Monthly Archives: July 2022

Chinese Foreign Ministry Expresses Dissatisfaction with US Attempts to Impose Sanctions against Russian Oil Supplies to China

July 27 2022  

The Chinese authorities are categorically against attempts by the United States to impose unilateral sanctions on Russian oil supplies to China. This was announced on Wednesday by Chinese Foreign Ministry spokesman Zhao Lijian.

“China is categorically against such illegal unilateral sanctions,” he said at a briefing, answering a question from TASS about how the PRC authorities feel about such plans by the United States. “China and Russia carry out normal trade and economic cooperation on the principles of equality, mutual benefit and mutual respect “.

As the Chinese diplomat clarified, Beijing’s cooperation with Moscow is not aimed against anyone. “We will also not tolerate external interference,” Zhao Lijian stressed.

As Bloomberg reported earlier, US senators led by Marco Rubio (R-Fla.) have proposed sanctions against companies involved in the sale of Russian oil and other energy resources to China. The bill provides for penalties for any organization that insures or registers tankers that transport oil or liquefied natural gas from Russia to China.

Editorial comment. Playing with fire. It is clear that Republican Senator Marco Rubio and his colleagues are primarily pursuing the goals of the election campaign and would like to embarrass the Democratic administration by accusing it of “insufficient” toughness towards Russia and, at the same time, ignite the fire of a trade war with China, which Donald Trump failed to accomplish fully. However, the absurdity of dictating whom, from whom and for how much to buy is so obvious that the US executive branch will hardly dare to subscribe to the initiative of the Rubio group.


Russian Contracts Portfolio of South Korean Shipyards Exceeds $8 Billion

The loss of these contracts may affect the financial position of enterprises

July 26, 2022  

The three largest shipyards in South Korea expect to receive significant profits next year from the execution of shipbuilding contracts with customers from the Russian Federation. Samsung Heavy Industries, Daewoo Shipbuilding & Marine Engineering (DSME) and Hyundai Samho Heavy Industries received orders worth $5 billion, $2.5 billion and $550 million, respectively, according to Business Korea. However, due to the current economic sanctions against Russia, any delay in the tranche may lead to a shift in the construction schedule.

The construction schedule for 2022 at South Korean shipyards has already been completed by 70%, but, according to the publication, this year the companies will remain in the “red”. This is because shipbuilding projects have been going on for about 10 years, and steel prices are rising rapidly.

The sum of the Hyundai Samho contract for the construction of one LNG tanker for Russian shipowner is less than that of the other two shipbuilders, so it is not so tangible. In addition, in case of termination of the contract, such a vessel can be easily sold to another shipowner.

SHI and DSME have received large orders for the construction of Arc 7 class LNG tankers, and if contracts are terminated, the sale of this class of vessels may be difficult. DSME has already been notified of the cancellation of orders for two vessels.


Editorial Comment: The authors of the article are a little cunning in the last sentence. Not “DSME has already been notified”, but DSME itself has notified the successive termination of contracts with Sovcomflot for two LNG carriers due to delays in the receipt of funds within the contractual terms. However, it is known that the reason for the delay is the accession of South Korea to anti-Russian sanctions in the financial sector, which created technical difficulties with the transfer of money to Korea. Significantly, the decision to join the sanctions was made by outgoing President Moon Jae-in, possibly to harm the opposition leader who won the election. Let us also recall that when a similar problem related to the technique of transferring funds under contracts for payment for Russian gas faced the EU countries, a solution was found quickly. In this particular case, the Republic of Korea will lose a lot, in exchange for receiving, at best, only an encouraging pat on the back from Washington.

Sale of the fleet of the Murmansk Shipping Company declared invalid

July 12 2022

The Thirteenth Arbitration Court of Appeal upheld the Arbitration Court of the Murmansk Region, which invalidated the auction of six ships and real estate of Murmansk Shipping Company JSC (declared bankrupt).

The ruling of the court of first instance was issued on April 22 following the consideration of the complaint of the Federal Tax Service of Russia.

As the court found, six vessels and MSC real estate were sold at auction in November 2021. The only bidder was Cassiopeia LLC (Moscow), founded less than two months before the auction. The contract was supposed to be concluded at a starting price of 1.771 billion rubles. Previously, the provision on the procedure, terms and conditions for the sale of MSC property was approved by the creditor, Resheniye LLC. At the same time, the creditor and the buyer of the collateral property turned out to be affiliated persons, since they are controlled by Farisia limited (Cyprus). The ultimate beneficiary is a citizen of the Russian Federation Alexei Bogachev (owner of Sistema Bank).

Subsequently, the Arbitration Court of the Murmansk Region, at the request of the Federal Tax Service, prohibited the conclusion of a sales contract with Cassiopeia LLC.

The court found that the procedure for conducting auctions of MSC property included in the register of strategic organizations was violated. As a result, the auction was declared invalid. In addition, the arbitration recognized as illegal the inaction of the bankruptcy trustee of the MSC in terms of failure to take measures to appeal the provision on the sale of the debtor’s collateral property. 

As reported, two ro-ro vessels Kapitan Danilkin and Yury Arshenevsky, bulk carrier Grumant, icebreaker Vladimir Ignatyuk, oil tanker Kotlas and the passenger ship Klavdiya Yelanskaya were put up for auction as part of one lot worth 1 billion 771 million rubles in October 2021. The same lot included the Moryak hotel, a building in Portovy proezd with indoor and outdoor parking in Murmansk, premises in a building in Moscow, several land plots and the right to long-term land lease.

Previously, the lot also included the building of the MSP Museum in the center of Murmansk. However, Legal Space LLC, the organizer of the auction discovered that the building had the status of an object of cultural heritage of the peoples of the Russian Federation and excluded it from the lot.

The monitoring procedure for MSC was introduced in March 2020, for bankruptcy proceedings – in October 2020. This procedure has been extended to 6 October 2022. 

The ICR, with regard to the beneficiary of the MSC, Nikolay Kulikov, is investigating criminal cases under part 2 of article 201 of the Criminal Code of the Russian Federation (abuse of authority that entailed grave consequences) and part 4 of article 159 of the Criminal Code of the Russian Federation (fraud committed on an especially large scale). During searches in September 2019, documents related to the activities of offshore companies, as well as expensive art objects, were seized. From the materials of the Murmansk Regional Court it follows that the amount of damage by four imputed episodes is about 1.27 billion rubles.

MSC, which provided the bulk of Russian-flagged cargo transportation in the Russian sector of the Arctic, began to experience financial difficulties in 2018.


Expert round table “Transport and logistics system of the Far East of the Russian Federation in the realities of 2022: problems and development tasks”

On July 13, an expert round table “Transport and logistics system of the Far East of the Russian Federation in the realities of 2022: problems and development tasks” was held at the Maritime State University. The round table was organized by the Science and Education Center for Marine Transport and Spatial Logistics and Editorial Board of the “Asia-Pacific Journal of Marine Science & Education”. It was attended by leading scholars and professors of MSUN, FEFU, FEMRI, FEB RAS and representatives of the logistics and tourism businesses.

A welcoming address to the participants of the round table was made by Assistant of MSUN Rector for Research Mikhail Kholosha and coordinator of the transport section of the UN Development Program “Greater Tumangan Initiative” (GTI) Sergey Khidirov. This was followed by eight presentations by experts in various fields.

The dynamics of global events has recently accelerated sharply. This was initiated by the COVID-19, or rather, by not always adequate and coordinated actions of international organizations and individual states to fight the pandemic. The economy is more inertial than politics, and the negative effects of endless lockdowns and quarantines have resulted in a global logistical crisis, disruption of supply chains, which destabilized the world economy, caused a sharp increase in energy prices, a failure in the supply of electronic chips, and much more. Economic crisis, in turn, exacerbated security concerns in a number of regions of the world, resulted in the growth of extremism, terrorism and violence (for example, the unprecedented assassination of former Prime Minister Shinzo Abe in Japan), the bankruptcy of entire states (Sri Lanka). Among these trends, the campaign of unprecedented anti-Russian sanctions by the West stands out, which, instead of resolving the conflict situation around Ukraine, lead to an aggravation of the energy crisis and, possibly, to the development of an even more dangerous global food crisis.

The participants of the round table discussed geopolitical challenges and problems of regional security not for the sake of abstract theorizing. In today’s world, everything is interconnected, and a crisis in Europe could ignite dormant hotbeds of conflict in East Asia, where the main centers of world industrial production are located. One does not even want to think about the civilizational consequences of such a scenario.

At the same time experts believe that the situation in our pragmatic and rational region remains stable so far. Despite Japan and South Korea formally joining anti-Russian sanctions, their businesses, which are interested in working with Russian partners, are looking for workarounds and continue cooperation. The prospects of the DPRK coming out of self-isolation and launching mutually beneficial transport and economic projects with its participation have been identified. The volumes of container traffic between the ports of the Russian Far East, India and the ASEAN countries are growing. The participants of the GTI program confirmed their intention to continue joint work on the development of the transport system in Northeast Asia. Therefore, the skeptics who claim that only China is able to save the Russian economy are wrong. In fact, there is no need to “save” something that feels good enough on its own.

During the round table discussions, specific positive examples of creating new logistics routes, real import substitution in the field of transport and port activities were mentioned.

At the same time, experts stated, the reorientation of the Russian transport and logistics system from the Western to the Eastern direction is a very difficult task. It cannot be solved by financial injections alone. We will be overcoming the consequences of the mistakes of the past “well-fed” years for a long time to come, in particular, the dominant position of coal exporters in the transportation market of the Eastern Railway Range and in the seaports of the Far East. At the same time the grain export terminal, which is so much needed today, was never built. It should be noted that in recent months, Russian logisticians have been able to create several cross-border routes for the transportation of grain to NEA, including inland waterways, however, a task of building specialized offshore grain terminal still remains.

Based on the results of the round table, a special thematic issue of the “Asia-Pacific Journal of Marine Science & Education” will be prepared, and, as the participants suggested, practical recommendations will be formulated for improving transport and logistics system in the Russian Far East. The practice of holding scientific and practical events on this topic will be continued this fall, probably in an expanded format.

Science and Education Center for Marine Transport and Spatial Logistics

Flag raised on the new fishing vessels

July 9 2022

On July 8, the ceremony of raising the Russian flag on the new fishing vessels took place. The vessels were built at domestic shipyards under the program for upgrading the production capacities of the fishery complex with government support.

Russian shipyards have not built fishing and crab vessels for almost 40 years. However they have received a massive influx of orders since 2016 against the background of the transition to the auction principle of quota distribution in the fishing industry. As part of the reform, market participants are required to build new vessels in the Russian Federation in order to receive part of the bioresources quotas. 

The largest portfolio of orders was collected by the enterprises of the North-West – Severnaya, Admiralty, and Vyborg shipyards, Kaliningrad Yantar shipbuilding plant and Pella Leningrad Shipbuilding Plant. Far Eastern enterprises also received orders. In particular, the construction of a series of 10 trawlers is being carried out at JSC Admiralty Shipyards, another ten vessels are being built at Severnaya shipyard.

42 vessels out of 97 under construction in Russia for the domestic fishery complex (58 fishing vessels and 39 crab vessels) are being built at the shipyards of the United Shipbuilding Corporation, the press service of the Federal Agency for Fishery reported in early May. 


India and Iran Will Use a Short Transport Corridor to Russia

July 6, 2022

Indian Foreign Minister Vinay Kvatra had a telephone conversation with Iranian Deputy Minister for Political Affairs Ali Bagheri Kani. The conversation was the latest in a series of high-level talks to bring a shorter, sanctions-free route between Russia and India into operation. At the same time, more than a dozen countries of Central Asia and the Caucasus could use this corridor, the Indian newspaper The Tribune reports on its website.

The parties discussed various aspects of bilateral relations, including the successful development in the Chabahar port, as well as international and regional issues, including Afghanistan.

The telephone conversation came two weeks after the Iranian state shipping company announced that it had successfully completed the first transportation of transit cargo from Russia to India via the International North-South Transport Corridor (INSTC). India is pushing for the Iranian port of Chabahar to be included in the INSTC.

Russian President Vladimir Putin, speaking about the importance of the INSTC corridor, said that Moscow would pay more attention to it, as it could help turn the Caspian Basin into an energy and logistics center.

The newspaper draws attention to the fact that 18+ countries attracted to the INSTC route have never been active supporters of the unilateral sanctions periodically announced by the West.

In June, Iranian Foreign Minister Hossein Amir-Abdollahian visited India and held regional partnership talks that reviewed the progress made at the “Shahid Behesti” Terminal in Chabahar, which will provide sea access for Afghanistan and become a commercial transit hub for the region, including Central Asia.

Notably, a few days later, India abstained from voting against Iran at a board meeting of the International Atomic Energy Agency.

For example, last month a test shipment of 41 tons of laminated wood sheets was sent from St. Petersburg to the Russian port of Astrakhan. From Astrakhan, the cargo was transported to the Iranian Caspian port of Anzali. Then it was taken by road through Iran to Bandar Abbas, from where the cargo was sent to Indian Mumbai. The delivery took 24 days and will probably get faster when the construction of the Trans-Iranian railway is completed.

Usually, cargo from South Asia goes through the Suez Canal to the ports of Rotterdam (Netherlands), Antwerp (Belgium), Piraeus (Greece) and Valencia (Spain). All these seaports are subject to unilateral sanctions imposed by the West, the Indian newspaper notes.