Georgia beefs up seaport infrastructure to attract Asian goods

Georgian Energy Minister Ilya Eloshvili in Astana.

Kazakhstan’s oil now goes straight to the world markets through the territory of Russia


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According to the Georgian media, in the middle of November this year, Georgia will launch a new infrastructure project – Anaklia seaport on the Black Sea.

The first stage of the project is designed for an annual throughput of eight million tonnes of container cargo. It will cost $586 million. The terminal of the Anaklia deep sea port is scheduled to open in 2020. By that time, its throughput capacity is expected to grow to 20 million tonnes a year.

Upon completion of the project, Georgian authorities expect to double their country’s container transit traffic between the West and Asia.

The Ambassador of Kazakhstan to Tbilisi, Yermuhambet Yertysbaev, provided all these updates to an August briefing in Astana.

Answering the journalists’ questions about the future of Kazakhstan’s assets in that Transcaucasian republic, the diplomat shared his vision with them. In particular, he mentioned the Batumi terminal and expressed his concerns over it.

“There is a problem that will become very acute in the nearest years. The Georgians have decided to build a forth sea port, Anaklia. They have found a good deep-water place not far from Abkhazia. Its construction will begin soon, and in the long run, Batumi will only remain open for civil vessels. It will also become a tourist centre. Going back to the subject of risky investments, I said as early as in 2013 that it would be expedient to sell the Batumi terminal while it could still command an attractive price, and to move to Anaklia” Yertysbaev said.

Recall that national company KasTransOil, which leased it in 2006 for 49 years for $92 million, owns the Batumi terminal. The acquisition had been explained by the necessity to have direct access to transport routes for Kazakhstan’s key export goods – oil and grain – through the Black Sea to the markets of the Middle East, Egypt, and Europe.

“However, the situation has changed seriously in the past years. The original expectation had been to transship at least six million tonnes of oil and grain a year. Up until 2015, we’d managed to more or less maintain that level, but, alas, we cannot keep it up now,” the ambassador explained.

In addition, the diplomat cited some more reasons. First, the large Caspian consortium pipeline has become operational, and Kazakhstan’s oil now goes straight to the world markets through the territory of Russia. That is faster and cheaper than to ship through the Caspian Sea, then through Azerbaijan to Georgia, to transship it by the Black Sea.

“As far as I know, the Batumi terminal has now re-positioned itself to transship phosphate fertilizers, steel, and iron. But those changes require amendments to the inter-governmental agreements. As far as grain is concerned, currently, the Ukrainian and Russian grain is much closer to transport through the Black Sea than Kazakhstan’s,” Yertysbaev said.

The Kazakh diplomat, however, did not mention another reason that has made the Batumi terminal unprofitable. Georgia’s media often write about that reason. The main problem of the so-called Caucasus corridor is that Azerbaijan, which lays on the way to Georgia, is trying to monopolize the automotive and railroad transit.

The tariffs that are unilaterally increased by Azerbaijan frustrate all the efforts by Georgia to use its transit potential. So the Kazakh ambassador’s suggestion that Kazakhstan should leave the Batumi project is dictated by pragmatic reasons.

Georgian Energy Minister Ilya Eloshvili had been among the guests at the XI KazEnergy Forum in Astana. In his interview to NE, he spoke about the future of the Batumi terminal from the perspective of the Georgian authorities.

“The new port, Anaklia, is a deep water port for handling heavy-tonnage vessels. As such, it will not compete with the Batumi terminal. Instead, it will complement Batumi in the build-up of the logistical might of Georgia,” Eloshvili said.

The Georgian minister found it difficult to answer NE’s question as to when, finally, agreement could be reached with the neighbouring Azerbaijan on a single tariff for the Caucasus corridor.

“We will build new ports and create infrastructure. And although it’s difficult to guess the future situation, we should be ready for the time when the political and economic conditions become favourable. Besides, we are not just looking to provide transit for Georgian goods, but also to attract goods from the entire Asian region, including China and Indian. Georgia intends to become part of the Great Silk Road,” Eloshvili said.

Even if the Georgians manage to come to an understanding with the Azerbaijani, there is no guarantee that those agreements will be implemented and the tariffs reduced.

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