July 17, 2014 [OPIS] - Latvia's Ventspils Nafta transhipment terminal (VNT) has seen crude oil and oil product transhipment volumes in the first half of the year rebound 2.6% year-on-year to 6.4 million mt, after a nearly 20% plunge in 2013, the affiliate of trading house Vitol said Wednesday.
The modest bounce came despite stiff competition from Russian terminals on the Baltic Sea coast and geopolitical tensions in the Ukraine.
The terminal receives supplies from Russia, Ukraine and Belarus under long-term contracts, via pipeline (up to 8 million mt/y), railway (up to 5 million mt/y) or ship.
Petroleum product shipments via the pipeline system from Polotsk in Belarus to Ventspils, however, fell 7% year-on-year to 3.3 million mt, given “the current market situation in general,” parent group Ventspils Nafta said. The pipeline, managed by logistics sister LatRosTrans (LRT), is currently used for diesel, while separate crude oil lines from Polotsk to Ventspils and Mazeikiai – not employed for transits in recent years – are earmarked for a potential conversion to gas.
Recent loadings at Ventspils have involved gasoline, gasoil and base oil, for sailings to Togo (gasoline), Amsterdam, Argentina, Mohammedia (gasoil) and Riga (base oil), according to shipping data.
OPIS understands that smaller parcels of naphtha (about 22,000 mt/193,000 bbl) were lifted onto two different tankers in early July, after three loadings of 77,000 mt (686,000 bbl) in total in the second and third decade of June. Naphtha went to Fawley (U.K.), Rotterdam (Netherlands) and Rostock (Germany).
Vitol holds a 49% stake in VNT, via VTTI-Eurotank holding, and further shares via its indirect ownership (49.98%) of VNT’s main stakeholder Ventspils Nafta group, which controls 51%.
Ventspils Nafta group owns 66% in LatRosTrans and 49.94% in the Latvian Shipping Company (LAT), which focuses on handy-size and medium-range tankers.
The Russian-Ukraine conflict could have serious long-term implications if it deteriorates, but the company expects “solid flows” this year, given the long-term nature of most deals, often done on a pre-paid basis.
“This is a major threat to our business,” group chairman Robert Kirkup said in a webinar in June. “If it [the Russia-Ukraine conflict] escalates further, you could potentially see flows stopping. That would obviously have terrible consequences for the pipeline and the terminal.”
The shipping business would be “largely unaffected” because it is not tied to the region “but the core profit part of the business would be badly hit,” he added.
“A lot of the business is long-term, we rely on … the Vitol group. We have long-term contracts in Russia, Ukraine, Belarus which attract flow of oil to the region. So, I’m confident that this year we will have solid flows through our business,” he said.
“Going forward, obviously this is a big question. If there were further sanctions and that escalated, that would … stop these contracts. But I’m confident that for the next six months we’ll have solid flows of oil through our business.”
VNT can store almost 1.2 million cbm (7.5 million barrels) of oil liquids in 105 tanks.
