Major concerns of Russia’s North-West railroad

Insufficient capacity of Russian railways is a major hurdle in the development of the country’s ports. It has long been said recently about the Far Eastern direction, but the problem is quite urgent for the Baltic Sea basin as well.

Ust-Luga as a priority

The company operating railways network in the region, where major Russian Baltic ports are located, is Oktyabrskaya Railroad, a branch of the country’s rail monopoly - Russian Railways (RZD). Ust-Luga is one the ports demonstrating cargo traffic surge. There are also expansion projects for the ports of Vysotsk, Primorsk, Vyborg and Big Port Saint-Petersburg, the latter largely through the construction of outer harbor Bronka).
Currently the railways authorities are focused mainly on strengthening of rail infrastructure capacity to meet the needs of the rapidly growing Ust-Luga. In 2011, the Ust-Luga-bound freight traffic totaled 22.7 million tons. The volume is estimated to reach 84.7 mln tons in 2015, and 120.4 mln tons by 2020. Andrei Pankov, deputy head of Oktyabrskaya Railroad who participated recently in the 5th annual international conference "TRILOGY" (Transport. Investments. Logistics) said that current capacity of the railways moving freight to Ust-Luga is more than 35 million tons per year.

Such a rapid development of the port, which continues to put into operation new terminals, pushes RZD to develop railway infrastructure at an accelerated pace. Thus, the state-owned rail monopoly has injected in the development of the Mga-Gatchina-Ust-Luga line a total of about RUB 45 billion, of which 15 billion rubles in 2011. The other day, the Luzhskaya-Neftyanaya station has been inaugurated, another station Luzhskaya-Sortirovochnaya featuring modern technology of rolling fleet management is expected to be opened very soon.

The RZD plans includes the rehabilitation until 2025 the Gdov-Pskov rail line. According to Pankov, restoration of the branch line is necessary to ensure smooth traffic during the modernization of the railway infrastructure in the Pskov region (St. Petersburg-Dno-Pytalovo and further, toward Velykiye Luki and Sebezh), which implies, in particular, its transfer to electric propulsion, to be implemented by 2025. The Gdov-Pskov line reconstruction is profitable also for Ust-Luga, which would have its own direct and short rail haul in this direction.

Action and reaction

The accelerated development of the railway infrastructure in Leningrad and Pskov regions and beneficial to companies operating in Ust-Luga, annoys those who invest in the development of other regional ports. Thus, the further growth of traffic flows in the ports of Primorsk, Vysotsk and Vyborg also is limited by the railways capacity. This has become a pressing problem in connection with the congestion of Vyborg main line by passenger trains, including the high-speed communication with Finland. So, the companies operating in the Russian ports of the northern coast of the Gulf of Finland are looking forward to the completion of the bypass of the Vyborg main line – the Sosnovo-Losevo-Kamenogorsk branch line, which is scheduled for completed in 2013. It is planned to complete electrification of Svetogorsk-Kamenogorsk. This will boost the capacity of the railway carrying cargoes to the ports of Vyborg and Vysotsk and Primorsk to 10-15 million tons a year, which will enable stevedoring companies to increase handling existing cargoes and add new loads.

However, NCSP Group (major shareholders - the group Summa and Transneft) are unhappy that RZD is not going to meet its needs in the port of Primorsk and creates a "discriminatory conditions" in comparison with Ust-Luga port. They have filed an appeal with the Federal Antimonopoly Service of the Leningrad region. The stevedore company requires connection of the Primorsk bunkering complex with the rail network.

Andrei Pankov assured that Oktyabrskaya Railroad is ready to participate in construction of the railroad sidetrack to Primorsk but only on the equity participation principles. In its turn, NCSP insists that the branch line should be built the Oktyabrskaya authority.
RZD will hardly be able to satisfy wishes of all stevedoring companies. Besides, this is a state-owned company and its investments will ultimately be paid by taxpayers.  

The ports of Vyborg and Vysotsk are relatively small in terms of cargo volumes. If we talk about the coal terminal of Vysotsk port, its throughput growth can be achieved within the existing rail infrastructure and the coal demand in Europe will likely not increase in the nearest future, while the Asia-Pacific region is increasingly becoming the main consumer of the commodity (and the Far Eastern ports need to strengthen the railway infrastructure even more than in the Baltic ports). Oil terminal of Lukoil in Vysotsk will be able to meet its needs through the construction of a spur line from the North main pipeline.

Primorsk port specializes in transshipment of crude oil and petroleum products delivered by pipelines. The bunker complex built here by NCSP is not critical for shipping in the region. The oil can be delivered here by water transport. Plans to diversify the cargo base in Vysotsk in Primorsk as only on papers, that is, the projects implementation is a distant perspective.

On the other hand, if RZD does not focus right now on the development of rail infrastructure in the southern part of the Leningrad region, the port of Ust-Luga will just stall in the next two or three year with all its new terminals.

Vitaly Chernov.