Source: Oleoscope (Russia)
Russia is expanding its Baltic ports to increase agricultural exports by 50 percent by 2030 while reducing dependence on traditional Black Sea routes, reports ProFinance.
Russia, which will export at least 72 million tons of grain in the 2023/24 season, is looking for new markets in Latin America and Africa to diversify its traditional grain markets in North Africa and the Middle East.
“Last year, with its record harvest, showed that our export capacities are not enough,” explained Ksenia Bolomatova, deputy head of the state agricultural conglomerate OZK, which owns several Black Sea terminals, at an industry meeting in the southern Russian city of Sochi.
In the past 18 months, Russia has put two large ports into operation, Vysotsky and Lugaport in the Gulf of Finland near St. Petersburg.
In Vysotsky, the first grain was shipped in April 2023, while Lugaport started operations in June this year and is expected to reach a capacity of 7 million tons by early 2025, according to its owner Novaport. Dmitry Rylko, Director General of ICAR, explained that the two ports will be able to handle up to 15 million tons of agricultural exports, including grain, annually. This would correspond to a quarter of Russia’s projected grain exports of 60 million tons for the 2024/25 season.
The private company Primorsky UPC is also planning to build a grain terminal in Primorsky Port with a capacity of up to 5 million tons.
Russia has become the world’s largest exporter of wheat, corn, barley and peas over the past ten years, but further growth could be limited by bottlenecks in shipping capacity. Many Russian ports have announced plans to expand capacity following the record harvests of the last two years. It is expected that the terminals on the Baltic Sea will expand faster. The volume of AIC export shipments by sea will increase 1.5 times in 2023 compared to 2022.
The expansion of terminal capacity in the Baltic Sea is a question of economic and transport security and sovereignty. Russian trade flows and supplies have so far not been subject to any major disruptions in the Baltic Sea, 96 percent of whose coasts belong to NATO members, including Finland and Sweden. In contrast, disruptions in the Black Sea are worsening and could affect global grain supplies, according to a World Bank report.
Russia exported 62 million tons of grain by sea in the 2023/24 season, with 90% of shipments going via the Black Sea, mainly to markets in the Middle East and North Africa. This share is likely to decrease with the expansion of the Baltic Sea infrastructure. Last season, 1.5 million tons of grain were shipped through Baltic ports, three times more than in the previous season, but still only 2.4% of total Russian exports, according to Reuters calculations based on publicly available data.
“From a logistical point of view, the Baltics have many advantages for grain exports,” said Daria Snitko, a vice president at Gazprombank. She said the ability of the Baltic terminals to handle larger vessels should help reduce overall costs.
“Shipments from the Baltic Sea are more economical than shipments from the Azov-Black Sea region in trade with African countries outside the Mediterranean, as well as with Asia,” she added.