Russia revolutionises the Baltic: from mutual reliance to the cold shoulder
Politics, history and Slavic pride are at the root of so much that goes on in the former Soviet Union. RussiaÍs temporary cut of oil product deliveries to Estonia last year, in a row over a statue, showed just how much power it still has over its formerly Soviet neighbours, and just how reliant Baltic ports still are on Russia exports
For the Baltic region ¿ Lithuania, Latvia and Estonia in particular ¿ the irony of being in such close proximity to the second biggest oil exporter in the world, yet being sidelined, must be almost too much to bear. The Soviet Union depended heavily on the ports of the three Baltic states for access to key European markets but, when the Iron Curtain fell, Russia lost a lot of its direct connections to the Baltic Sea. Rather than resign itself to being dependent on transit countries, it has, perhaps wholly expectedly, invested millions in the development of its own Baltic ports further north, much to the dismay and economic disadvantage of its formerly Soviet neighbours.
Most of RussiaÍs product exports consist of fuel oil, including mazut ¿ a low quality but highly-calorific fuel oil ¿ and diesel, destined for heating use in European countries and the US.
According to International Energy Agency (IEA) figures, in 2006 Russia exported almost 4 million barrels per day (bpd) of crude oil and over 2 million bpd of oil products. Russian oil products exports to the US alone reached 262,000 bpd in 2006, from 11,000 bpd in 1995.
The Baltic Sea plays a key role in much of this movement, with Baltic ports almost 95% reliant on Russian exports. But while RussiaÍs domestic production and exports have soared since the mid-1990s, so have the capacities of its own Baltic ports. Losing direct access to seaports like LatviaÍs Ventspils upon the dissolution of the Soviet Union in 1991 did not go down well with Russia, and it initiated ambitious investment programmes at locations at the northernmost tip of the Baltic, at ports such as St Petersburg, Primorsk and Vysotsk. Tucked away and ice bound for good chunks of the year they may be, but they offer direct access to northwest Europe, and that is what matters.
Although vessel journeys to these ports from the Danish Straits add two days or so in comparison with the southern Baltic, they are big, wellconnected to land infrastructure and are, in the main, deepwater. Russia is therefore able to take advantage of lucrative backwardation in the US market and build bigger cargoes for transatlantic sales, bypassing the rest of the Baltic altogether.
