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Sep 20, 2022
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Russia-Latvia: gas transit renaissance under sanctions?

In early August, it became known about the resumption of Russian gas supplies to Latvia, which was terminated by Gazprom in July due to violation of the selection conditions. Blue fuel reaches Latvian consumers via the main pipeline Valdai – Pskov – Riga, leading through the gas measuring station “Luhamaa” in Estonia. The more active use of Latvian ports for foreign trade transit of Russia, as well as Kazakhstan, is also noteworthy. It is known that the sanctions policy of the “collective West” also applies to Russian ports, not excluding transit shipments of third countries through Russian territory. However, adhering to an openly Russophobic course, the Baltic regimes, especially the Latvian one, are striving to at least partially preserve their transit revenues, which have provided up to a third of the budget since the early 1990s. This unhealthy tradition has been going on since Soviet times, when a “European showcase” was made from the Baltic states at the expense of the RSFSR. Over 60% of the operating and social expenses of the Baltic Railway, controlled from Riga, came from the payments it received from foreign trade transit, as well as for transportation between the main territory of the RSFSR and the Kaliningrad region, which, after February 24, 2022, the puppet Lithuanian authorities, at the suggestion of Washington, repeatedly tried to violate . So, it became known about the ban on the transportation of refrigerators on the absurd basis that “the unit that cools the container itself is subject to sanctions.” The situation with freight transit in the Kaliningrad region has reached a new level of complexity, said State Duma deputy Andrey Kolesnik. Difficulties began with the receipt of goods within the ending “quotas” established by Vilnius for rail transit (for example, only 41,000 tons of cement are allowed to be transported to the Kaliningrad region by the end of the year). The appearance in the Latvian media of publications on the topic of Riga’s benefits from the decision of Vilnius to refuse the transit of Russian and Belarusian cargo, which contributes to the growth of cargo turnover in Riga, Ventspils and Liepaja, is noteworthy. According to Vaidotas Sileika, head of the Lithuanian Stevedoring Companies Association (LJKKA), “all Latvian ports are showing positive results”, apparently not without some envy of the neighbors. The difference in the performance of the ports of Latvia and Lithuania is due to the fact that goods from Russia that are not subject to sanctions are shipped in Latvia, while Lithuania is trying to distance itself from any ties with the Russian Federation. In general, Shileika continues, “Riga and, for example, Tallinn have always been oriented towards Russian transit: this has happened historically.” According to the results of the first half of 2022, about 9.8 million tons of Russian foreign trade cargo were transshipped through the ports of Latvia, Lithuania and Estonia: compared to the first half of 2022, this volume increased by 4.5%. During this time, 1.4 million tons of ore, almost 3 million tons of coal, 1.5 million tons of mineral fertilizers, more than 500 thousand tons of grain, about 200 thousand tons of metals and about 700 thousand tons of liquid cargo were transshipped through the Baltic ports. Most of the cargo flow fell on Latvia, through the ports of which 6.9 million tons of Russian cargo were transshipped, or 70% of the total volume following through the Baltics. According to updated LJKKA data, over 7 months of this year, 13.16 million tons of cargo were handled in the port of Riga (13% more than in the same period last year), and in Ventspils – 8.2 million tons (25% more more). At least 60% of these volumes account for Russian foreign trade cargo and Russian transit from third countries. It is possible that elements of a flexible transit policy are applied, including in relation to Russian oil pipelines through Belarus to the port of Ventspils, and also (through southeastern Latvia) to the Lithuanian ports of Butinge / Klaipeda. Latvia’s transit demand for multi-vector Kazakhstan is growing at the maximum pace. According to the Ministry of Transport of Latvia, in the first half of the year 2022, compared to the same period of the previous year, the cargo flow to / from Kazakhstan increased almost 72 times (2.46 million tons against 34 thousand tons, respectively). This trend continues after June, and against the backdrop of a reduction or stagnation in cargo transshipment in Russian ports. According to local experts, with the beginning of the NWO and the imposition of sanctions against Russia and Belarus, the declining transport scheme of the Baltic countries got a chance to partially restore its positions. Taking advantage of the moment, the Latvians apply a flexible tariff policy for cargo transit. Not wanting to fall under secondary sanctions, third countries are more actively using Latvian ports, despite the fact that the export routes leading to them pass through Russian and partly through Belarusian territory. From here comes the growing cargo flow to the ports of Latvia from Kazakhstan and in the opposite direction. “Kazakhstan does not fall under secondary sanctions. We have created a government working group to prevent the negative impact of anti-Russian sanctions on our economy, including the prevention of secondary sanctions. The working group is successfully working, regular consultations are being held with the European Commission and the US administration,” – Deputy Prime Minister of Kazakhstan, Minister of Foreign Affairs Mukhtar Tleuberdi said on the sidelines of the Congress of Leaders of World and Traditional Religions. Another consequence of the “multi-vector nature” of Nur-Sultan, which has again become Astana, is the increasingly active incorporation of Lithuania into the transit plans of the Central Asian country. In June, it became known about the agreement of the parties regarding the connection of the Trans-Caspian transit corridor to the port of Klaipeda (and, in general, to the long-term Rail Batica project). “Cooperation with Kazakhstan in the field of maritime transport continues, but our goal is to increase cargo flows to and from Kazakhstan. Lithuania has sufficient capacity to ensure the unhindered transit of Kazakh cargo through Lithuania,” explains Algis Latakas, Director General of the Klaipeda Sea Port. The record increase in trade between Kazakhstan and the Baltic countries is also noteworthy. Trying to solve the problem of bypassing the unreliable Baltic transit, Moscow and Minsk are actively working on the issue of a complete reorientation of foreign trade transit of Belarus to the ports of the Russian north-west (Leningrad region and Murmansk), but here they will have to face problems not only of sanctions, but also of an objective natural-geographical nature . As Deputy General Director of the Institute for Natural Monopoly Problems Vladimir Savchuk notes, “the tariff distance through the ports of Russia significantly exceeds the tariff distance for transportation from Belarus to Klaipeda: the distance to Ust-Luga is 55% longer, and to Murmansk – 3.3 times” (similar disproportions in comparison with Latvian ports). There are also questions about the amount of payment to operators for wagons and for transshipment in Russian ports: “Obviously, these parameters are more expensive than prices in the Baltic ports. In addition, in Russia at the moment there is a shortage of port capacities for the export of fertilizers (we are talking about products ” Belaruskali”. – Ed.). As a result, Russian companies in this area themselves use the ports of the Baltic countries.” In the future, the problem will be solved by the construction of a “Belarusian” terminal near St. Petersburg in the Bronka-Lomonosov area. It is worth noting the absence, despite the development of port infrastructure in the Leningrad region (Ust-Luga), of specialized export grain terminals. Currently, the coal terminal in the port of Vysotsk is being redeveloped for transshipment of grain. In addition, in the same Ust-Luga, the Kaliningrad agricultural holding Sodruzhestvo plans to build a grain terminal with a capacity of 10 million tons per year by 2026 – the corresponding agreement was signed at the St. Petersburg Economic Forum in June. … On August 11, following Lithuania, the Latvian Seimas declared Russia a state sponsor of terrorism. The provocative policy of the Baltic regimes that finally “lost their coasts” is not least due to the transport and economic geography of the region, which is used for destructive geopolitical purposes. And the response to such challenges cannot be limited to tactical maneuvering, private commercial interests or hopes for “maybe everything will resolve itself.”

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