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Analysis – Russian New Port In Ust-Luga To Deprive From Cargo Ports In Ukraine, Latvia, Lithuania, Estonia, Finland

Analysis – Russian new port in Ust-Luga to deprive from cargo ports in Ukraine, Latvia, Lithuania, Estonia, Finland

Ust-Luga, Russia (PortSEurope) April 19, 2021 – Russia’s currently under construction Baltic Sea port of Ust-Luga, which when completed will cliam to be the largest one in the world, will take over Russian export cargo currently transported via ports in Ukraine, Latvia, Lithuania, Estonia, Finland, Germany and the Netherlands. For Ukraine, this is going to be the second Russia’s multi-billion transit revenue blow, after Moscow
strategy to bypass it for gas shipments to Europe via the Turkish Stream and Nord Stream pipelines. Ust-Luga Multimodal Complex, 160 km west of St. Peterburg and 820 km northwest of Moscow, is a development project for the portside area of 3,000 hectares (30 million sq. m.) on the Soikinsky Peninsula in the Gulf of Finland, close to the terminals of Ust-Luga Sea Merchant Port. The project developer is Multimodal complex Ust-Luga. The development project envisages, in addition to a giant port, an international cargo airport, industrial zone, logistics zone, temporary storage warehouses zone, business park and residential zone. The new port should reach its full capacity by the end of this decade. For several years, Russia has been gradually rebuilding its transport infrastructure, trying to avoid the shipment and transshipment of goods through the ports of the Baltic countries and Ukraine. The likelihood of cargo delays, and the high cost of transit, has forced Russia to implement this strategic decision. For the Baltic countries and Ukraine, the flow of guaranteed traffic and significant profits from Russian cargo has been already significantly reduced. Soon it might end altogether. When in December 2020 an iron ore terminal was put into operation in the port of Ust-Luga, it affected Ukrainian ports and iron transit through its ports decreased by 93%. Last year, the port of Ust-Luga for the first time exceeded the milestone of transshipment volume of 100 million tonnes. But by 2030, this volume will become 180 million tonnes. Cargoes from the states of the Far East, China and Southeast Asia were traditionally sent through Helsinki, Hamburg and Amsterdam. But even here Russia might take a considerable slice for itself. The new port can become both the most convenient and the most efficient one for the transport of goods from Asia to European countries. Since June 2019, Novotrans has been the principal operator of the road-rail-ferry complex at the Ust-Luga port and has invested significantly in a new universal terminal at the facility. Using this facility, the company exported grain from Kazakhstan to Belgium for the first time in April. Russia’s Prime Minister Mikhail Mishustin has launched the construction of the Ust-Luga universal trading terminal (LUGAPORT project) in November 2020. The ceremony took place within the framework of the XIV international exhibition ‘Transport of Russia’. In a video conference with the port of Ust-Luga, Mishustin asked the Director of the Ust-Luga Universal Trade Terminal Alexei Zharkov to start importing construction materials to the LUGAPORT site. A column of dump trucks delivered the first cargo to begin the implementation of a new stage of construction of the first multimodal transport and logistics complex. Konstantin Goncharov, President of the Novotrans Group, said that his holding started construction of the universal terminal in the port of Ust-Luga in August 2019. In June 2020, the creation of artificial land plots for the terminal facilities with an area of 47 hectares was completed including the installation of sheet piling, the construction of bank protection, the creation of embankment dams, and the filling of the territory formation maps with sand. Goncharov claimed that by the end of 2024 LUGAPORT will be commissioned. Russia is also modernising the ports of Kaliningrad, Vyborg, Vysotsk and Primorsk. The total indicator of the volume of cargo per year there will be about 400 million tons, which means that Russia will surpass the record total cargo volumes of the former Soviet Union. Moscow is also developing the Northern Sea Route, where navigation is now achievable not only in summer. In January, Moscow announced that the capacity of Russian seaports in 2021 is planned to be increased by 50 million tonnes due to the commissioning of facilities under construction and reconstruction within the framework of the federal project Russian Seaports of the Comprehensive Plan for the Modernization and Expansion of the Main Infrastructure (KPMI). By the end of the year, the construction of a mineral fertiliser terminal Ultramar in the seaport of Ust-Luga with a capacity of 12 million tonnes will be completed; also the full development of the Taman bulk cargo terminal in the seaport of Taman, Azov-Black Sea basin (increase in capacity by 25 million tonnes) and reconstruction of the KSK grain terminal in the port of Novorossiysk in the Azov-Black Sea basin (by 1.5 million tonnes).  By the end of 2021 is planned to be commissioned the sea terminal for transshipment of liquified natural gas (LNG) in the vicinity of the Portovaya compressor station in the seaport of Vysotsk in the Baltic basin with a capacity of 2.2 million tonnes and a terminal (first stage) for transshipment of liquid cargo TemryukMorTrans in the seaport of Temryuk in the Azov-Black Sea basin, which should reach a transshipment volume of 0.5 million tonnes. It is planned to complete the reconstruction of berths 1 and 2 in the seaport of Pevek in the Arctic basin, after which their capacity will increase by 0.8 million tons. The project is aimed at increasing the transport accessibility of remote areas of the Chukotka Autonomous region. Three projects will increase the capacity of the seaports of the Far East basin. Construction of a specialized coal transshipment complex for general use in the area of ​​Otkryty Cape, Primorsky Krai (stage 2A), increase in capacity by 1.55 million tonnes, and a new specialized port in the Sukhodol Bay (first stage) with a capacity of 6 million tonnes will be completed. The project for the port in Sukhodol will increase the export potential of the seaports of the Far Eastern basin and increase the transshipment of coal to the countries of the Asia-Pacific region. The reconstruction of the hydraulic structures of berths No. 34, No. 35, the approach channel to the berths and their water areas in the Vostochny seaport will be completed, as a result of which the port’s capacity will increase by 0.5 million tonnes due to an increase in coal transshipment. In 2020 the port the different terminals of the Ust-Luga port had the following results: – Ust-Luga Department of the North-Western Basin Branch of FSUE RosMorPort increased cargo handling from 0.7 to 1.1 million tonnes (+57%) – New communal technologies, controlled by Ilya Traber increased cargo flow from 4.6 to 6.5 million tonnes (+41%) – Ust-Luga Container Terminal controlled by Global Ports of Sergey Shishkarev increased processed cargo from 1.5 to 1.8 million tonnes (+26%) – RosTerminalUgol, managed by Iskandar Makhmudov’s Ural Mining and Metallurgical Company increased cargo volumes from 24.5 to 26.5 million tonnes (+8%) – European Sulphur Terminal, controlled by Alexander Zhukov cargo increased from 7 to 7.5 million tonnes (+8%). In 2020, out of 11 stevedores of the Ust-Luga port five increased their cargo processing. Of the 102.4 million tonnes port’s cargo turnover, the five handled 42.3 million tonnes (41%). With the exception of the European Sulphur Terminal (specialised in mineral fertilisers), positive results were associated with the export of coal. The success of Ust-Luga diminishes Russian dependency on the ports of Baltic states and provides leverage for Moscow over these countries whose important transport sectors have come to depend on Russian cargo. Moscow has even encouraged Belarus to divert some of its transport needs to Ust-Luga, away from Baltic state infrastructure. More than 30 percent of the cargo turnover at Lithuania’s Port of Klaipeda is reportedly Belarusian (primarily oil and fertilizers). The Director of the Ust-Luga complex, Denis Mechev, was recently quoted as saying that cargo exports to Europe using the Ust-Luga-Baltiysk (Kaliningrad) route is an alternative to the overland path through Belarus and Lithuania. Ust-Luga new port’s construction begun in 1997 and the port commenced operations in 2001. It has now 37 berths with total length of about 7,100 meters. There are twelve terminals currently operating in Ust-Luga port: Coal terminal; Universal Handling Complex; Sulphur terminal; Automobile and railway ferry complex; Multipurpose transshipment complex; Container terminal; Timber terminal; Ro-Ro & general cargo terminal; Crude oil terminal; Oil products transshipment terminal; Gas condensate fractionation; Terminal for transshipment of LPG. Terminals currently under construction include ones for handling steel products, fertilisers, LNG, general and bulk cargoes, grains and a bunkering complex. Copyright (C) PortSEurope. All Rights Reserved. 2021.

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