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Analysis – Russia Keeps Pushing For Development Of Caspian Sea Ports And Volga-Don Canal

Analysis – Russia keeps pushing for development of Caspian Sea ports and Volga-Don Canal

Astrakhan, Russia (PortSEurope) December 14, 2020 – The prospects for the development of container services in the Caspian Sea and the creation of a special port economic zone (SEZ) in the region, the development of the North-South international transport corridor were discussed at a meeting of the Council for Maritime Activities under the governor of the Astrakhan Region. The key issue was the technical requirements
and the comprehensive reconstruction of the Volga-Caspian Sea Navigation Canal (VCSNC), or Volga-Don Canal, in order to ensure a passage draft of up to 4.5 m and the two-way traffic of vessels. In 2020, 3.5 million m³ of soil was recovered as part of repair dredging works in VCSNC, and a further 3.9 million m³ of soil is scheduled to be dredged 2021. The negative impact of lowering of the level of the Caspian Sea on the drift of the VCSNC and the redistribution of water flow was also discussed. Currently, the two seas are connected via the Volga–Don Canal, which has limited capacity and is unsuitable for larger ships (depth of only 3-3.5 metres, with further summer limitations). The Lenin Volga–Don Shipping Canal connects the Volga and Don rivers (both in Russia) at their closest points. The 101 km canal together with the lower Volga and the lower Don, provides the most direct (over 800 km long) navigable connection between the Caspian Sea and the world’s oceans via the Sea of Azov and the Black Sea. The canal is unsuitable for larger ships (depth of only 3-3.5 metres, with further summer limitations). It ends with the Caspian Sea port of Astrakhan, which in the first half of 2020 processed 1.2 million tonnes (+14.0%) of cargo. In October, Russia’s Ministry of Economic Development said that it plans to allocate RUB 2.8 billion (€31.6 million) for the creation of a port SEZ (special economic zone) in the Astrakhan Region by 2022. Funds will be available in 2021-2022 for the modernization of Olya port’s berths and construction of a new seaport. The two-phase project includes modernization of the existing terminals of Olya port and a second phase would be a new container terminal on the Caspian Sea. Olya is some 100 km south-east of Astrakhan. The government will allocate RUB 1.1 billion of subsidies to the Astrakhan region for land development and modernization of Olya port’s berths and RUB 1.4 billion for creation of a new port. The investment will increase the role of Russia in the North-South transport corridor and will increase the competitiveness of Russian ports around the Caspian Sea. The sea’s littoral states are all investing in ports as they seek to develop hubs on the new Silk Road between China and Europe. Astrakhan is a seaport in the city of Astrakhan in Astrakhan Oblast, Russia. The port is located in Trusovsky District on the right shore of Volga river in the north of the Caspian Sea. 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 from Azeri and Kazakh ports. 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. A modern new port, Turkmenbashi, has been built in Turkmenistan in the eastern part of the Caspian Sea. It also has regular lines that serve routes to Baku and Aktau. Iran is also investing in ports to trade with other Caspian Sea littoral states. Astrakhan has regular sea connections with Turkmenbashi International Seaport, the main passenger harbour and cargo port in Turkmenistan. The main problem for a new container terminal in Astrakhan is the lack of modern multimodal transport infrastructure, particularly highways and the integration of railway services at the river port. The governments of Azerbaijan and Kazakhstan are protecting the market from the penetration of new players, and the geopolitical situation, including international sanctions, both of which contribute to restraining Russian cargo traffic. The outdated equipment of the Russian ports and the low level of presence of the Russian fleet in the Caspian Sea are also serious issues. International sanctions against Iran also hinder the development of the transit of goods to Europe. According to cargo carriers, the new port of Turkmenbashi could become a link in the Caspian Sea and forward cargo to the Russian ports of Olya (where a new port is being developed, just 50 km to the north), Makhachkala and Astrakhan due to the reorientation of cargo from Uzbekistan, Kazakhstan and Iran to the Caspian Sea. Earlier this year the consul of Turkmenistan in Astrakhan, Guych Garayev, and the Governor of Astrakhan region, Igor Babushkin, discussed the possibility of opening a logistics centre for Turkmen goods in a new economic zone near Olya port. They also spoke about direct flights between Turkmenistan and Astrakhan. After years of neglect, it seems that Moscow is slowly discovering the potential of its three Caspian Sea ports and the role they can play in the International North-South Transport Corridor, a 7,200-km-long multi-mode network of ship, rail, and road route for moving cargo between China, India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia and Europe. Russia wants a transport hub in the Caspian Sea to challenge developments in other littoral states as it seeks a stake in the cargo transit business between Asia and Europe, which is manifested in various international transport corridors which form part of China’s new Silk Road. The Russian government is planning to develop the infrastructure of Makhachkala port, Dagestan, on its Caspian Sea west coast and turn it into a transit hub for the country. The target is to attract additional traffic in oil, grain and fish, to improve Dagestan crisis-hit economy and give a push to local socio-economic development. One more reason for the sudden “discovery” of Makhachkala’s potential is that a group of Iranian companies, financed by China, wants to invest in the development of the small southern Russian port of Lagan, a few kilometres from the Caspian Sea, Batu Khasikov, governor of Russia’s Kalmykia Republic, said in March. Lagan is some 200 km north of Makhachkala. The Iranians want to invest 100 billion rubles (€1.16 billion) in port facilities capable of handling 22.5 million tonnes of cargo transhipment capacity per year. The idea seems to be over-ambitious as the total current capacity of all Russian ports on the Caspian Sea is only 12 million tonnes. But this year, Russia’s Caspian Sea ports were the best performers in the country. In the January-July period, Caspian basin ports handled 4.93 million tonnes (+15.7%) of cargo, of which the dry cargo was 2.12 million tonnes (+28.4%), liquid cargo – 2.81 million tonnes (+7%). A new port in Lagan might make more sense if combined with a proposed new east–west canal (Eurasia Canal) to the Sea of Azov – and thus to the Black Sea and onward to European markets. Theoretically, the new Lagan port could become operational within two years from the start of its construction. A canal from Lagan to the port of Yeysk (Eisk) on the Azov Sea might initially be dredged to a depth of only 2.5-3.5 metres, and only used for barge traffic. Dredging a canal for sea ships is expected to cost additional 200-300 billion rubles (€2.3-3.4 billion). The Moscow response to a Iranian-Chinese initiative for Lagan was a July 29 order of the Russian government that states: “The construction of the Caspian seaport of Lagan is included in the amended scheme of territorial planning of the Russian Federation in the field of federal transport. The construction of the port is included in the “Individual program of social and economic development of the (Russia’s) Republic of Kalmykia” for the period up to 2024”. The order explains, in particular, that the construction of this port is of “geopolitical significance” for Russia and will accelerate “the integration of the transport complex of Kalmykia into the world transport system through participation in the formation of international transport corridors.” The documents prescribe the construction of a modern port in Lagan with grain and oil terminals with a capacity of up to 5 million tons and 500 thousand tons per year, respectively. Also, terminals for packaged and containerized cargo are planned in Lagan (their capacities are being specified). Copyright (C) PortSEurope. All Rights Reserved. 2020.

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