|                                                                                                                                                             |  | RUSSIA  BUILDS  NEW  BALTIC  PORTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    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|**BISNISHome PageSearchBISNISEmbassyReportsCountryReportsIndustryReportsPublicationsSourcesof FinanceLeadsand EventsExchangeRatesState ExportsOtherSources** |  | October 1997by Dan BrennanThree major new commercial ports are under construction in the Leningrad oblast as part of
Russia's long-term bid to reduce dependence on ports in neighboring Baltic countries.  U.S.
companies shipping products in and out of Russia should monitor the development of these ports
in planning future logistics needs.The first port to begin operations is located at Batereinaya Bay, 47 miles from St. Petersburg on
the Gulf of Finland.  The port will be used primarily to handle oil shipments and is expected to
have an annual capacity of 15 million tons once it becomes fully operational by the end of 1998. 
The project will cost an estimated $250 million, and is being financed chiefly by the Russian oil
company Surgutneftegaz.The Batereinaya project officially opened on June 19, at a ceremony attended by Russian Deputy
Prime Minister Vladimir Bulgak, Transport Minister Nikolai Tsakh, and the Governor of the
Leningrad oblast, Vadim Gustov.  Gustov, who has been a strong supporter of the Batereinaya
project since taking office last year, has publicly stated that the new port would inject $l billion
into municipal and regional coffers by the year 2001.Batareinaya will be joined by two other ports being developed in the region, at Ust-Luga (78
miles southwest of St. Petersburg) and Primorsk (70 miles northwest of St. Petersburg). 
Collectively, the three ports will boost annual port turnover by an estimated 100 million tons, 60
million of which will consist of crude oil, petroleum products, and gas.Ilya Baskin, of the Leningrad Oblast Port Authority, said that the new ports would provide a
major boost to Russian exporters, who currently pay a total of $24 million each year for the right
to transport shipments via the Baltics.  News of the new ports has already had a direct impact on
Russian coal exports.  A contract to supply Germany with 8 million tons of coal from 1998 to
2005 was concluded soon after plans were finalized for the Batereinaya port.The Ust-Luga port, where construction began in February of this year, will have an overall
capacity in excess of 35 million tons.  The initial phase will focus on construction of a dedicated
coal terminal, to be followed by a terminal for mineral fertilizer.  The Ust-Luga company has
already signed handling contracts for future consignments of 5 million tons of fertilizer.  Further
dedicated terminals for timber, ore, cement, bauxite, grain, unrefined sugar, and containers, as
well as rail, automobile, and ferry facilities, are also in the planning stage.  The Port Authority's
Baskin asserted to the Itar-TASS news agency that "Ust-Luga is destined to become Russia's
leading and best equipped commercial seaport, and has the potential to secure economic growth
not just in the Leningrad oblast, but in the whole of the Northwest [of Russia]."The main backer for the Ust-Luga port is another Russian energy giant, Rosterminalugol, which
is currently holding talks with a number of German banks to obtain funding for the project,
according to the Interfax news agency.  According to a representative of Rosterminalugol, the
door to foreign funding for Ust-Luga and the other two ports was opened by the new presidential
decree "On Freight Transit via Finland," which was signed on June 6 of this year.  In fact, all three
ports have been in the planning stage since 1993, but have been slow to get off the ground due to
lack of serious investment.  The new decree commits the government to provide the investment
guarantees needed to back port construction work, subject to provision of a freight transit
development program prepared jointly by the St. Petersburg municipal and Leningrad oblast
authorities.  The objective of the program, according to the decree, is to "secure Russia's national
interests and economic security."Other transportation infrastructure projects are underway in the Leningrad oblast, as well.  In
addition to plans to establish a new international cargo terminal at St. Petersburg's Pulkovo
Airport, which has qualified for a major credit from the World Bank, the region has also
commissioned a feasibility study into the conversion of a disused military airbase at Veshchevo
(62 miles northwest of St. Petersburg) into an international cargo airport.  The study is being
conducted by American aviation consultants, Airis International.  If the project, which could
cost an estimated $250 million, goes ahead as expected, Veshchevo will become the largest
dedicated cargo airport in Europe and the fourth largest in the world.  This article expresses the
views of the author, and should not be construed as a statement of U.S. Government policy.  This
story is reprinted with permission from Russian Customs News of London, which is published
by CIS Information Publishing in association with the Adam Smith Institute.Dan Brennan is Editor of Russian Customs News.This report is provided courtesy of the Business Information Service for the Newly
Independent States (BISNIS)