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ITE Transport and Logistics

Sector Spotlight: Oil & gas transportation throughout Russia

Russia, thanks to its continent-spanning size, sits upon vast reserves of oil and natural gas. It is a the world’s third largest producer of crude oil, for example, and is only second to the United States when it comes to natural gas production.

But while its mineral wealth transfers into both political and economic heft, Russia’s geography presents some unique transportation challenges – namely moving billions of barrels of oil and cubic metres of natural gas through the country and off to foreign markets.
 

Russia: a world leader in energy production


Russia ranks behind only Saudi Arabia and the United States in terms of crude oil production. In 2016, Russia produced 10.96 million barrels of oil a day. In December of that year, Russian oil output hit a 30 year high, peaking at 11.21 million barrels per day.
 
The drop in global oil prices, which started in 2014, did hit Russia hard, but as prices begin to stabilise and the market returns to health, Russia’s oil industry will likely remain in rude health. To avoid another huge nosedive in the price of oil worldwide, Russia, alongside Saudi Arabia, has agreed to cut production levels through to 2018. So less output is coming, but Russia’s oil sector is not going anywhere soon.

2016 saw Russia produce 637 billion cubic metres (Bcm) of natural gas – representing a marginal increase of 0.2%. Exports of gas products are a major source of revenue for Russia, which may explain why 5% more natural gas was sent overseas last year. A total of 202.3 Bcm of gas was exported in 2016, primarily reaching European markets and Turkey.
 

Rail is Russia’s leading non-pipeline oil & gas transport mode


Some 90% of the gas and oil produced in Russia is transported via pipeline. Transneft is the state pipeline company, and effectively runs a monopoly on Russian pipe-based transportation. Trucks are only really used to move refined products to and from storage bases to customer-orientated selling points, such as petrol stations.
Rail is the chief non-pipeline mode for ferrying oil from its production sites to export centres. 23.6 million tons of oil and associated products was carried by Grand Old Man of European railways throughout 2016. 

Russia’s rail network stretches from its Western borders through to the farthest reaches of Siberia and beyond. Given the remote location of Russia’s energy projects, and the importance of mineral shipments for the nation’s economic prosperity, ensuring exports travel unimpeded to their transhipment destinations is a top priority.
 
Russian railways are more developed than the country’s road routes, especially in the Far East, making transporting these essential exports a far easier prospect. This goes some way towards explaining rail’s importance to the Russian energy industry.

Natural gas mostly requires specialist LNG carriers for transportation. The world’s first icebreaking LNG-carrying ship was successfully tested in the arctic Yamal region of Russia in 2017, demonstrating the unique challenges Russian geography presents for its energy industry – namely in moving the products around. Orders for further LNG-transportation vessels are in the pipeline.
 

Russian ports are the country’s main oil export hubs


Russia is blessed with thousands of miles of coastline and access to some of the world’s busiest waterways including the Black Sea, Gulf of Finland, and the Pacific Ocean. As such, a number of Russian ports are essential stops in its energy supply chains.
 
Below is a list of Russia’s leading oil terminals, ranked by total annual volumes of oil cargoes handled by each port (2015’s figures).

•    Varandey – Barents Sea - 6 million tons
•    Primorsk – Gulf of Finland - 45.1 million tons
•    Ust-Luga – Gulf of Finland – 17.6 million tons
•    Black Sea ports (Novorossiysk & Tuapse) – 26.7 million tons
•    Kozmino – Sea of Japan – 30.4 million tons
•    De-Kastri – Sea of Japan – N/A
•    Sakhallin Ports – Sea of Japan – N/A
 

Geography affects oil & gas transportation


Take a look at this map of Russia’s ongoing oil and gas developments. Notice something? Apart from a handful in more accessible zones, such as Kaliningrad on the Baltic Sea, they are all in remote, nigh-inaccessible locations. And when things get remote in Russia, they tend to get cold. Very cold.

The Sakhalin and Yamal gas fields are especially hard to access. These are located in Russia’s frigid Far East – a region known worldwide for its Arctic temperatures and exceptionally harsh winters. Moving essential prospecting and production equipment to these locations is no easy task, given the nature of the machinery in demand at these project sites.

Oil and gas production equipment is big. Extremely big. Necessary oversized cargoes, such as drills, bespoke production modules, and so on, often weigh hundreds of tons, are unwieldy and difficult to move to Russia’s remotest corners. 

However, this is where the biggest opportunities for foreign businesses to enter this niche market. Specialist cargoes require specialist services, and Russian energy producers are more than ready to collaborate with international breakbulk operators to get the job done.

ALE Heavy-lift, a UK-based oversized cargo handler, is collaborating with Russia’s Yamgaz, TechnipFMC, JGC, and Chiyoda, to outfit the under-construction Yamal LNG terminal in Northwest Siberia. The site is in need of huge liquid gas production modules, weighing hundreds of tons and possessing unique dimensions, which requires ALE’s expertise to transport.
 
ALE successfully completed shipment of essential project equipment to the site in early 2017, showing how, if they can deliver, foreign firms can meet Russia’s energy-related transport needs.
 

Uncover market potential at ITE’s Russian transport and logistics events


Russia is committed to expanding its energy industries with new sites and projects appearing every year. Even in the face of its promised oil production cuts, the nation is still forging ahead with massive, yet remote, natural gas developments, as well as construction of energy terminals across its coastlines.
 
Such projects share a common trend: a demand for oversized cargoes requiring specialist transportation – playing right into foreign transport and logistics’ operators hands.

To grow your business leads in Russia’s transport and logistics industry, and meet the energy figures requiring bespoke transportation services, make sure you head to one of ITE Exhibition’s Russian transport events.
 
Our events are essential platforms in establishing business relationships with Russia’s leading figures, sharing ideas and project information, and discovering opportunities in one of the world’s leading transport markets.

Head to our events page to find the right exhibition for you – or get in touch to learn more about ITE Exhibition’s Russian transport and logistics shows and how you can take part. 


Sector Spotlight part one: Automotive Logistics in Russia

 

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