Phantoms of Russian infrastructure in 2014

The list of large-scale infrastructure projects left in limbo has not changed a lot this year though some of them have moved up a little. Meanwhile, the list of “Russian infrastructure phantoms” is likely to extend in 2015 due to complicated foreign policy and economic situation.

Sequester for Kaliningrad

The project on construction of a deep water port in Kaliningrad Region moves from one year list of “phantom projects” to the next one. Finances allocated for this project have been reassigned again, this time in favour of Yamal LNG project. In September 2014, RF Government signed a Decree on introduction of amendments into the federal special-purpose programme “Development of Russia’s Transportation System in 2010 – 2020”. According to the amendments, the project on “Construction of a deepwater port in Baltijsk (Primorskaya Bay, Kaliningrad Region)” was renamed into “Construction of seaport infrastructure at Kaliningrad seaport” and divided into two phases.

The first phase estimated at RUB 8.5 bln implies the construction of an international passenger terminal with a yacht marina in Pionersky (Kaliningrad Region), the second one – (RUB 400 mln) – construction of deepwater port near Yantarny.

Earlier, the project on construction of a deepwater port in Baltijsk was to get RUB 17.9 bln of federal allocations. So, the project lost RUB 9 bln.

Local media has recently quoted Deputy Transport Minister of Russia Victor Olersky as saying that the cruise terminal and the yacht marina in Pionersky should be generally built in 2017. “We are aware of the time pressure. To solve this task we should hold a competition in January and start designing to commence construction in the first half of 2016, not later than in March. Looking ahead I can say we are not likely to encounter technical problems. We think that the project is quite mature and we will implement it by 2017,” Victor Olersky said.

“I am frequently asked about the deepwater port and confirm once again: the project is still included into the federal special-purpose programme but the decision has been taken with the consideration of today’s situation and today’s business logic. The second phase, cargo port, will be implemented if the investor is found of course”, the official added.

Arkhangelsk: Belkomur affair

Another project which has fixed in the “phantom list” is the creation of a deepwater district at port Arkhangelsk. As Arkhangelsk Region Governor Igor Orlov told IAA PortNews, the region does not reject the project but investment activities are very low amid the difficult economic situation today.

The project will be implemented in the context of the Belkomur railway construction (White Sea-Komi-Urals) which has been in limbo for several years already. Komi Republic authorities count on RUB 50 bln of federal allocations for the project. 

Komi Governor Vyacheslav Gaizer says the financing model has been revised. “The project is being implemented through private-public partnership but with the resources carried out jointly with the Russian Fund of Direct Investments and the National Wellbeing Fund,” the Governor said.

According to him, the project will cost some RUB 180 bln and its implementation can take 4 years.

Based upon liquid

Two large-scale port projects related to LNG supplies are under implementation in Russia today – Yamal LNG and Sakhalin plant expansion project within the framework of phase III.

Other LNG projects are just being discussed. Gazprom postpones commissioning of Baltic LNG phase I (construction of LNG plant and terminal at Ust-Luga port) from 2018 to 2019.

Some projects of LNG terminals were earlier announced in the North West region by Rosneft and Nordic Yards, as we wrote before >>>> 

In the North, there is a phantom project of Pechora LNG implying the construction of a sea terminal in Indiga. There are talks about the expansion of this project with the construction of additional facilities for oil cargo and even containers while in reality the initial plans have not been executed yet.

"Now we are working together to prepare an investment passport of the seaport in Indiga. And we are expanding prospects, considering the construction of not only a terminal for shipments of LNG, but also mull over an oil terminal and a container terminal, since it is possible to build a road that would run from Indiga to Orenburg region, through the Perm region and further towards the Urals and Siberia. It length would be about 2,000 km. This is a strategic path, the path of development, and we can build this only in conjunction with other regions of Russia", Igor Koshin, head of Nenets Autonomous Region has commented recently.

Under the project, a floating LNG plant is to be located in the area of Indiga, with a 300-km-long pipeline linking it with deposits in the Pechora. Port Indiga was planned as a deep-water port with depths of about 17 m. The project investors are Alltech Group and Rosneft.

As for the Far East, in November 2013 Vladimir Miklushevsky, Governor of the Primorsky Territory, and Gazprom CEO Alexei Miller signed a Memorandum of Understanding (MoU) and cooperation agreement for implementation of the LNG plant construction project in Primorye.

The project is moving on slowly though: In December 2014, Gazprom LNG Vladivostok obtained positive conclusion from the state expert appraisal board following the review of project documentation and engineering survey results and assessment of the project facilities construction Phase 1 compliance. The first phase of the three-phased Primorye LNG project includes commencing works on the Lomonosov Peninsula, the Khasan district. The second phase includes construction of facilities of a marine LNG export terminal and a cargo terminal, and finally the third phase - the construction of the plant itself. The LNG plant is scheduled to start production in Q4 2018. 

Nevertheless, some experts are skeptical about the project’s commercial viability as we wrote earlier >>>> 

Murmansk hub

Meanwhile, the year of 2014 saw the launch of the project on comprehensive development of Murmansk Transportation Hub. Maxim Sokolov, Transport Minister of the Russian Federation, and Marina Kovtun, Acting Governor of the Murmansk Region, have kicked off the first phase of the project. They have officially announced the start of the construction of federally owned facilities within the framework of MTH project: railway line Vykhodnoy-Lavna line (via Tuloma bridge and Murmashy-2 station). The line is 46 kilometers long.

In general, the Murmansk Region is among the leaders when it comes to the number of marine transport projects announced this year. For example, Rosneft is looking into development of Murmansk port based facilities for transshipment and regasification of LNG, transshipment and refining of oil from Arctic fields. Bashneft and Gazprom Neft also have ambitious plans on creation of oil and oil product transshipment facilities in Murmansk. Rosneft has already started creating a base for development of Arctic fields with shipbuilding and ship repair facilities.

More over, Murmansk is going to become a port-hub for the Arctic container line which requires the construction of a container terminal and involvement of refrigerating facilities of the fishery port. The coming year will cast light on the prospects of these plans.

Generally speaking, it is difficult to forecast amid the current foreign policy and economic situation. Evidently, it is the beginning of the budget savings period, reappraisal of investments and terms of implementation as well as revision of the plans.

Vitaly Chernov