RUSSIA LAUNCHES MASSIVE PROGRAM TO DEVELOP BLACK SEA PORTS

By _Vladimir Socor_ ( +Socor)
Friday, July 13, 2007

On July 11 Russia’s First Deputy Prime Minister Sergei Ivanov and
Transport Minister Igor Levitin unveiled a comprehensive modernization
program for Russian Black Sea ports during an inspection visit
there. The program is ambitious in both scale and pace, with most of
its goals scheduled to be attained by 2010. It is a counterpart to the
program for accelerated expansion of Russia’ s Baltic ports, which the
Russian government also launched this year, with President Vladimir
Putin taking a personal interest in both programs.

The government drew up its Black Sea program before the decision of
the International Olympic Committee to hold the 2014 Winter Olympic
Games in Sochi, on Russia’s Black Sea coast. That decision, announced
on July 4, will necessitate massive investments to develop
infrastructure in the Sochi area, above and beyond the scope of the
overall program for Black Sea ports and mostly beyond this program’s
time frame. Ivanov and Levitin discussed boththe overall maritime
transport program and ideas about Sochi development during their
visit.

According to these officials, Russian Black Sea ports currently handle
more than one third of Russia’s sea-borne exports in terms of tonnage.
Total export cargos were reported at 160 million tons in 2006 and are
`conservatively’ expected to grow to 250 million tons annually by
2010. The port development program ambitiously envisages doubling the
existing export capacities, which are currently strained to the limit
and distributed very unevenly along the Russian coast.

At present, Novorossiysk alone handles more than one half of that
overall export tonnage. The over-congested port’s various terminals
loadeda reported 88 million tons of export cargos in 2006.

That figure includes an estimated 60 million tons of oil, one half of
this originating in Kazakhstan. Oil loading will increase if the
Caspian Pipeline Consortium’s line boosts the volume of oil pumped
from Kazakhstan to Novorossiysk. Expecting this to be the case, the
Russian government is ordering three tanker ships to carry that
additional volume of oil from Novorossiysk to Bulgaria’s Black Sea
port of Burgas, for feeding into the planned trans-Balkan pipeline to
Alexandropolis on the Greek Aegean coast.

The Russian government’s program envisages relieving some of the
congestion at Novorossiysk through specialization. It would transfer
some shipping flows from there to other Russian Black Sea ports while
dedicating Novorossiysk to oil, grain, and container cargos. In
addition, a modern grain export terminal is due for completion this
year.

Ivanov and Levitin explicitly called for competing with Romania’s port
of Constanta in terms of attracting international container shipping
to Novorossiysk. The Russian government envisages building the
appropriate terminals as a priority until 2010, in place of existing
old terminals.

The commercial port of Novorossiysk can no longer expand physically in
the narrow bay, a section of which is taken up by the naval port.
Russia=80=99s Black Sea Fleet is expanding its installations there to
a full-fledged base as an alternative to Ukraine’s Sevastopol, where
the Russian fleet=80=99s lease is due to expire in 2017.

Other port development plans include using Taman as the main coal
export terminal (instead of Tuapse) while expanding the use of Tuapse
as an export outlet for oil and, potentially, liquefied gas. The port
of Kavkaz (also in Krasnodar Krai) is slated to specialize for
handling commodity ferryboats.A catamaran line for passenger boats is
scheduled to run between the ports of
Anapa-Novorossiysk-Gelenjik-Tuapse-Sochi.

The program also envisages developing overland and air links to the
ports.A second railroad line to Novorossiysk and convergent highways
to that port are to be built until 2010. Also by that date, the old
airports of Anapa and Gelenjik are to become modern international
airports, alongside the existing Adler airport. The three are to be
merged into a single, state-controlled company. Ivanov and Levitin
underscored Krasnodar Krai’s potentialas a destination for
international and Russian tourism (`We don=80=99t have anything
comparable in Russia’).

In Sochi, the transport modernization program runs through 2015, but
will almost certainly have to be adjusted to meet the 2014 Olympic
deadline. The port will be reserved exclusively for passenger
traffic. All other cargo flows are to be transferred from Sochi to
other ports. This measure takes immediate effect, so as to enable the
port of Sochi to receive construction materials for the planned
Olympic installations and start construction of large-scale passenger
terminals. These are planned to accommodate passenger and cruise ships
with capacities of up to 3,000 passengers each, for a total of 600,000
passengers per year by 2010 and 715,000 by 2015. Access highways to
Sochi and a ring highway around the city are included in the program,
as well as expansion of the Adler airport, which is servicing Sochi.

The Russian government is creating an inter-departmental structure to
supervise this Black Sea program. While the government’s existing
Maritime Affairs Board only meets three or four times per year with a
very broad agenda, the new structure will be a standing one to
coordinate port development. Ivanov has nominated Levitin to head the
new inter-departmental structure in his capacity as transport
minister. With President Putin evidencing a personal interest in the
port development program, Ivanov a front-running presidential
contender, Levitin also mentioned as aspiring to a top post in 2008,
and the scheduled Olympic games as an added stimulus, this Russian
Black Sea program will command political attention and funding in
Moscow.

(Interfax, Itar-Tass, July 11, 12)