Last year nearly 75 percent of Russian oil products and liquid exports were reloaded at Baltic ports.
"Every year Russia loses $2.5 billion shipping transit cargoes via Baltic ports," the adviser to the vice governor of St. Petersburg, Boris Usanov, said at the conference. "Oil transit fees in the Baltics states are two to two-and-a-half times higher than in Russia."
The mayor of Ventspils, Latvia's largest transit port, Aivars Lembergs, who is also chairman of the Latvian Transit Business Association, argued Usanov greatly exaggerated the fees Russians pay to use Baltic ports: "Fees in Latvian ports are much lower."
Janis Blazevics, deputy director of the Latvian oil company Ventspils Nafta, said business and politics don't mix, and hinted Latvian politicians are getting increasingly active in the country's oil business. But he refused to provide an example of how politicians in Latvia are interfering in the oil transit business here.
"There will have to be negotiations between Russia and the European Union since the oil demand in this region will dramatically increase over the coming 30 years," Blazevics said.
Vitalijus Marinecas, the Moscow representative of the Klaipeda seaport authority, said that there's currently a price war going on in the transit business. However, he sees hope in the form of an initiative group with representatives from the Baltic states, Russia and Finland.
Usanov denied Russia is dumping rates in its ports, saying the country is seeking membership in the World Trade Organization, where such practices would be strictly prohibited.
"There's a dispute between the EU, Russia and oil transit countries," Blazevics said. "There's a need for more documents and estimates on oil extracted in the East and how the transit business should be organized."
The Ventspils mayor is lobbying for his city to handle more Russian oil. There are rumors about the final destination of a Russian pipeline currently under construction. At present, port representatives along the Baltic Sea's east coast are trying to convince Russia their ports are the best option.
But transporting oil through pipelines is not the only way. The Baltic states are all working on rehabilitating and modernizing their railway systems as well.
Daniel A Giblin, general manager of international transportation and logistics for GIBB Ltd., said there has been a lot of changes in railroad management in the Baltics.
"More money from the European Bank for Reconstruction and Development or other investment banks is needed to complete this project," Giblin said. "In Latvia, the most important stretch is between the northeastern town Rezekne and Ventspils on the west coast in terms of transit. However, more money is needed to improve this part of the east-west corridor."
Russia is not the only country east of the Baltics glancing at the Baltic Sea ports. Kazakhstan is steadily increasing its export through Latvia. But oil is not the main concern in the Baltics for Kazakhstan, said Jevgenij Mihailov, marketing director for Kazakhstan railroads.
"Lembergs said 'transit business through Latvia is not stable,' besides, tariffs for exporting oil through St. Petersburg are more favorable," Mihailov said. "We consider the Baltic states as partners. Maybe not for oil but for other materials."
Mihailov also stressed the importance for Estonia, Latvia and Lithuania to agree on a joint tariff system and customs regulations.
"If the Baltics cannot agree, Russia will close one tap to the Baltics, or like Caesar said 'divide and conquer,'" Mihailov said.
Blazevics said there are huge oil resources in the Kazakhstan region and that this will have a huge impact on the European market, thus increasing the oil flow through Latvia.
Astrids Freimanis, one of Latvia's leading oil experts, offered a presentation on Latvia's future oil capacity. Last April, Latvia announced a tender for licenses to explore and develop potential oil deposits in Latvia's territorial waters in the Baltic Sea.
Freimanis said there was a possibility that 500,000 tons of high quality oil could be found there.
"These oil deposits have a very good geographical position since they are surrounded by countries with a huge consumption of energy resources," Freimanis said. "Also, development of oil in the Baltic Sea will be much easier because the sea is shallow and calm, and it does not freeze over, which will allow for oil to be extracted throughout the year."
Kaljo Aamer of the Estonian Oil Association reminded conference participants they were not working with a product that would last for ever.
"At the rate we discover oil and looking at the rate we consume it, international studies indicate we have until the end of this century before we run out," Aamer said. "But I think this is impossible to predict. Who would have thought that the Norwegians and the Irish would find oil?"
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