Can’t live off crude oil alone

By Mikhail Tuzhikov, Transport Rossii

The expected EU accession of the Baltic states opens up new prospects for Baltic terminals handling liquid chemical and oil chemical transit cargo, because the Western market – in  Europe –numbers 350 million clients, while in the East – the CIS – there are 300 million

Photo: Ventamonjaks

In the early 1970s the Soviet Union and U.S. company Oxidental Petroleum signed an agreement for the construction of a specialized terminal for exports of ammonium and other chemicals in Ventspils port in  north-western Latvia. In 1973 Ventspils port started reloading liquid chemical and oil chemical products under the Soviet-U.S. agreement. At the time the chemical terminal was called the Ventspils Portside Plant and belonged to the state. On February 18, 1994, the plant was privatized and since them has been working as a completely privately-owned company called Ventamonjaks, reloading ammonium, liquid nitrogenous and compound fertilizers, light oil products, base oils and over 20 different types of technical spirits and solvents.

The facts:

Ventamonjaks has a total reloading capacity of 2.75 million tons a year, including:

• 1.35 million tons of ammonium;
• 1.1 million tons of oil products;
•  0.23 million tons of spirits;
•  0.07 million tons of base oils.

Unquestionable leader

Last year Ventamonjaks put into commission an upgraded ammonium storage tank that allowed the company to cut service costs and increase its competitive ability. The upgrading took less than a year and cost 1.23 million euros. In view of high maintenance costs, such ammonia tanks can be found in only a few ports over the world, the closest ones being in Germany and Belgium. Eight tanks are located in the former Soviet Union: two in Ventspils and six in port Yuzhny, Ukraine.

In 2001 Ventamonjaks reloaded 1.35 million tons of cargo, and in 2002 – 1.14 million tons (351,000 tons of ammonia, 654,000 tons of oil chemical products and 138,000 tons of other liquid chemicals.

This year Ventamonjaks intends to start accepting a new type of cargo – vinyl acetates. Investment of 66,330 euros will be required to equip the terminal for handling of this chemical product. The company has already approved a plan for upgrading the terminal in the next few months, and experts believe the move will help increase cargo turnover.

Photo: A.F.I.

Ventamonjaks president Аrnis Janvars told the BC some of the company’s future plans: “I would like to point out that this year, alongside ammonium, we continued actively reloading oil products. As we have and still are paying maximum attention to the development of oil product reloading as the main reloading product, we upgrade the terminal at regular intervals and look for new solutions to be able to meet the ever increasing market requirements. In addition, we look at all options for unification of related services as it would enable us to increase oil product reloading and attract clients with special, specific requirements to handling their products. In particular, our efforts are aimed at providing the client with maximum facilities for providing a product with the exact composition or quality he needs at the given moment. Of course, this somewhat restricts the range of our suppliers because they all have different requirements as to the quality of oil products. At the same time, specializing for a specific supplier and his needs is our niche on the market of oil product reloading services. And it is to further expand this niche that we are now working actively on the new facility that would offer maximum flexibility from the technological aspect and meet all modern requirements.” 

Fighting for a place under the sun

By expert estimates, aggregate annual cargo turnover for north-east Baltic   ports will reach 126 million tons by 2010, of which 50% will be liquid cargo: oil, oil products, liquefied gas and liquid chemicals.  Similar forecasts make players of the liquid chemicals market fight actively for their place under the sun.

In the Soviet Union the function of specialized chemical ports was performed by Odessa (methanol) and Ventspils (ammonia). After secession of the former Soviet republics, Russia had to pay USD 25-40 per ton for reloading these chemical products at the ports. As Russia’s Baltic coast is relatively close to major suppliers of the chemical products – Novomoskovsk, Novgorod and Kirov-Chepetsk – the Russian government  decided to build its own terminal for reloading liquid chemical cargos.

The construction of the first Russian terminal for reloading of liquid fertilizers, ammonia and methanol with annual capacity of one million tons in each category began in late 2000 on the Vysotsk Island near Vyborg. The project was financed by private investors and carried out by Baltkhimeksport, a subsidiary of Severstaltrans. The estimated value of the project was USD 75 million, and the chemical terminal with capacity of 3 million tons a year was to be completed by early 2003. But in late 2002 the LUKoil oil giant bought 100% of Baltkhimeksport from Severstaltrans and adjusted the project to its own needs, changing the terminal’s profile from chemical to oil chemical and rising projected capacity to 10 million tons a year. The project costs increased to USD 150 million. Construction of the first stage of the terminal with annual capacity of 4-5 million tons of oil products is expected to be completed in October 2004.

Yuri Chizhkov Photo: The BC archives

Yury Chizhkov, deputy chairman of the transport committee under the administration of the Leningrad region, told the BC that “Baltkhimeksport was working very slowly due to insufficient  funding and willingly gave up its shares to a prosperous oil company, the management of which did not reject construction of a special chemical terminal. Moreover, LUKoil plans to increase the terminal’s capacity to 4.5 million tons a year but … only after completion of the first two construction stages for the oil product terminals. One can do nothing about this because he who has is in the oil business, has the money and therefore can call the tune.”

At present St.Petersburg is discussing possible construction of a liquid chemicals terminal on the Nevsky Guba inlet, by the estuary of the River Yekateringofka on a vacant pier.  Boris Usanov, the transport advisor to St.Petersburg’s governor, told the BC that “the new chemical terminal will have an annual capacity of two million tons and a decision about building it may be made already this March”.

Experts believe, however, that current market situation suggests that similar projects would be economically feasible only if they were complex facilities combining both production and reloading of ammonia.

In implementation of this idea, the Itera company plans to build an ammonium production plant in the Leningrad region to create a combined production and reloading complex, which would have its own direct access to the sea. But the company’s analysts link the future of chemical projects by Itera with the problem of buying its own terminal in the Baltics. Klaipeda port in Lithuania, already with two liquid fertilizer terminals is being considered as an alternative to the Vysotsk Island.

Peterburg Oil Terminal is an investor in the project for construction of a terminal for reloading oil chemical cargo at the maritime port of Ust-Luga (Leningrad region). For this purpose the company was given 75% of the shares in Rosneftbunker, a subsidiary of Кompaniya Ust-Luga.  Total annual capacity of the terminal will be 5.5 million tons, and total costs of the project are estimated around USD 80 million. The first stage of the terminal is to be put into commission this year.

Construction of a transport-technological port complex near Primorsk city (Leningrad region) with total projected capacity of 45 million tons a year provides for the establishment of separate specialized terminals, including:

• an oil product terminal with capacity of 10 million tons;
• a liquefied gas terminal with capacity of 4 million tons; 
• a liquid chemicals terminal with capacity of 1 million tons.