ST PETERSBURG, April 15: Russia may halt oil products shipments through its northern river route to the Baltic Sea port of St Petersburg in 2007 due to poor technical state of the canal, the head of the canal system said on Friday.

If we fail to start dredging operations this year the 2006 navigation will be the last one for the large-capacity fleet, Vladimir Nikolayev, head of the state Volgo-Balt canals system, which manages the route, told a news conference.

In the country’s north, Russian firms ship oil through the system of river canals known as Volgo-Balt to St Petersburg on the Baltic Sea and Onega Bay on the White Sea, where oil is reloaded into floating storage and re-exported to northwest Europe.

Nikolayev said the canal is currently 3.7 metres deep, while 4 metres is required for a passage of vessels with a deadweight of more than 5,000 tons.

He said the shallow depth automatically brings down freight flow by 10-12 per cent, as it forces shippers to underload 600 tons on each 5,000-ton tanker.

He also said it was currently impossible to carry out all the necessary dredging works in the canals and he did not know when such works could start.

I do not have a kopeck (cent) to spend on dredging. A nine-year investment programme has been only fulfilled to 7 per cent, Nikolayev said.

Market participants say if Volgo-Balt stops shipping oil products, Russian firms will switch to railway shipments, giving operators an advantage over river and pipeline routes.

He forecasts Russian firms will ship around 1.6 million tons of fuel oil in 2006 through the route, of which 1.5 million will be from YUKOS’s Samara refineries and around 300,000 tons from Tatneft’s and LUKOIL’s Nizhnekamsk and Perm refineries each.

Oil firm Bashneft is expected to ship around 1.0 million tons of fuel oil and between 300,000 and 400,000 tons of vacuum gas oil from its Ufa refinery through the canal in 2006.

Besides, LUKOIL plans to ship between 700,000 and 900,000 tons of fuel oil, which it plans to deliver by the river from the Norsi refinery to its Baltic Sea Vysotsk terminal. In 2005, Vysotsk received all its volumes by rail.

Railway capacity will be sufficient. Fuel oil will be delivered to Tallinn, other Baltic Sea ports. Besides, Vysotsk is set to double to 12.0 million tons and will seize the spare volumes, a source at the Petersburg Oil Terminal (PNT) said.

He said St Petersburg will cut fuel oil exports by 4 million tons if Volgo-Balt halts shipments.

PNT, the biggest oil products exporter in the St Petersburg port, plans to export 11 million tons of refined products, of which around 1.0 million tons will be delivered by river.—Reuters