The sea port of Astrakhan on the Volga River to help Russia bypass Western sanctions

Astrakhan, Russia (Ports Europe) May 18, 2022 - Russia is trying to bypass Western transport sanctions via the seaport of Astrakhan on the Volga River 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 – 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. The Volga-Don Canal Russia is planning a €1 billion dredging, locks modernisation and other improvements project to guarantee all year-round navigation in the Volga-Don Canal. Currently, the canal is used on average 240 days a year. Following dredging works in the two large rivers, it could become a transport artery for some 9 million tonnes of cargo a year. The project could be completed by 2030. The 101-km canal connects the Caspian Sea with the Sea of Azov. Russia decided to develop the canal after it took complete control over Azov Sea following the occupation of Ukrainian ports of Berdyansk and Mariupol. At present, the Volga–Don Canal has limited capacity and is unsuitable for larger ships. It has a depth of just 3-3.5 metres, with further summer limitations. The Lenin Volga–Don Shipping Canal connects the Volga and Don rivers (both in Russia) at their closest points. The canal, together with the lower Volga and the lower Don, provides the most direct (over 800 km long) navigable connection between the Caspian Sea and the world’s oceans via the Azov and the Black Seas. It ends at Russia’s Caspian Sea port of Astrakhan. Developing Russia’s Caspian Sea capacity In October 2020, Russia’s Ministry of Economic Development said that it planned to allocate RUB 2.8 billion (€31.6 million) for the creation of a port SEZ (special economic zone) in the Astrakhan Region in 2022. Funds will be also available in 2021-2022 for the modernisation of Olya port’s berths and construction of a new seaport. The two-phase project includes development of the existing terminals of Olya port and a second phase would be a new container terminal on the Caspian Sea. Olya (also on the Volga River) is about 100 km south-east of Astrakhan. Astrakhan is a seaport in Astrakhan Oblast, Russia. The port is located in Trusovsky District on the right shore of Volga river in the north of the Caspian Sea. There are no modern Russian container terminals on the Caspian Sea or the Volga River. This is an issue the government intends to address. The main problem for a new container terminal in Astrakhan is the lack of modern multimodal transport infrastructure. This includes highways and the integration of railway services at the river port. Experts expect that the dredging and other works on the Volga-Don Canal, as well as in both rivers, will first lead to a seven-month navigation, followed by free navigation of up to 11 months. The main issues for year-round use of the water way are ice in winter and lack of enough water in summer. Russia has to order also new icebreakers and new container ships having currently an outdated and inefficient fleet of both. Olya Port Another option is the port of Olya. It is situated at the N of the Caspian Sea on the Volga estuary, SW of Astrakhan. The project in Olya is aimed at the development of container shipping on the International Transport Corridor North-South (INSTC) across the Astrakhan Region, linking Northern and Western Europe with India and Iran. By the end of 2023, the first stage of construction of a new container terminal in Caspian Sea port of Olya will be completed and able to handle 3 million tonnes of goods, Governor of the Astrakhan Region Igor Babushkin told Russian President Vladimir Putin in January. He also asked Putin to instruct the Ministry of Transport to work on the deepening of the Volga-Caspian Sea Canal. Babushkin insisted that in order to improve transportation of goods, it is necessary to increase the throughput of the Volga-Caspian Sea Canal, because its current depth does not meet even its officially registered depth of 4.5 meters. Currently, the depth of the canal is below 4 meters and during part of the year the canal is even shallower. Stage two of the container terminal project will see port’s capacity increased to 8 million tonnes by 2030. According to Babushkin, the planned investment in the new container terminal will be 34 billion rubles (€391 million). The project to build a container terminal at Olya port has received official approval in June 2021. The contractor is PLC Caspiy together with Germany-based Martrade Holding. The first phase of the project would develop the current berths 8 and 9 to be followed by four new terminals. Last month, experts from Germany’s Martrade Group visited the Kazakh Caspian Sea port of Aktau to assess future investment potential. The port seeks foreign investments as a new transport and especially container hub taking over cargo, mostly from China which is avoiding transit via sanctions hit Russia. This would seem contrary to investing in Olya port. The officially released information last year was that this would increase port’s throughput to 2.2 million tonnes by 2023. A second phase of the plans involves the construction of a new port in the nearby Ilmen Zaburunny area (about 7 km from Olya port). The longer-term goal, again according to last year’s official information, is a facility with a throughput of 8 million tonnes by 2031 (a year later than the new promise of Babushkin) which would require an investment of 27 billion rubles (€310 million) – 81 million less than the new plan. Finally, the Russian invasion of Ukraine has changed many plans. Traders are looking for new East-West trade transport routes. One possibility is the Middle Corridor, also known as the Trans-Caspian International Transport Route (TITR). It combines the countries participating in the new Silk Road and important logistics players of the region. Its members are leading maritime and transport companies from Kazakhstan, Azerbaijan, Georgia, Ukraine, China and Turkey. TITR allows traders to bypass Russia, which until now sanctions the transit of certain types of goods through the country. A number of Russian entities are under sanctions from the international community following Russia’s annexation of the Crimea in 2014. The Russian invasion of Ukraine in February 2022, and the subsequent international sanctions against Russia, has worsened the situation. Traders are forced to explore East-West trade routes which avoid Russian territory. If Russia intends to spend significant sums of money on new Caspian Sea port cargo capacity, it must be confident that it can compete successfully for business. This seems unlikely in the current political and business climate. Further Ports Europe reading Analysis – Russia “discovers” its strategic Caspian Sea ports Russia plans steady increase in seaport capacity Analysis – Caspiy and Martrade advance plans for modernisation of berths in Olya port on the Caspian Sea Copyright (C) Ports Europe. All Rights Reserved. 2022.

The sea port of Astrakhan on the Volga River to help Russia bypass Western sanctions

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The sea port of Astrakhan on the Volga River to help Russia bypass Western sanctions

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All news

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Latest Free Reads

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