Russian Ports Attract Foreign Investors

Russian Ports Attract Foreign Investors

Russia's port sector is attracting increasing interest from foreign investors as a recovering economy boosts imports of consumer products and capital goods.

While the global terminal operators like Dubai's DP World and Denmark's APM Terminals focus investments on emerging markets, especially Africa and Latin America, smaller stevedoring firms are moving into Russia.

Most recently, Gulftainer, the Sharjah-based ports operator, announced plans to invest $500 million in Russian ports and logistics centers, and Europort International, a unit of Singapore-listed port equipment supplier Portek International, began negotiations over a possible move into container and multi-purpose cargo terminals.

Gulftainer and its Russian state-owned joint venture partner Prominvest are reported to have identified 40 port, logistics and infrastructure projects in Russia and neighboring East European countries.

Europort, ME Projects, a subsidiary of Singapore logistics company CWT, and Russia's Vladmorrybport are conducting a feasibility study for a multi-purpose cargo facility at Russia's Pacific port of Vladivostok.

Europort also is examining the potential for a new container terminal in Kaliningrad, Russia's Baltic enclave between Lithuania and Poland.

Russia's container traffic is very low by international standards.

Gulftainer alone handles around 4 million 20-foot containers a year in Sharjah ports, including Khor Fakkan, more than Russian ports' entire 3.5 million TEUs annual throughput.

But traffic is expected to grow faster than in Western Europe as the Russian economy recovers and high oil prices boost imports.

Russia's finance minister Alexei Kurdin this week forecast steady economic growth of 4 percent for 2010 and the next two years.

Foreign direct investment is expected to total $40 billion this year, up from $36 billion in 2009 and is likely to grow 25 percent next year, Kurdin told a Moscow conference aimed at promoting the nation as a global business hub.

Kurdin also said Russian membership in the World Trade Organization is imminent, paving the way for the establishment of new trade links.

The Russian port sector is consolidating rapidly as companies capitalize on high valuations to sell assets to the leading domestic stevedores.

Fesco, operator of Russia's largest ocean container carrier, booked a $525 million profit in the summer with the sale of its 50 percent stake in National Container Company, a container terminal operator, to an affiliate of Moscow-based oil trader First Quantum for a reported $900 million.

More recently, Russia's largest stevedore and port operator, Novorossiysk Commercial Sea Port, agreed to sell a controlling stake to Russia's state oil monopoly Transneft and its partner Summa Capital after it has acquired a 100 percent stake in Primorsk Commercial Sea Port, the operator of Russia's largest crude oil export terminal.

-- Contact Bruce Barnard at