New Terminal Project in the port of Novorossiysk is Believed to be Superfluous
12.13.2012 - NEWS

December 13, 2012 [Kommersant] - LLC Neftegazindustriya, which owns the Afipsky Oil Refinery, wants to build an oil export terminal with an estimated throughput capacity of 11 M tons per year in the port of Novorossiysk. The company intends to connect the terminal with the refinery via pipeline. Analysts estimate the cost of the project at $ 1 billion and believe it will be superfluous unless it will be supported by the state. In Novorossiysk two terminals for transshipment of oil products are already in operation and a new project is believed to be useless.

On Monday, the Ministry of Transport has published a draft to expand the boundaries of the sea port of Novorossiysk by adding land for construction of the new terminal with a throughput capacity of 11 M tons a year. In the port of Novorossiysk two terminals are already operational: NCSP and Delo Ports. Rado Antolovich, the head of NCSP, refused to give his comments on the project, only saying that the port area is almost completely built up and there is no place to launch another terminal. Timofey Telyatnik, the head of Board of Directors of Delo Ports, can also hardly imagine a possible location for the construction of the new terminal.

Kommersant had access to other draft documents, which suggest that the initiator of the construction of the terminal is LLC Neftegazindustriya. The company wants to build the terminal in Tsemess Bay, near Cape Penay, and it is planned for handling primarily diesel fuel – 7 M tons per year, as well as gasoline or fuel oil – about 3,5 to 4 M tons per year. The expected number of ship-calls is 181 per year. Delivery of petroleum products will be done through pipeline built from the Afipsky Oil Refinery. The construction of 3,5 km long tunnel is proposed for overcrossing the Markothskogo Ridge.

LLC Neftegazindustriya and the Ministry of Transport refused to give comments on the draft. It is known that the company has acquired the Afipsky Oil Refinery in 2010. The refinery can process 430 thousand tons of crude oil per month producing gasoline, diesel, fuel oil. After the refinery was bought the representatives of LLC Neftegazindustriya promised to invest more than $ 2 billion in its development. Transneft is currently building its branch to the refinery, which should raise the processing capacity to 5 million tons a year, the estimated project cost is 4 billion rubles. The launch of the pipeline is planned for the summer of 2013. The refinery is located at the distance of 150 km from the port of Novorossiysk.

According to SPARK-Interfax, 99% of the shares of LLC Neftegazindustriya is owned by Cyprus registered Lakescope Limited, 1% – Windport Limited. The 2011 revenues amounted 24.7 billion rubles., net profit – 3.4 billion rubles. The CEO of the company is Alexei Gladkov. He is also the head of LLC Neftegazindustriya-invest and LLC Neftegazindustriya-management. After the transaction, some media sources linked LLC Neftegazindustriya with former co-owner of Promstroibank, Deputy Minister of Regional Development Vladimir Kogan.

During the summer 2012 a fuel oil terminal with throughput of 4 M tons per year was completed in the port of Novorossiysk (a JV between Gunvor and NCSP). A second already operating terminal is Importpishcheprom and it is capable of handling about 5 M tons of diesel fuel per year. The products are delivered to both terminals by rail. The crude oil is delivered by Transneft pipeline to Sheskharis Oil Terminal, which is capable of handling 50 M tons per year. The port itself is not too pleased with the idea of a new terminal. “We find the investment from the federal budget in transshipment of an additional 11 M tons of crude oil and petroleum products, considering the already existing surplus, ineffective.” – said NCSP to Kommersant on Monday.

“There is an available territory in Cape Penay for construction of the terminal, but extra construction of a pier and a tunnel are required, – said one of the stevedores. – Besides, the diesel fuel pipeline should be always heated. Unbelievable that such project can pay back for itself.” Elena Sakhnova, from VTB Capital, estimates the amount of investment in the project at the level of $1 billion. “The only logical argument for the project is the presence of oil refinery, that guarantees the volume of petroleum products. In any case, the estimated time for ROI would be about ten years,” – the analyst said. The source of Kommersant said that “one can not believe in the project, unless it is supported by the government, especially given its potential beneficiaries.”

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