Primorsk terminal may boost traffic to Baltics

Jan 10, 2002
TBT staff

The Primorsk oil-loading port, the last link in the Baltic Pipeline System designed to export Russian petroleum and avoid the Baltic states, is unlikely to be operating at its planned maximum capacity for some months to come. But some reports say it could eventually export up to 240,000 barrels of crude oil a day.

Players in the region told a sister paper of London-based Lloyd's List, BunkerNews, that St. Petersburg, the nearest major port, is not yet in a position to capitalize on any new demands.

Primorsk is several hours' sailing time from St. Petersburg. Observers say any St. Petersburg barge taking a cargo of bunkers, which provide fuel for a vessel, to a tanker working at the new terminal would need some 24 hours to make the round trip.

St. Petersburg is already suffering from barge congestion, and given the capacity of the port's barges it would take two to three vessels from there to make the delivery of fuel oil for one tanker.

Bunker suppliers in the Estonian port of Tallinn, however, could see their business increase when Primorsk's terminal begins operations. Tankers will be passing close to Tallinn as they enter the Gulf of Finland.

The Russian media disagree. The start of operations at Primorsk could significantly reduce the export of oil through the Baltic states, Russia's Rosbalt news agency reported on Jan. 3.

It said that the connection of the Timan-Pechyora and western Siberian oil extraction regions and Primorsk into the Baltic Pipeline System would reduce the export price for Russian companies by $2 a ton compared with, for example, exports via Latvia's Ventspils.

"The port in Primorsk will be a serious competitor for Lithuanian, Latvian and Estonian ports," Rosbalt said.

Aivars Lembergs, the mayor of Ventspils, believes there will be enough work for all ports even after the opening of the Primorsk terminal. He told reporters on Jan. 7 that only 10 percent of Russian oil exports flow through Ventspils. Primorsk is therefore a rival for everyone, including other Russian ports, Germany, Poland, Slovenia, Lithuania and others.

Lembergs said oil production in Russia is expected to grow, and the same applies to the Caspian region. Additional capacities are needed. Primorsk's capacity is, he said, only slightly higher than last year's oil production growth in Russia.

"Refusing Latvia's transit route could be only a political decision," Lembergs stressed. It would lack any economic sense.

Duty at Primorsk is $2.65 a ton, whereas at Ventspils it is just $0.7 a ton. And ships will have to sail further. Primorsk also has ice to deal with that is 40 centimeters thick. Ventspils is ice-free.

The head of the Lithuanian parliamentary group for relations with Russia, Liberal MP Algimantas Matulevicius, said that Russian transit through Lithuania is heavily influenced by the increase in the price of cargo transportation by Russian railways to the Lithuanian port of Klaipeda.

"After Lithuania canceled railway discounts for cargo headed for Kaliningrad, Russia responded in October 2000 by raising tariffs for cargo transported to Klaipeda by rail," he said.

In his opinion, Lithuania was later forced to equal cargo tariffs for Kaliningrad and Klaipeda, but Russia failed to revise its pricing policy.

This situation led to a catastrophic decrease in the flow of cargo via Klaipeda, while the Estonian port of Tallinn has started to handle more.

Russian officials argue the oil-loading terminal in Primorsk not only forms a "window" for Russia to Europe, but allows Russia to maneuver between export routes, reducing its dependence on the Baltic states for oil exports.

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