Russia's Baltic Sea port of Ust Luga expects to more than double exports this year on its way to becoming a major trade route for refined oil products, coal, grains and even cars, the port's director said.

Coal miner Kuzbassrazrezugol will expand its terminal at Ust Luga. The port also plans to host a new grain terminal and is in talks with South Korean auto makers Kia Motors and Hyundai Motor about taking delivery of cars.

The expansion, which will also include a fertiliser terminal and container shipments, could potentially boost annual turnover at the port to 170 million tonnes by 2015 -- 17 times the amount of goods shipped last year, port director Maxim Shirokov said.

"We are preparing for the big breakthrough," he told Reuters in an interview.

"In 2011-2012, we will have a real jump," he said. "Several companies are completing design work and are starting to build their terminals."

The expansion of Ust Luga, which will host Russia's largest refined oil product export facility, will create a major new outlet for Russian exporters and allow them to re-route cargoes that currently pass through ports in the Baltic states.

Oil trader Gunvor is building a terminal it says could handle about a fifth of Russia's total oil product exports. Shirokov said this terminal would be launched in the autumn.

Ust Luga will also receive goods for the Russian market. The car import terminal built last year has been running below capacity since the Russian car market collapsed during the economic crisis, but it will launch a second phase in July.

Shirokov said the port was in talks with South Korean car makers about delivering vehicles directly to northwest Russia without having to reload in European port hubs.

"We believe that Korean auto makers could save up to 400 euros per car by using the direct ocean line, if 5,000 vehicles are delivered in the carrier. This year we hope to start signing the first papers regarding the deal," the port director said.

Shirokov said the 170 million tonnes of turnover planned by 2015 would include 68 million tonnes of crude oil and refined products. He forecast total turnover of all products would rise to 24.5 million tonnes in 2010 from 10.4 million tonnes in 2009.

COAL, GRAIN AND FERTILISER

Coal exports at Ust Luga are expected to rise to 8 million tonnes this year and 12 million tonnes in 2011, compared with 7 million tonnes last year, as Kuzbassrazrezugol nears completion of the second stage of its terminal.

The mining company had enough land in the port to build an additional terminal should it wish, Shirokov said.

Shirokov said Ust Luga would this year sign a contract to construct a new grain terminal with capacity to ship between 5 million and 10 million tonnes per year.

"We have already signed two protocols of intention with (state trader) United Grain Company and with a group of private investors. One of them will lead us to the contract," he said.

Shirokov said that, by the end of 2010, Ust Luga would also close a deal with a Russian fertiliser producer to build an outlet. He did not name the company.

In February 2011, Ust Luga plans to start container shipments via a terminal belonging to the National Container Company (NCC). The project was halted last year after domestic consumption in Russia dropped, but construction resumed two months ago.

NCC planned to start loading 150,000 twenty-foot equivalent units per year, Shirokov said.

He said the port would raise between 27 billion and 28 billion roubles ($927.8 million-$962.2 million) in 2010 and a further 25 billion-26 billion roubles in both 2011 and 2012.

About 10 percent would come from the state budget, he said, and the rest from private investors developing their terminals and the Ust Luga port itself.

The company is seeking to issue state-backed bonds worth 10 billion roubles with a maturity of 10 years.

News source: FOREXYARD.com
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