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Monday, June 24, 2019

Maritime Logistics Professional

June 7, 2019

DP World Mulls Port Deals Along Russia's Northern Route

File Image: A typical DP World-operated marine facility (CREDIT DP World)

File Image: A typical DP World-operated marine facility (CREDIT DP World)

DP World, one of the world's largest port operators, wants to run ports that Russia plans to build along the northern sea route in the Arctic to shorten shipping times between the east and west, its chief executive told Reuters.

Russian President Vladimir Putin has made developing the northern sea route (NSR) - which requires new ports and heavy icebreakers to move goods - one of his priorities, with supporters dubbing the route the northern Suez Canal.

Dubai government-controlled DP World operates 78 marine and inland terminals, supported by more than 50 related businesses in over 40 countries.

The firm agreed this week with the Russian Direct Investment Fund (RDIF), Russian state nuclear firm Rosatom and Nornickel, one of the world's top nickel and palladium producers, a joint project to pursue the integrated development of the NSR.

The deal is not legally binding and the parties will first study options for developing the route and may set up a joint venture later to develop freight transit via the NSR.

"This is going to change the (economic) growth for Russia. Russia is creating the fastest route between the North Far East and Europe," DP World Chief Executive Sultan Ahmed bin Sulayem told Reuters in St Petersburg.

Novatek, Russia's biggest private gas producer, is already using the route to ship its liquefied natural gas (LNG) to Europe and Asia, saving on costs and making its LNG competitive on the global market.

"Ports are surrounded by other infrastructure which creates additional value, creates cargoes and high value cargoes," bin Sulayem said, adding DP World was interested in operating ports along the NSR.

"We have expertise and want to provide our expertise in running and managing and developing and investing into industrial infrastructure (along the NSR as well)."

Novatek wants to use nuclear icebreakers to keep the NSR open all year for its LNG in 2023-2025 and is preparing to build more LNG exporting capacity in the Arctic. Russia plans to move other goods via the NSR too.

Bin Sulayem said the NSR would allow DP World to create a truly global operation.

"I am expanding in India, Italy, Pakistan, Egypt, Africa, in the UK, Ecuador. We were always missing Russia, Russia is a link," he said.

Bin Sulayem said it was to early to talk of possible stakes in potential future joint ventures. "The (Russian) government will decide which land to give us and we will prepare the projects, we will attract the customers, we will work with industries how to attract, to produce something that we know."

"We are at early stages (to talk about any stakes), we will need to sit with the partners and see, but we will always abide by rules which are laid (by Russia)."

RDIF head Kirill Dmitriev told Reuters separately on Friday the NSR could cut shipping times between Asia and Europe by a half.

"This is a huge opportunity to reduce time of delivery and cost of delivery," he said. "DP World's commitment to build with us different port facilities on the northern sea route is an example how interesting economically this infrastructure is."

Reporting by Katya Golubkova and Gleb Stolyarov