Analysis – The Port of Mariupol: A Chinese piece in Ukrainian-Russian Azov Sea puzzle

Mariupol, Ukraine (Ports Europe) February 13, 2020 – It is widely expected that China will invest in Ukrainian Port of Mariupol as part of its Silk Road programme, which envisages some $7 billion (€6.43 million) for projects in Ukraine. The concession project for Mariupol, on the north-western coast of the Taganrog Bay of the Azov Sea, is currently under development. If China invests more in Ukrainian ports, how does that alter Russian strategic calculation if Chinese civilian and even military vessels start to enter the Sea of Azov? The new Silk Road (part of the Belt and Road initiative also known as One Belt, One Road, or OBOR) is a Chinese economic strategy to seek better access for Chinese-made products in European markets, which includes acquiring stakes in ports and other transport facilities, and cooperation agreements with countries along the Silk Road routes. The Chinese state-owned food processing company China Oil and Food Corporation (COFCO group) has signed a Memorandum of Understanding (MoU) to develop port infrastructure in Mariupol. The project will bring over $50 million (€45.95 million) to the port and at least 90 new jobs to the city of 440,000 people located 720 km to the southeast of Kyiv. COFCO signed the MoU with the Administration of the Sea Port of Mariupol and the Commercial Seaport of Mariupol and will reconstruct two docking sites, will participate in the construction of a second stage for the port’s grain terminal and the creation of an entire transshipment complex for agricultural products. Back in 2015, China’s COFCO bought Noble Agri Resources, an international agricultural corporation with assets in Ukraine. In 2016, it opened a grain terminal in Ukrainian Black Sea port of Mykolaiv. As part of the future development of the Mariupol port, Ukrainian Defense Ministry plans to build a military base there, which will be in accordance with all NATO (North Atlantic Treaty Organization) standards. Total cargo handling of stevedoring companies operating in Mariupol Sea Port in 2019 was 6.48 million tons, up 10% on 2018. Mariupol Sea Port Administration reported that 5.77 million tons (89% of total) of the cargo was handled by state port operator MMTP, followed by UkrTransAgro 594,030 tons and ASRZ 118,250 tons. In January 2020, Mariupol Sea Commercial Port increased cargo handling operations by 54.1% compared to January 2019. In January 2020, cargo shipments consisted mainly of metal (361,000 tonnes, +69.7% compared to January 2019), construction materials (39,400 tonnes, +118%) and grain crops (25,900 tonnes, -39.2%). Currently, the hopper dredger vessel Meotida of Delta-pilot branch is dredging on the 9-11th km of the coal harbour approach channel of Mariupol port, according to the Ukrainian Sea Ports Authority (USPA). Russian customs officials and border guards are inspecting most ships entering the Azov Sea from the Black Sea via the Kerch Strait and heading towards Ukrainian ports of Mariupol and Berdyansk. Vessels of Panamax type cannot pass through the Kerch channel due to the newly constructed bridge there, and with the restrictions on the movement of vessels, the seabed around the bridge is becoming shallow and silting up. Ukraine considers the construction by Russia of a bridge across the Kerch strait to Russia occupied Crimea unlawful. Kiev also suspects that Russia seeks to obtain control of the Ukrainian shore of the Azov Sea and link it to the territories of Donbas that pro-Russian separatists already control. Kiev claims that Ukrainian maritime sector has lost millions in revenue as a result of the Russian blockade of country’s Azov Sea ports of Mariupol and Berdyansk. The Azov Sea is a strategic gate for Ukraine’s industrial and agricultural east, connecting the country’s mines, fields and factories to global markets. The Ukrainian ports of Mariupol and nearby Berdyansk on the sea’s western shore export coal, metals, grain, and fertilizer. A treaty between Russia and Ukraine from 2003 ensures that Ukrainian vessels have the freedom to navigate through the Kerch Strait. Russia denies that this freedom of navigation exists and claims that the Kerch Strait lies within the Russian sovereign “state border”. Russia’s security services claimed that Ukraine plans to sabotage its newly constructed, 19.3 km, €3 billion (€2.76 million) bridge across the Kerch Strait, connecting Crimea, annexed by Russia in 2014, to mainland Russia. Various Ukrainian news outlets reported that the bridge is facing serious technical problems due to its fast construction. The Crimean Peninsula was annexed by Russia between February and March 2014, and since then has been administered as two Russian federal subjects - the Republic of Crimea and the federal city of Sevastopol. The annexation from Ukraine followed Russian military intervention in Crimea that took place in the aftermath of the 2014 Ukrainian revolution and was part of wider unrest across southern and eastern Ukraine. As part of China's new silk Road economic policy, Chinese companies have been very active in recent years in acquiring transport assets around Europe, and Chinese firms now have stakes in over 12 European ports. Chinese companies COSCO and CMPort both have stakes in Kumport, Ambarli, Istanbul, at the opening of the Bosphorus Strait, linking the Black Sea to the Marmara Sea. There are expectations of Chinese investments in the Bulgarian ports of Varna and Burgas, and it’s very likely to see China showing readiness to invest in Poti as well. Copyright (C) Ports Europe. All Rights Reserved. 2020.

Analysis – The Port of Mariupol: A Chinese piece in Ukrainian-Russian Azov Sea puzzle

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Analysis – The Port of Mariupol: A Chinese piece in Ukrainian-Russian Azov Sea puzzle

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