Port of Tallinn Operators Will Invest 200 Million Euro

During the meeting on March 8, the Supervisory Board of AS Tallinna Sadam approved the annual statement of the Port of Tallinn and also gave approval to a range of development projects, according to which the operators will invest a total of 200 million euro into the development of the container terminal and of liquefied gas and liquid bulk transshipment terminals.

As Neinar Seli, the Chairman of the Supervisory Board of AS Tallinna Sadam, confirms, the development of new projects will facilitate increasing the competitive capacity of the port and ensure its energy safety. “These projects will have a positive effect on the Estonian economy as a whole, including the employment rate and the increase in tax revenues,” Seli said.

“As modern technologies will be used during the construction of the terminals and the cargo will mainly be transported by railway, the given projects will neither result in excessive environmental stress nor overburden the roadways of Estonia,” Seli added.

The Port of Tallinn has displayed the best economic performance in history

During the today’s meeting, the Supervisory Board of AS Tallinna Sadam approved the 2010 annual statement of the company; according to the statement, in the last business year, the Port of Tallinn displayed record-breaking performance concerning all the most important financial indicators: the record return on sales, the record net profit, and the record EBITDA (earnings before interest, taxes, depreciation, and amortization).

According to the audited data, the consolidated return on sales of AS Tallinna Sadam accounted for 87 million euro (1,358 million kroons) in 2010; compared to the same period of the previous year, the growth amounted to 6 million euro (91 million kroons) i.e. 7 per cent. The consolidated net profit accounted for 42 million euro (663 million kroons), having increased by 16 million euro (225 million kroons) i.e. 62 per cent in comparison with the previous year.

Year 2010 was also a year of success for the Port of Tallinn in terms of the scope of its operation. The volume of goods handled reached 36.6 million tons which is 5 tons more than the volume in the previous year (the growth accounted for impressive 16 per cent). This ensured that the Port of Tallinn took the third place in cargo turnover among the ports of the Eastern coast of the Baltic Sea. Primorsk occupies the top position, and Saint Petersburg fell into the second place. Thus the Port of Tallinn outperformed its rivals in Klaipeda, Riga and Gdansk.

Notwithstanding the fact that the economic environment is only now starting to recover, the number of passengers having employed the services of the harbors incorporated in AS Tallinna Sadam reached the record-breaking 7.92 million in 2010. This being said, the number of the passengers of cruise liners somewhat decreased (by 6 per cent), but the number of customers that turned to the services of the most popular Tallinn-Helsinki ferry line increased by 621 thousand passengers i.e. by 10 per cent.

“The port is facing several extensive development projects in the nearest future, and the intense competition with the neighbors forces us to make more and more effort. I am sure that the current team will successfully fulfill all the objectives set for the future as well,” Seli added.

An LPG terminal to be opened in Muuga Harbor

The main field of operation of the intended LPG terminal will be the transit of liquefied gas from Russia and Kazakhstan and supplying LPG (liquefied petroleum gas) to the markets of the Baltic region. The terminal will provide services for the markets of Latvia, Lithuania, Poland, Finland, Sweden, Denmark, Germany, Belgium, the Netherlands, and France. The intended capacity of the terminal will constitute 300,000 tons of LPG annually at the first stage and up to 800,000 tons of LPG annually at the second stage.

According to the Chairman of the Supervisory Board of AS Tallinna Sadam, Neinar Seli, the terminal to be constructed will allow using liquefied gas under the same condition as natural gas. “This means that by installing new equipment in boiler rooms, one could substitute expensive wood heating or coal and shale fuel, which pollute the environment, for liquefied gas, which is cost-effective and clean. We are talking about a significant step towards the energy safety in Estonia,” Seli noted.

In the course of assessing the impact of the terminal on the environment, it became clear that neither the construction of the liquefied gas transshipment terminal nor its further operation to the planned extent and in the intended way will significantly increase the environmental stress or overburden the area surrounding the LPG terminal. The area chosen for the construction of the terminal in the Eastern part of Muuga Harbor is also suitable from the aspect of ensuring safety as there are no residential or public use buildings within the limits of the maximum danger zone of the facility.

The Port of Tallinn and Vopak E.O.S. are expanding the liquid bulk transshipment terminal

The Supervisory Board of AS Tallinna sadam has accepted the proposal of the company regarding the construction of an additional liquid bulk tank depot with the capacity of 400,000 cubic meters for the needs of AS Vopak E.O.S. in Muuga Harbor; this will allow handling up to the additional five million tons of oil products annually.

As the Chairman of the Supervisory Board of AS Tallinna Sadam, Neinar Seli, explained, Vopak E.O.S. has made large-scale investments in order to maintain and increase the current cargo turnover. “To begin with, in order to offer high quality services to traders and goods owners, the terminal has to possess an additional tank depot for storing and blending the products as well as additional mooring facilities for VLCC tanker loading and unloading,” Seli stated.

AS Vopak E.O.S. is the largest independent port operator in the Baltic countries and the largest cargo operator of the Port of Tallinn. AS Vopak E.O.S. belongs to the Royal Vopak group (80 terminals in 81 countries), which is the independent leader in the world as to the field of handling and storing liquid and gas chemicals and oil products. In Estonia, AS Vopak E.O.S. operates three modern terminals with the total tank depot volume amounting to 951,000 cubic meters. The terminals are situated in Muuga Harbor (Pakterminal), in Iru (Trendgate), and in Maardu (Termoil); the terminals are connected to the moorings of Muuga harbor by pipelines. In 2010, Vopak E.O.S. transshipped more than 19 million ton of cargo, which accounted for 52 per cent of the whole cargo traffic handled by the Port of Tallinn and 75 per cent of the total volume of the transshipped liquid bulk. The Port of Tallinn received 364 vessels in the last year in order to handle Vopak cargo.

The only place suitable for the construction of a liquid bulk terminal in Muuga Harbor and its surroundings is at the moment the so called “Lonessa” area in the Western part of the Harbor. The detailed project implying the construction of tanks for liquid bulk in the given area has been approved; the corresponding construction permit has also been issued. The area of the future terminal amounts to 20 hectares.

The tender for the container terminal operator was won by the Rail Garant holding

Among the applications for the tender called for by the Port of Tallinn in order to find the operator of the new container terminal, the Supervisory Board of the company has deemed the tender of the Rail Garant holding the best.
Rail Garant is one of the largest Russian transport holdings, which includes 11 railway and container transportation carriers and forwarding agents. The main types of the goods transported by the companies of the holding are mining and smelting goods, liquid bulk, refined petroleum products, liquefied gas and other types of the cargo of industrial purposes, such as large diameter pipes, cars, mineral fertilizers, and grain.
The consolidated rolling stock of the holding exceeds the number of 17 thousand rail cars; the company development strategy implies increasing the rolling stock up to 50 thousand of rail cars by 2013, which would ensure the Rail Garant holding a place among the among the largest top five independent operators in Russia. Rail Garant is owned by major Russian business leaders Sergei Gushchin, Nikolai Falin, and Sergei Smyslov.

In the last year, the Port of Tallinn conducted negotiations with some ten prospective container terminal operators, two of which submitted specific proposals as to operating the given area.

According to the Chairman of the Supervisory Board of AS Tallinna Sadam, Neinar Seli, the innovative business plan of Rail Garant became the crucial factor in making the decision. According to the plan, the terminal will be mainly used to fulfill the needs of the Russian export, which, in its turn, means new opportunities for Russian importers because it will allow transporting fully loaded containers in both directions.

“The business plan submitted by Rail Garant will enhance the potential of the Port of Tallinn in the region, attract a greater number of shipping lines here, and make the country more appealing to foreign investors,” Seli stated. “Moreover, the decision of the Supervisory Board will promote the competition on the container market that has so far been virtually monopolized, which will also contribute to increasing the cargo turnover of the government owned Estonian Railways significantly.”
Seli also regarded the long-term co-operation experience of Rail Garant with a widely known European transportation carrier, the German company Hoyer, as important; it will ensure international experience and connections in the process of operating the terminal.