Ports in Leningrad region continue growing

Leningrad region is the leader in Russia judging by national measures. The industrial output is growing in the region year by year. A substantial contribution to development of the regional economy is made by the ports and terminals ashore the Gulf of Finland built up during the last 5-6 years. Due to those ports Russia succeeded in quick transit redistribution in the North-west basin. Cargoes, formerly exported via Baltic ports after disintegration of the USSR, have changed their route to go via Primorsk, Vysotsk, and Ust-Luga. Almost 70 mln tons of cargo were transshipped via the ports of Leningrad region the last year. To a great extent, the cargo turnover growth was ensured by Primorsk port that transshipped 57 mln tons of crude oil. By estimates of experts, the overall cargo turnover in the Russian Baltics will increase up to 185 mln tons annually by the year 2010. From the above, the cargo turnover of the Leningrad region’s port capacities will exceed 100 million tons of cargoes. Prospects for further growth of the maritime industry in the regional economy – the subject of our conversation with Valery Serdyukov, Governor of Leningrad region.

- Mr. Serdyukov, the port capacity in the Gulf of Finland will be considerably extended this year due to commissioning of an automobile-railroad ferry in Ust-Luga and start up of the third phase of LUKOIL distributing transshipment complex (DTC) in Vysotsk. What are the reserves for further development of the regional ports?

- Ust-Luga port stays one of the biggest infrastructural projects under construction, where several new terminals are being constructed. We are planning to establish a production-industrial zone in this deep-water port that will handle the heavy-tonnage fleet. This will enable attracting corporate and private investors, as well as it will give an impulse to development of coastal territories in the Luga Bay. We expect that Ust-Luga port will get the status of a special economic zone.

Construction of new capacities at LUKOIL-II DTC is close to its completion, whereas in 2005 its cargo turnover reached 7 mln tons of hydrocarbons. However, as early as this year, nearly 12 mln tons of crude oil and oil products are planned to be transshiped via the DTC after commissioning of new facilities.

Primorsk maritime port has large prospects also. This year, Transneft JSC completed construction of the Baltic pipeline system and put into operation the second mooring complex of Primorsk specialized maritime oil-loading port. It has reached its design capacity and will transship 65 mln tons of hydrocarbons annually. It is about a quarter of the whole Russian “black gold” export. However, capabilities of Primorsk are far from being exhausted. Implementation of the Sever project is being continued, within the frame of which Transnefteproduct Company builds a marine terminal and performs laying of the long-distance export oil-products pipeline “Kstovo – Yaroslavl – Kirishi – Primorsk” that will run across the territory of seven regions – Leningrad, Novgorod, Tver, Yaroslavl, Ivanovo, Vladimir, and Nizhny Novgorod. The first phase of 8.5 mln tons per year capacity should be commissioned within two years. The estimated construction cost is 750 mln dollars. When the oil-products pipeline reaches its full design capacity, its throughput shall amount ot 24.6 mln tons per year.

In total, it is planned to open four terminals of different purposes in Primorsk. Also, we have two areas available there with the mooring access to the Gulf of Finland water area. We study the issue of erecting a LNG plant in Primorsk and building a terminal for its exporting. Vysotsk port progresses also; there we carry out dredging of an approach channel for the purpose of further increasing the port capacity as regards to transshipment of general cargoes. Railroad is of great importance for ensuring successful operation of the ports. Today we have two capital investment projects being implemented – “Complex reconstruction of Mga-Gatchina-Veymarn-Ivangorod section involving development of railroad approaches to the sea ports of the south coast of the Gulf of Finland” and “High-speed traffic at St. Petersburg – Buslovskaya section”.


Port Primorsk facilities

- The Leningrad region is one of the most investment attractive regions in Russia and for the last few years it leads in its basic socioeconomic indexes. Starting from the 90’s of the last century the regional government pursues a correct economic policy aimed at attracting investors, and such policy has already shown excellent results. What are the investment attraction forecasts for this year and in the long term?

- As per our calculations, in 2006 the region will receive over 100 bln roubles of investments. It is pleasant to say that today the Russian capital share make up more than a half of total investments. The Government of the Leningrad region has always supported and will support those companies that bear a certain social load apart from merely investing their money in their own business.

It is important to build up the right policy for attraction of investments. Certainly, we understand that investors are primarily interested in territories adjacent to megalopolises as the main markets of products and services. At the same time, today we are working over a mechanism for revitalizing the investment process in remote areas of the region, outside the 50-kilometer zone of St. Petersburg. And since any investor is interested in availability of the required infrastructure, we create industrial zones and concurrently improve the infrastructure in remote areas of the Leningrad region. Two such industrial zones successfully operate nowadays. We have worked out a development project of the special economic zone “Ust-Luzhskaya” in Kingisepp district. We are working over a variety of other infrastructural projects. All those projects will give a new impulse to development of the region and will enhance its investment attractiveness. However, even today the Leningrad region already has a lot of advantages as regards to investments. This is, in the first place, a good transport infrastructure. We have powerful Primorsk and Vysotsk ports functioning; in the short run, the automobile-railroad ferry Ust-Luga – Baltiysk (Kalinigrad region) – German ports will start operating. We have international railroad communication with the Baltic countries and Finland. The regional territory has federal routes running across, which are included in the intermodal transportation corridor No. 9 with flows of foreign trade and transit cargoes along the North-South axis.

- Another big infrastructural project being in progress is North European Gas Pipeline (NEGP), which partially runs across the territory of the Leningrad region. Will the regionbenefit from it?

- This year, Gazprom plans to complete construction of the first section of the NEGP land-based part of 115 km length on the territory of the region. The overall length of the section that will run across the territory of our region equals to 598 km. The whole route has been determined; construction has been agreed upon with municipal formations and land-users. The gas pipeline will be laid across the Baltic Sea water area from Vyborg town in the Leningrad region to the German coast. Its capacity will be 55 bln cubic meters of gas per year. It is a vital international project for Russia since natural gas will be supplied to Europe directly without transit through other countries.

Though the NEGP is concentrated mainly on the European market, the Leningrad region will additionally receive 1.5 bln cubic meters of gas per year. This will provide for faster completion of gasification in towns, settlements, and villages. Today, the gasification level in the region is a little bit higher than 50%.

In addition, construction of the NEGP is beneficial for the regional economy for one more reason: a liquefied natural gas plant on the platform is planned to be constructed in the Gulf of Finland near Primorsk. That enterprise will be involved in another large-scale project of Gazprom – establishment of Russian-Canadian partnership in the energy industry, which shall result in the LNG - Baltics project. The Canadian-side partner is Petro-Canada Company. Liquefied gas will be loaded on the territory of our region and delivered to the regasification terminal in the Canadian port Gros-Cacouna (Quebec). The overall cost of the project will be nearly 3 bln dollars; and half of that sum will be spent for construction of the liquefied natural gas plant. Feed gas for the plant will be supplied by Gazprom through the Unified gas supply system. Also, it is planned to construct tanks for LNG storage and required offshore facilities in the coastal zone of the Baltic Sea.

- In recent years, so many port complexes and industrial enterprises of different profiles were built in the Leningrad region that a concern arises spontaneously: Can it be a big load on ecology?

- All projects are subject to the strict ecological expertise and environmental impact assessments prior to their preparation for their implementation. Ports and terminals are designed and built in accordance with the latest requirements. For instance, the established Russian environmental standards are more severe than European ones. The most dramatic confirmation of observing the environmental requirements is the fact that this year HELKOM Helsinki Commission for the Baltic Sea Protection excluded Russia from the list of countries-pollutants of sea. Whereas almost all the Russian part of the Baltic Sea water area is located on the territory of the Leningrad region. Members of the Commission recognized that after putting new water treatment facilities into operation including the ones on the territory of the Leningrad region the Russian part of the Gulf of Finland no longer endangers the Baltic waters.

I’d like to tell you even more: we have started developing the recreational potential of the Gulf of Finland. The regional government is planning to build 35 km length tourist-recreational zones on the coastal strip in Vyborg district. We have already formed 6 projects comprising not only recreation areas, small- and medium-size hotel complexes but also locations for research institutes examining natural environment. Also, it is planned to build deep-water passenger ports on the coast of the Gulf of Finland. We have to admit that today neither the Leningrad region nor St. Petersburg is capable of accepting large ferries of Silvija Line type, whereascoastal depth of the Gulf of Finland on our regional territory will enable performing these operations. Two basic conditions that we require from potential investors: no endamagement to woodlands and strict observance during construction of the projects approved by the Government of the Leningrad region.



Interviewed by Olga Loskutova
The editorial staff would like to thank Dmitry Motylkov, Governor’s Press Secretary, for assistance in preparation of this material

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# 3(17), 2006
Topical Interview