Russia: Oil tycoon buys Port of Murmansk

Feb 08, 2011 12:00 AM

Russian oil tycoon Gennady Timchenko is reported to have sealed a deal on the acquisition of the Port of Murmansk, the fourth biggest in Russia and a key asset in the development of the country's Arctic. Business structures belonging to Gennady Timchenko will buy the Murmansk Commercial Sea Port for a total of $ 250 mm. The deal is to be completed in the course of the first quarter of 2011.

A spokesman for Timchenko denies that the purchase has taken place. However, sources close to both the buyer and the Murmansk port confirm the deal, the news agency writes. As previously reported by Barents Observer, the Murmansk Port was included in the list of state-owned enterprises to be privatized. The state owns 25,49 % of the port, while 34,97 is controlled by Specialized Project Investments and 12,68 by Laterium Commercial Limited. With the acquisition of the port, Timchenko will become a considerable player also in the Russian Arctic. The Murmansk Port, located strategically in ice-free and deep-sea waters, will inevitably become a key asset in the development of Russian offshore oil and gas projects in the Arctic.

The port was granted status as special economic port zone, something which is expected to boost its popularity among investors. The enhanced port status is also believed to help prepare the ground for the major upcoming developments linked with the Shtokman gas project in the Barents Sea.
The port has the capacity to handle about 20 mm tn of goods per year. In 2010, the port handled 12,87 mm tn, a drop of 14,8 % from 2009. Of this, 9,74 % was coal. Also increasing volumes of oil have over 2010 been shipped through facilities in the port area.

While all port activities in Murmansk are based on the eastern side of the Kola Bay, several key activities will in the future take place also on the western side of the bay. A number of major investment projects are in pipeline along the bay. A new railway line will link the western shore of the bay with the regional railway grid and thus pave the way for the construction of several new facilities, among them a coal reloading terminal and an oil terminal.

Gennady Timchenko, reportedly a citizen of Finland, has over the last years been associated with a number of controversial business deals. In 1997, he co-founded the company Gunvor, which a decade later had become the world’s third biggest oil trader. Speculations say that he is closely connected with Prime Minister Vladimir Putin. Timchenko and his business structures have lately shown an increasing appetite for oil company acquisitions. In 2009, he bought 23 % of the second biggest Russian gas producer Novatek and later acquired also the Geotech Oil Services, as well as an oil terminal in Ust-Luga on the Russian Baltic coast, Vedomosti writes.

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