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Wednesday 26.10.2016 | Name days: Kaiva, Amanda, Amanta

Experts warn that Russian oil product transit is lost for Latvia

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe threats of Russian Transneft Company to divert oil product transit from Latvian ports are not empty ones, as concluded by De Facto programme of LTV. In a telephone conversation, the company’s representative said – no matter what Latvia does and no matter how beneficial the tariffs it offers, oil product transit will be pulled from Latvia soon.

Transneft is a Russian state monopolist – it transports nearly all oil products produced in Russia. Instead of using the railway to transport them through Latvia ports, Russia intends to use its Sever pipeline leading to Primorsk port. The company also promises to use other modernized ports – Ust-Luga and Novorossiysk. All of them are ready to accept cargoes, experts say.

According to experts interviewed by the programme, it is the political aspect that is the main factor in the company’s decision. Other Russian state companies could follow this example.

Former deputy chairman of Russian Central Bank Sergei Aleksashenko said during the interview: «Even before Vladimir Putin became president, he developed a theory as part of his Master’s degree that it is necessary to build ports in Kaliningrad to ensure Russia’s independence in transport industry. He sees Russia surrounded by enemies. The sanction regime imposed against Russia after the aggression in Ukraine proves his in his eyes.»

Sergei Ivanov, who recently left his post in the Russian president’s administration, now serves as Vladimir Putin’s special representative in matters of ecology and transports. It is from Ivanov did Russian news agency TASS reported this week that starting from 2020 not only oil but also other products will be diverted to its own ports. It will be more difficult, however, to sway private companies – Russian exporters who risk their own, not the state, money using transit services of other ports.

Currently Latvian ports have a more beneficial position in competition. Whether or not this could change in the future is a question with many variables. One of the main questions is whether or not Russia’s modernized ports can offer lower tariffs and how much Russian railway asks for cargo delivery services.

Experts recommend Latvian ports to attract cargoes headed in the opposite direction: European goods imported by Russia’s engineering, construction and consumer sectors.

«Because of the crisis, there are not a lot of those cargoes at the moment. However, in a few years, Russian consumers will start buying foreign products again. With that, Baltic ports have good advantages in transshipping foreign goods. You can transport food products, construction materials and such,» – explains expert of Russian Energy and Finance Institute Sergei Agibalov.


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