|                                                                                                                                                             |  | REGIONAL CORNER: NOVOROSSIISK, RUSSIA                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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|**BISNISHome PageSearchBISNISEmbassyReportsCountryReportsIndustryReportsPublicationsSourcesof FinanceLeadsand EventsExchangeRatesState ExportsOtherSources** |  | February 1998Novorossiisk is Russia's only deep-water port on the Black Sea.  Although it is an extremely
expensive port to use and it has a widespread reputation for poor service and monopolistic
business practices, Novorossiisk is likely to remain a major regional port for the foreseeable
future.  Becuase the port is known as a difficult place to do business, however, many shippers will
look for alternatives whenever possible when shipping to Russia and the Caspian Basin via the
Black Sea.Importance of the Harbor
The city's economy revolves around its busy deep-water  harbor, which is operated as a near-monopoly by the Novorossiisk Commercial Sea Port company.  During a recent visit by U.S.
Embassy personnel, at least seven ships lay at anchor outside the harbor waiting for a pier where
they could unload their cargoes.  New and expanded ferry service to Turkey operates regularly
several times a week.  Smaller local companies, like GeoPort and the Transport and Expedition
Center, are building and operating roll-on/roll-off facilities for trucks carried back and forth by
ship from Turkey and Bulgaria.  A number of floating dry docks provide repair services for large
commercial vessels from countries such as Italy, Malta, and Bulgaria.By all reports, the port is not an easy place to do business.  Pier space is at a premium, fees are
high, and service is widely considered poor--for which the port has been heavily criticized.  For
example, a report issued last year by the World Bank, cited recently in the magazine  Russia
Review, alleges that the port was charging a fee $3.50 per ton of crude oil moving through the
port, compared with actual costs estimated at no more than 50 cents per ton.Another important maritime business based in Novorossiisk is Novoship, a provider of fleet
services as well as an important Russian tanker operator.  Despite being headquartered in
Novorossiisk, Novoship reportedly does most  of its business elsewhere, due the cost and
difficulty of doing business there.The new Caspian Sea Pipeline Consortium (CPC) is also headquarterd in Novorossiisk.  The
difficulties of doing business in the existing port are reportedly one reason the CPC is  planning to
build its oil terminal and floating moorings at Yzhnaya Azeryeika, 15 kilometers to the north.The largest local concern using the Novorossiisk port is the city's cement plant.  Although its
facilities appear to be in poor condition, the plant's output has reportedly risen from 30 percent of
capacity in 1996 to 50 percent last year.Downtown Growth
Novorossiisk's compact downtown is undergoing slow, steady reconstruction and growth.  Many
attractive older buildings in the city center are being refurbished.  Novorossiisk's showcase harbor
park area is being cleaned up as well, although at least one major thoroughfare remains closed due
to reconstruction.   Most downtown merchants have moved indoors to well-stocked, if not always
modern, shops.  Prices for most goods in tend to be slightly lower than in Moscow.  Elsewhere,
however, the kiosk remains the standard retail outlet.Two large, communist-era hotels serve this city of 300,000.  Rooms are reasonably priced and hot
water is available year-round.  A four-star resort hotel 35 kilometers away in the coastal town of 
Gelendzhuk charges Western prices, but does little business outside the summer tourist season. 
Most foreign business travelers in Novorossiisk--largely from Turkey, Romania, Cyprus, Greece,
and Armenia--seem to prefer proximity to the city's downtown area over more luxurious
accomodation.Climate
Novorossiisk's climate can be severe.  An April 1997 storm, for example, sank numerous ships at
the pier with 10-foot waves and 60-knot winds.  Port officials estimate that 70 days out of the
year the harbor is not usable due to the fierce "Bora" winds, which blow down the mountains
from the north and create unsafe navigational conditions.  Because of these winds, the nearest
commercial airport is 40 kilometers to the west at Anapa.  This article is based in part on
reporting from the American Embassy in Moscow. For more information on Novorossiisk, visit
BISNIS Online at www.mac.doc.gov/bisnis/cables/971104ru.htm.This report is provided courtesy of the Business Information Service for the Newly
Independent States (BISNIS)