that ships leaving the port could enter international waters. Investors were promising to build an approach highway and a railway from the Belomorsk station.
One more northern project features vague prospects – port Indiga in the Nenets Autonomous District. Acting Governor of NAD Aleksandr Tsybulsky mentioned the project at the“Arctic: Today and the Future”. According to him, the port is to accommodate vessels of up to 350,000 DWT. The ice-free Bay of Indiga will offer round-the-year handling of vessels without icebreaking support.
The project of a deepwater port Indiga implies the construction of several terminals including coal, oil, LNG and multi-purpose terminals. Total turnover is expected to reach 35 mln t per year.
Construction of a Sosnogorsk-Indiga railway is supposed for the delivery of cargoes to the port. Besides, a Vorkuta-Amderma railway branch is o be built for coal exports via Amderma.
According to earlier reports, the construction is to be divided into three phases. Phase 1 implies the construction of a deepwater port, gas pipelines and an LNG plant with annual capacity of 4 mln t. Pechora LNG is going to develop LNG production infrastructure. The project is based on Kumzhinsky and Korovinsky gas condensate fields. Phase 2 implies the construction of an oil terminal and a refinery, Phase 3 – construction of container terminal.
Will the Baltic get LNG?
The Baltic LNG, a project on construction of an LNG terminal at the port of Ust-Luga has started taking shape. In December 2017, joint delegation of Gazprom and Shell visited Commercial Sea Port of Ust-Luga, JSC to discuss cooperation under Baltic LNG project, particularly the transshipment of oversized equipment intended for the plant.
Besides, Gazprom is going to launch an LNG production/storage/shipment facility at the Portovaya compressor station (Leningrad Region) in December 2018. Annual capacity of the facility will be 1.5 mln t. It is to comprise a terminal at the port of Vysotsk to ship LNG by tankers of different capacity. The contract for designing, construction and commissioning of the facility was signed in October 2016.
Cryogas CJSC (owned by Gazprombank novatek Cryogas) is also going to build an LNG plant at the port of Vysotsk.
The coming year will show how realistic those plans are.
Last year, the list of ‘phantom’ projects also included that of “Summa” Group at port Zarubino
(Primorsky Territory). The only thing that has changed this year was the RF Government Order dated 28 August 2017 (No 1840-р) which approved the expansion of port Zarubino for implementation of new investment projects and development of the existing infrastructure.
There is a plan to build a terminal for construction of grain cargo (wheat, corn and soya) with design capacity of 33.5 mln t of grain per year. The terminal will be able to accommodate and handle vessels of up to 91,300 t in capacity.
The terminal is to be built north-east of the port boundary along the Troitsa Bay coastline. Artificial plot of land is to be created for the terminal.
According to the investor, design capacity of the terminal will be gradually increased to 33.5 mln t by 2030. The terminal will number five berths, a storage facility, railway and highway facilities, conveyors.
The project is being financed by United Grain Company JSC and its subsidiary, Far East Grain Terminal LLC. FEGT is the terminal developer.
As for the Far East in general, there were many plans related to coal transshipment in the region. However, implementation of all the announced plans requires considerable increase of railway capacity (Transsib and BAM railways).