Moscow fixated on Astrakhan port as it looks to use INSTC to bypass sanctions

Astrakhan, Russia (Ports Europe) June 20, 2022 - The Astrakhan region of Russia has presented its ambitious port special economic zone (SEZ) project "the Caspian Cluster" at the St. Petersburg International Economic Forum. The region is under heavy government pressure to become Russia’s door to Asia and help Moscow bypass western sanctions. The region also announced the signing of several partnership contracts, including with an Indian alliance of more than 150 companies. The Caspian cluster includes the special economic zone (SEZ) Lotus and the new Port SEZ. Both are tasked with the development of the International North-South International Transport Corridor (INSTC). INSTC is fast becoming the pet project of Astrakhan’s governor Igor Babushkin. Lotus SEZ occupies a territory of 1,000 hectares in the Narimanovsky district of the Astrakhan region. It has 16 registered businesses with the total declared investment of more than 30 billion rubles (over €500 million according to official exchange rate). Astrakhan Russia is trying to bypass Western transport sanctions via the seaport of Astrakhan on the Volga River where it is planning new multimodal cargo services to Southeast Asia. The port of Astrakhan would be developed and transport links established with countries between Russia and the Far East. According to local officials, Astrakhan’s port infrastructure has the capacity for over 16 million tonnes of cargo per year. This is sufficient to turn the port into a gateway to Southeast Asia. This is something Russia currently lacks. Part of the strategy would be to develop capacity of the Volga-Don Canal, providing an import-export route for Astrakhan. Currently, the Astrakhan region is working on several projects to develop transport and logistics infrastructure with other countries of the Caspian Sea. There is already an agreement on the creation of the logistics centre of Turkmenistan in the port economic zone. From there, Turkmen goods will be the shortest way to Russian regions. In June 2022, a program of cooperation with the Iranian Mostazafan Foundation was signed. The framework is to implement a project for a logistics centre and refrigerated terminal in the poet. Iran is one of the main partners of the Astrakhan region for the development of the INSTC. Negotiations on attracting investments and shipbuilding orders are also underway with Kazakhstan and Azerbaijan. Kazakhstan considers the possibility of opening on the border of the Astrakhan and Atyrau regions of a Border Trade Center. In April 2022, as part of the TransRussia exhibition, a cooperation agreement was signed between the Lotus SEZ and logistics operator BelTamozhServis. This will contribute to the transit of Belarusian goods through the Astrakhan region in the direction of Iran and India. The main tasks of the Astrakhan transport and logistics node are to ensure the fast and safe export of domestic products to the world market, as well as high-quality and operational processing of the necessary imports. In May, Russian President Vladimir Putin noted the need to increase the throughput of transport arteries included in the INSTC and instructed dredging work to a depth of at least 4.5 m of the Volga-Caspian marine shipping channel by the end of 2023. Putin noted that the channel is a key section of INSTC. Iran The Islamic Republic of Iran Shipping Line (IRISL) realised in June the first multimodal cargo shipment from Russia to India via INSTC. This was reported by chairman of the Russian-Iranian port of Solyanka in the Astrakhan special economic zone Darius Jamali said. The aim is to transit containers from Russia to India and to the Far East using only one invoice for the entire transit journey. International North-South International Transport Corridor (INSTC) The International North-South Transport Corridor (INSTC) is a multi modal transportation established in 2000 for the purpose of promoting transportation cooperation among the Member States. It connects India Ocean and Persian Gulf to the Caspian Sea via Iran, and is then connected to Saint Petersburg in Russia. The transport corridor is a 7,200-km, multi-modal network of ship, rail, and road cargo route. The corridor improves trade connectivity between Moscow, Astrakhan, Baku, Tehran, Bandar Anzali, Bandar Abbas, Mumbai, and other locations along the route. There is a flurry of logistics-related activity in the Caspian where two of the littoral states have the dubious distinction of being the two most sanctioned countries in the world – Russia and Iran. Ports Europe: The two most sanctioned countries try to cheat the West via a logistics bridge across Caspian Sea The first multilateral transit consisted of two containers with wood-layered plastic weighing 41 tonnes sent from St. Petersburg and delivered to the port of Astrakhan, part of which is Solyanka. Transit time should be less than 25 days. Most of the cargo will likely be sent from Russia and Belarus to India through the port of Astrakhan. This will support Russian efforts to bypass international sanctions for its invasion in Ukraine. Interestingly, Solyanka is 53% owned by Iran’s Khazar Sea Shipping Lines (KSSL), which operates 16 general cargo vessels in the Caspian Sea, providing multimodal cargo transportation through the North–South Transit Corridor. President Putin personally involved in INSTC Hard pressed by western sanctions for his invasion in Ukraine, Russian President Vladimir Putin urged in May Russia’s transport authorities to focus their efforts on the development of Caspian Sea ports of Makhachkala, Astrakhan and Olya in order to redirect trade flows towards Asia. “These are the most important points on the route of the North-South transport corridor, which involves the potential of the Volga (River) and Caspian (Sea),” Putin was quoted as saying at a meeting with transport officials. He claimed that the cargo volume in the Caspian is growing already fast, creating bottlenecks. Putin also pushed for the development of the sea ports of the Arctic, the Far East, the South and the North-West, including the modernisation of the Murmansk transport hub. “Practice shows: as soon as new corridors appear, the goods that will flow through them always appear,” he said. It remains unclear how Russia can speed up ports development while under wide ranging western sanctions, limiting its access to technology and western expertise. Port development also means creation of multimodal transport facilities which are expensive and with a very long return on investment period. More Ports Europe news about the Caspian Sea ports Copyright (C) Ports Europe. All Rights Reserved. 2022.

Moscow fixated on Astrakhan port as it looks to use INSTC to bypass sanctions

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Moscow fixated on Astrakhan port as it looks to use INSTC to bypass sanctions

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Table: Russian ports monthly cargo results Oct’23-Oct’24

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