2021 June 10
The key trends of the contemporary world are digitalization and sustainability. In the midst of the related discussion, Russia continues redirecting the cargo flows to its ports and developing the Arctic infrastructure. No surprise that the recent St. Petersburg International Economic Forum focused to a great extent on those issues.
In digital seas
When speaking at the forum, Russian Transport Minister Vitaly Savelyev economic forum predicted large-scale digitalization in the transport industry over the coming years.
“In 2019, the number of transport documents including waybills and permit for transportation of dangerous goods totaled 3.01 billion. If we do not digitalize anything that number will rise to 7 billion by 2030”, said Vitaly Savelyev.
The experts believe that digitization of documents can facilitate cargo turnover. Besides, digitalization will have an impact on other segments of the transport industry, particularly unmanned craft.
“Autonomous transport is not limited by automobiles. It also includes seaborne transport. In 2021, Sovcomflot is going to test an autonomously controlled tanker in the Barents Sea”, told the Minister.
A bright example of digitalization having boosted operating performance despite the pandemic and the related decline in global commerce is the experience of Ural Mining and Metallurgical Company (UMMC) shared by Irina Olkhovskaya, UMMC Director for Port and Rail Projects.
“Last year saw a decrease of cargo turnover in ports but Rosterminalugol increased its annual throughput from 20 million tonnes to 26 million tonnes without substantial investments in fixed assets or staff expansion ... we focused on transportation technologies with digitalization ensuring supply of cars with accuracy by seconds rather than by hours... Such results could be only achieved through integration with the main carrier, Russian Railways. It is not necessary to create a separate platform, it can be done through integration of the existing ones”, says Irina Olkhovskaya.
In the framework of the forum, State Transport easing Company and Digital Transport and Logistics Association signed a Memorandum on Strategic Partnership aimed at raising economic efficiency of transport and logistic companies and development of the market of transport and logistic services.
In clean waters
Environmental sustainability is a pivotal trend and Russian companies don't stand aside. In this respect, UMMC terminals, Vostochny Port and Rosterminalugol, also hold the leadership.
At the forum, Vadim Baibak, Managing Director of Vostochny Port JSC, and Mikhail Dudin, Deputy Manager of Industrial Dust Control Academy “Borey” LLC, signed an agreement on manufacture and supply of dust suppression systems for year-round operation with ship loading machines.
“We launched the environmental programme at Vostochny Port in 2016 taking into consideration the terminal’s specialization and sophistication as one of the elements of foreign trade with the APR countries”, said Irina Olkhovskaya when answering IAA PortNews’ question about the advantages of investing in ecology. – APR consumers pay great attention to environmental footprint of cargo and the entire supply chain. Ecology is not just a priority for us, it is must have”.
According to Irina Olkhovskaya, the port launched its environmental programmes before the catalogue of best available technologies was issued. Vostochny Port is the first coal port in the Far East that obtained a certificate of compliance with ISO 14001:2015 “Environmental Management System”.
“So, Vostochny Port is currently the flagship of environmental safety in the port industry”, she said.
In the framework of the St. Petersburg Economic Forum (SPIEF) 2021, Rosterminalugol and Severstal signed an agreement on supply of wind/dust protection screens and metal frames for construction of the coal storage facility at the dedicated coal terminal in the port of Ust-Luga. The structure will have a total length of almost 2 kilometers and will be over 20 meters high. Rosterminalugol will thus become the first sea terminal in the Baltic region equipped with such facilities. The construction works are to be completed by the end of 2021.
“Amid the contemporary challenges, environmental sustainability is the key focus of companies in the coal industry, - said Irina Olkhovskaya, Director for Port and Rail Projects of Ural Mining and Metallurgical Company (UMMC). – Rosterminalugol, the largest dedicated coal terminal in Russia’s European part, will be the first stevedore in the Baltic region to implement such an ambitious environmental project”.
As Denis Manturov, Russian Minister of Industry and Trade, said at SPIEF-2021, a total of 300 manufactures of category 1 hazard are to use the best available technologies by the end of 2022. As for introduction of green technologies in the industry, the Minister recommended paying attention to the existing ones. The official also emphasized that the existing technologies of energy efficiency should be applied to prevent the high load on consumers since innovations and the latest technologies are more expensive. They should be adjusted in compliance with the economic model.
Apart from introduction of the best available technologies in ports, environmental trends are aimed at decarbonization, reduction of the carbon footprint throughout the entire production chain. On 3 June 2021, as part of SPIEF-2021, PAO NOVATEK and a subsidiary of TotalEnergies SE signed a Memorandum of Understanding on decarbonization, hydrogen and renewables.
“With our long-term partner TotalEnergies, we are implementing technical solutions to reduce our carbon footprint on our Yamal LNG and Arctic LNG 2 projects and increase the competitiveness of our LNG products,” noted Leonid Mikhelson, NOVATEK’s Chairman of the Management Board. “Our long-term goal is to provide the global markets with affordable, secure and low-carbon natural gas, and the cooperation with TotalEnergies and our partners is one way for us to contribute to the decarbonization of the global energy industry.”
Alexander Dyukov, CEO and Chairman of the Management Board, Gazprom Neft, said in his turn, that the company is set to decrease the carbon intensity of its activities by a third by 2030.
“That is a task we are ready to set ourselves this year. When we gather here next year we will probably aim at a higher reduction in view of new task that will be probably set by a regulator”, said Alexander Dyukov.
When speaking about hydrogen related activities of the company, he emphasized that “hydrogen is new business” for Gazprom Neft.
“It is a promising market. Russia, oil and gas companies of Russia have a good chance to occupy a large share in this market. We have an excellent potential since we already produce hydrogen”, he added.
According to Alexander Dyukov, Gazprom Neft currently produces 100,000 tonnes of hydrogen per year at its two refineries. It is intended for fuel upgrading, removal of sulphur from diesel fuel and petrol. Production volumes can be boosted. It is important that the company has feedstocks for hydrogen production through the steam reforming technology.
“The problem is not in hydrogen production but in its transportation. That is a technological challenge which is to be addressed by the national industry”, said Gazprom Neft CEO.
Alexander Dyukov also drew attention to the problem of the hydrogen market regulation in terms of blue hydrogen policy of the European Union.
According to Deputy Prime Minister Alexander Novak who spoke at the Forum, the concept for hydrogen energy in Russia can be approved by the RF Government in the coming month or two.
“Russia sets itself a task of establishing export oriented production of hydrogen and occupy a certain niche in the global market. We believe we could occupy about 20% of the global market. That is about the same as our share in gas and oil trade”, he said.
More ports, good and diverse ones
Russia continues active development of its port infrastructure. For example, an agreement was signed at the forum on interaction in implementation of a large-scale investment project with a port construction on the Sakhalin. According to RF Government’s decision a multifunctional cargo area is to be built created in the Terpeniya bay of the Okhotsk Sea, near the Novoye settlement of the Makarovsky district. At the first phase, the terminal will annually handled 5 million tonnes of coal, 2.8 million tonnes of gas condensate and 5.5 million tonnes of oil. By the end of 2021, the preferential tax treatment of the Freeport of Vladivostok will be expanded to the territory of the future facility.
There will be a new terminal at the other end of the country as well. EuroChem will build a methanol plant and a terminal for product shipment in the Kingisepp District of the Leningrad Region. The agreement on cooperation under that project was signed at the forum by the investor and the Regional Government. EuroChem North-West-3 project foresees the construction of a modern facility from scratch with the application of the best available technologies for methanol production. The facility will have the maximum capacity of 2.5 million tonnes per year and will include a methanol pipeline and a port terminal for methanol shipment. Investments into the project are estimated at RUB 132 billion. It will generate about 300 new jobs. The facility is to be put into operation in 2025.
The Arctic will also see new facilities. As part of Saint-Petersburg International Economic Forum, PAO NOVATEK, PJSC Sberbank, and JSC Gazprombank signed a Memorandum of Understanding on financing the construction of a gas chemical plant on the Yamal peninsula. The Parties intend to organize financing to construct a gas chemical plant in close proximity to Sabetta to produce low-carbon ammonia, hydrogen, as well as other gas chemistry products that reduce greenhouse gas emissions into the atmosphere.
New facilities will be also built in the South. Within the framework of SPIEF, FSUE "Rosmorport", JSC UGC and LLC Demetra Holding signed an agreement on cooperation in the implementation of investment projects for the development of the infrastructure necessary for the organization of grain cargo transshipment in the seaports of Russia. The strategic partnership reinforces the intentions of the parties to interact on the development of facilities in harbors and areas adjacent to the harbors. As part of the project, it is planned to build a new two-sided pier in the head of the existing dock No. 3 in the seaport of Novorossiysk (used by LLC NZT and PJSC NKHP), which will allow to receipt Panamax class vessels, a grain gallery and a complex of auxiliary and infrastructure facilities, as well as carry out dredging. It is planned to carry out works under the project on an equal footing. The construction of the new pier will allow to solve the problem of forming a commodity-carrying export infrastructure, while the modernization of the terminal will double the total transshipment capacity from the current 13.6 million tons (PJSC NKHP – 7.1 million tons, LLC NZT – 6.5 million tons) up to about 25 million tons (PJSC NKHP – 13.1 million tons, LLC NZT – 12.5 million tons) by 2025, and one-time storage capacity – from 370,000 to 870,000 tons.
Elixir of life for the fleet
Russia is in a drastic need of its fleet modernization, construction of new ships for the development of the Arctic and the inland water transport.
State Transport Leasing Company and Eurasian Development Bank signed an agreement at SPIEF on implementation of a large-scale project in the water transport segment. According to the statement, the agreement will let STLC attract extra investments and support domestic shipbuilding. The agreement is aimed at financing of STLC's expenses for the construction of ten dry-cargo vessels for the RSD59 project for subsequent leasing to Astrol. Seven ships of the series have already been launched with five of them delivered to the lessee.
As for the seaborne transport, NOVATEK plans to increase its fleet to 65 ships by 2026. When speaking at SPIEF, Yevgeny Ambrosov, Deputy Chairman of the Management Board, Director of Maritime Operations, Shipping and Logistic, NOVATEK (Chairman of the Arctic Economic Council) said it would be the world’s most powerful fleet of gas carriers.
“In terms of number, the fleet of Qatar is probably larger, but in terms of value, sophistication and capabilities, it will be the most powerful one” said Yevgeny Ambrosov emphasizing that the bulk of that fleet will be built in Russia.
As Igor Tonkovidov, President and CEO of Sovcomflot, told journalists on the sidelines of the forum, year-round navigation on the Northern Sea Route is already possible with the support of icebreakers. Efficiency and economic feasibility of it is a different issue.
“According to our estimations made together with NOVATEK, year-round navigation on the Northern Sea Route should begin in that form starting from the winter of 2023-2024 or 2024-2025. That will depend on the progress of Zvezda in construction of the new generation gas carriers with high capability of moving in ice and the schedule of those icebreaking ships commissioning”, said Sovcomflot CEO.
The key result of the discussions and the agreements signed at the forum is probably Russia’s compliance with the global trends in development of digital and green technologies, water transport and port infrastructure despite the pandemic related constraints and the decline of international commerce.