New Russian Caspian Lagan Port To Service China, India & Iran

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Russia is planning to build a port on the Caspian Sea near the city of Lagan to increase trade in the Caspian region and beyond. Plans to build the port have been included in Russian Federation Government plans for the region, issued last week.

The redevelopment at Lagan Port will combine a container terminal with facilities for storing and loading a range of agricultural products, including a grain elevator with a storage capacity of 300,000 tonnes. Other terminals will handle vegetables, fruit and cooking oil.

The grain and container terminals will each have a 5 million tonne capacity, and the liquid cargo terminal will have a capacity of 500,000 tonnes.

Altogether, the port will have a transshipment capacity of 12.5 million tonnes; at present all Russian ports on the Caspian have a capacity of 7.5 million tonnes.

Dredging will also be carried out to deepen the existing port’s seaway to 13m.

Containerizing The Caspian

Much of the cargo carried on the Caspian is not containerized, so its adoption is seen as a way of increasing Russia’s trade with the Gulf countries and India, via Iran. In the reverse direction, the port will offer options for Chinese goods bound for Europe.

The port will be built in the Russian Buddhist Republic of Kalmykia that has long lobbied for Russian investment in a seaport. Moscow is now more responsive, owing in part to the silting up of its main Caspian port at Astrakhan.

The Kremlin is also considering the possibility of building a ship canal between the Caspian and the Sea of Azov, on the north of the Black Sea to provide a shorter route than the existing Volga–Don Canal.

Lagan To Acccess Four Belt & Road Routes

Products shipped too and from Lagan have four opportunities to join the Belt & Road Initiative routes. They can utilize Russian rail connectivity from Lagan north to the main Moscow line, which also connects to the Trans-Siberian rail heading East across Kazakhstan and onto China, they can cross the Caspian east to the Kazakh and Turkmen Ports of Aqtau and Turkmenbashi; they can head south-west and connect with Baku Port in Azerbaijan and access the BTK rail through to the Black Sea and ultimately to Turkey and Europe, or they can head due south to Iran’s Caspian Anzali Port (also a Free Trade Zone) or further east to the Amirabad Port and link up with the International North-South Transport Corridor which heads via highway south to the Iranian Port of Chabahar and then onto India.

Onto The Russian Heartland Via The Volga

Lagan is close to the existing Port of Astrakhan, just a 2.5 hour drive away. While Astrakhan is subject to silting at the mouth of the Volga River, it will remain the main transshipment route up the river. This is strategically important, as the Volga is Europe’s longest River at over 3,500km and possesses eleven cities along the route with populations in excess of 1 million. Lagan will become a transit port handling ships too large to berth at Astrakhan but will instead break down cargo due to access the Russian heartland from Astrakhan.

Vitaly Daginov, general director of Lagan Port stated in March that the expected cost of redeveloping the port, together with its road and rail links, was US$1.6 billion.

Several Iranian companies have expressed interest in investing in Lagan Port as well as China’s Poly Group, and China Energy Engineering Group International. Businesses interested in the Port operations can contact us for investment details.

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Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact Maria Kotova at russia@dezshira.com for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.

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