Oil exports from the Black Sea could face complications from a brewing dispute between the owners of the biggest port on the coastline and state oil monopoly Transneft, industry experts said.
Concerns arose after Transneft head Nikolai Tokarev, a close ally of Prime Minister Vladimir Putin, publicly questioned the way the port of Novorossiisk was privatized three years ago.
Novorossiisk accounts for 20 percent of Russia’s overall sea shipments and its operations are of huge importance to the Mediterranean oil market, which it feeds with around 1 million barrels per day of crude.
“We may face a serious confrontation here,” said Yelena Sakhnova, a transport analyst at state-run bank VTB Capital.
“I don’t think there will be a fully fledged war [between Transneft and port owners] but there could be some complications to flows, because the fight involves very influential players.”
Tokarev has repeatedly called for all port infrastructure to return to state control. The Novorossiisk port was privatized in 2006 and its owners, chairman Alexander Ponomarenko and State Duma Deputy Alexander Skorobogatko, raised $1 billion in a 2007 London share float.
In a recent interview with Kommersant, the usually reserved Tokarev was critical of Novorossiisk’s owners.
“The Novorossiisk terminal belonged to Transneft but it was sold out on the cheap in 2006 in circumstances which seem highly suspicious to us,” Tokarev said.
“Work is under way to review those decisions. We are discussing such an option in close contact with the terminal’s new owners. … They understand the situation, and we don’t give them grounds for calm.”
Novorossiisk vice president Roman Zinovyev said the company acted in full compliance with the law when it bought some facilities of the oil terminal from Transneft in 2006. It has since invested $80 million in their upgrade, he said.
Not every privately owned port has incurred Transneft’s displeasure. Tokarev, for example, has preserved a semiprivate structure at the Baltic Sea port of Primorsk.
He has said that Transneft lacks the money to buy out 50 percent of Primorsk from businessman Ziyavudin Magomedov’s Summa Capital, as this would cost $2.5 billion.
Traders say they are watching the developing spat closely given Transneft’s previous track record.
The pipeline firm has in the past shut supplies to Latvian and Lithuanian ports, citing technical reasons, in what were perceived as politically motivated moves to punish Russian neighbors amid difficult political relations.
“If we [Russia] are regularly shutting down gas supplies to Europe, I don’t see why it couldn’t happen with oil in Novorossiisk,” said a trader with a major Russian firm.
The trader said that even if Transneft decided to punish port owners with measures as extreme as cutting or reducing supplies, the move would be very short-lived.
“But even a minor disruption would put our credit profile at risk, as we have loans taken in the West and supply commitments from Novo under them,” the trader said.
Novorossiisk’s Zinovyev said Russia lacked alternative and economically efficient ports in the south to allow for disruptions. “For us, a situation with supply cuts or disruptions seems absolutely unreal,” he said.
A trader with a Western major agreed that he did not believe there could be cuts in supplies to Novorossiisk. “There might be some unhappiness about the port owners, but it [the dispute] is also a great chance to show to oil firms that it is safer to supply oil to the East,” the trader said.
Russia will this month launch its first major port for Siberian crude in the Pacific, but market players have expressed concerns its start might be premature.
Transneft has suggested that it may also build a new port near Novorossiisk close to the private CPC terminal, but traders said the costly project would make no sense if Transneft gains what it wants at Novorossiisk.
“This war of words is more about political pressure than real actions,” said the Western trader.