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  • Transshipment of LNG for bucks: is it worth allowing stevedoring sector charging USD for handling services?

  • 2022 January 26

    From Whom: Vitaliy Chernov


    About: Transshipment of LNG for bucks: is it worth allowing stevedoring sector charging USD for handling services?

    NOVATEK, implementing its Arctic projects, which are undoubtedly of strategic importance for the country, enjoys very significant preferences: the state has repeatedly issued exemptions and exceptions to the rules and regulation aimed at supporting domestic producers. Another actual withdrawal is now being considered by the State Duma. We are talking about the draft amendments to the law “On Seaports of the Russian Federation and on Amendments to Certain Legislative Acts of the Russian Federation”, which provides for the right to impose tariffs in foreign currency for services for handling liquefied natural gas (LNG) produced in the Arctic.

    It should be noted that the State Duma of Russia adopted the law on RUB tariffs in seaports in July 2018. At that time, this caused objections from stevedoring businesses: stevedoring companies are forced to purchase most of the equipment abroad in USD, EUR, and the volatility of RUB whose exchange rate against the dollar/euro basket has fallen by about half since 2014. This also did not contribute to the introduction of such a measure.

    Now, as the explanatory note to the project reads, services for transshipment of LNG in the Arctic must be paid in foreign currency, since the relevant projects are financed by foreign firms and financial institutions. And therefore they cannot depend on RUB volatility.

    It is curious that exactly on the day this bill was considered, Russian Foreign Minister Sergei Lavrov in the same State Duma designated the de-dollarization of the economy as a priority on the back the growing geopolitical tensions in the world...

    However, the same arguments are valid for the rest of the stevedoring businesses. Russia exports not only Arctic LNG, but also coal, oil, grain, fertilizers... RUB volatility, instability of the global economy due to the pandemic, low rates of import substitution - all this affects the stevedoring sector as a whole. So maybe it’s worth of returning to establishing tariffs for stevedoring services in foreign currency for everyone? Or, if the course for de-dollarization is really taken, then for no one?