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Analysis – Will Caspian Ports Become Stranded Assets If The Sea Shrinks?

Analysis – Will Caspian ports become stranded assets if the sea shrinks?

Source: Port Aktau
Baku, Azerbaijan (PortSEurope) December 29, 2020 – The Caspian Sea started shrinking in mid-1990s and its level is projected to fall by nine to 18 metres until year 2100, according to a study, published in December in Communications Earth & Environment journal. If scientific projections are correct, global warming continues or worsens and rivers’ inflow in Caspian continue to decrease, the sea’s surface area will
shrink between 23%, with a 9-metre reduction, and by 34% for an 18-metre drop in water level. The Caspian Sea started shrinking in the 1960s, but the problem ended abruptly in 1978, when its water started rising unexpectedly and without scientific explanation for the phenomenon. This welcome development continued until mid-1990s when the sea started losing water again. In comparison to other ancient lakes, the Caspian Sea surface temperature has suffered from the fastest rise on record. A loss of a third of Caspian Sea surface will deliver a fatal blow to the 12 ports located there and trigger a financial tsunami to the economies of the region. Worst affected will be the Russian ports of Astrakhan, Makhachkala and Olya as well as the project for a new port in Lagan (more here about the ambitious Iranian project expected to be financed by China). The Caspian’s largest and most successful port, Baku in Azerbaijan, will also be heavily affected, as well as the country’s second port of Alat. The new Turkmenbashi (Turkmanbashi) port in Turkmenistan, a $1.5 billion (€1.32 billion) over-ambitious project for a poor and isolated state, will have difficulties to continue operation (more about its problems here) Aktau, Atyrau and Kuryk in Kazakhstan, as well as Amirabad, Anzali and Nowshahr in Iran, are expected to face problems and would also require huge investments to be able to continue normal operations. According to scientific projections, the vast northern Caspian shelf, the Turkmen shelf in the southeast, and all coastal areas in the middle and southern Caspian Sea are expected to emerge from under the sea surface. In addition, the Kara-Bogaz-Gol Bay on the eastern shore will completely dry up. Some experts caution that the Caspian Sea level could stabilise or even start rising again unexpectedly as it happens some 40 years ago. This creates a serious dilemma for the financing of ports and related multimodal land and sea transport infrastructure – whether to invest now or wait for better projections. The Caspian Sea is the largest (371,000 to 384,400 km²) and most voluminous (78,000 to 78,700 km³) inland body of water in the world. Its physical environment and its floor have oceanic characteristics. The sea lies in an elongated depression between the European and Asian continental plates. Its surface is well below sea level, with a maximum depth of 980 m in the south and a shallow northern half averaging just 5.2 metres. The sea extends more than 1,000 km from north to south, and is bounded by deserts in the north and east, and by grasslands and forests in the west and south. The surface of the world’s largest (salty) lake lying between Europe and Asia has fallen by several centimetres a year since the 1990s, with the rate of water shrinkage set to increase dramatically as global temperatures continue to increase. The Caspian’s low salinity is due to freshwater input. The Volga river contributes up to 82% of the inflow, with the rest supplied by some 130 other rivers, principally the Ural, Kura and Atrek. On the background of a shrinking Caspian Sea, Russia’s ports of Makhachkala, Olya (where a new port is being developed, just 50 km to the north) and Lagan (if build) need significant investments in order to be turned into modern multimodal transport hubs. They lack well-developed railway and road connections, modern port-related infrastructure, such as airports and other transport systems. Any development of Makhachkala port will have to be matched by land transport infrastructure – roads and railway lines – to connect the port with northern Russian ports and the country’s Black Sea ports of Novorossiysk and Sochi. There are no modern Russian container terminals on the Caspian Sea and the Volga river and it looks like finally, the Russian government wants to build a large container port in Astrakhan region, primarily for transshipment of goods. Moscow is looking for ways to take over cargo currently handled by Azeri and Kazakh ports. Littoral states believe that the Caspian Sea has huge potential for them to develop a transshipment role in China’s new Silk Road, an economic strategy to seek better access for Chinese-made products in European markets. The sea occupies a key location facilitating water transport in both North-South and East-West directions. Developing international rail transport also attracts more distant countries, such as India, to use the Caspian Sea as a route to states in Europe and Russia. Iran sees an opportunity to establish trade routes whilst evading international trade sanctions, and countries can also avoid any difficulties associated with goods traveling through Russia. The opening of a feeder line last year from China and India through Kazakhstan and Azerbaijan turned Azerbaijan’s Baku and Kazakhstan’s Aktau ports into key transshipment facilities in the Caspian. The modern new Turkmenbashi port in the eastern part of the Caspian Sea also has regular lines that serve routes to Baku and Aktau. The main problem for a new container terminal in Astrakhan is the lack of modern multimodal transport infrastructure, particularly highways and the integration of the railway in the river port. All this requires huge investments that are linked to long-term returns. The withdrawer of Caspian water from the coasts where the ports are located will turn this new infrastructure into stranded assets. This issue is valid for all Caspian Sea ports Copyright (C) PortSEurope. All Rights Reserved. 2020

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