Patrick Lannin and Jorgen Johansson
May 29, 2008
RIGA, May 29 (Reuters) – Russia might be determined to cut oil product exports through the Baltic states, but Latvia’s Ventspils terminal, half owned by oil trader Vitol, still sees a role for itself, a top executive said on Thursday.
Vitol gained an extra foothold in the Baltic region, alongside a terminal in the Russian enclave of Kaliningrad, when it bought 49 percent of the Ventspils terminal last year. The other owner is Latvian holding, Ventspils Nafta (VNF1R.RI: Quote, Profile, Research).
“If the future will come as we expect it, we see a nice place for our business,” Olga Petersone, the holding company board chairwoman, told Reuters in an interview.
She said one future direction for the port was taking advantage of Russia’s desire to expand its production of cleaner diesel fuel. “It means they need to build other refineries. There is a possibility (for Ventspils). It is just a possibility, it shows how we are looking around,” she said.
She said Ventspils was aiming at “specialisation as a way to be useful.” She also noted the investments by Russia into the Baltic Sea ports of Primorsk and Ust Luga, and added: “But still they are short with port capacity.”
Russia has just launched a new pipeline to its port in Primorsk for cleaner diesel. This and similar developments of Russia’s own infrastructure have darkened the future for the Baltic region’s role as a traditional transit centre.
Russian Prime Minister Vladimir Putin recently reiterated a goal drastically to cut shipments through the Baltic.
Latvia’s northern neighbour Estonia has suffered from a drop in rail shipments after Estonia’s relations with Moscow deteriorated. The crude oil pipelines built in the Soviet era to Latvia and Lithuania have also both been shut.
But Petersone said Vitol, one of the world’s largest oil traders with a network of terminals around the world, was ensuring a steady supply of oil products through Ventspils.
In the first four months of the year, shipments through Ventspils rose to 4.74 million tonnes, up by 0.31 million tonnes from the same period of 2007.
This included 3.7 million tonnes of diesel by pipeline and rail, 0.6 million of gasoline by rail and 0.32 million tonnes of crude oil and petroleum product cargos delivered by sea.
Petersone said Ventspils was also eyeing business with oil products from Belarus. However, she was downbeat about the prospect of the crude oil pipeline being opened from Russia.
“It seems it will not be the realistic future. For crude oil, there is a less than 20 percent chance (of the pipeline being re-opened),” she added. (Writing by Patrick Lannin)