SAILING BY THE "SILK WIND"

The rapid growth of the extractive industry and the dynamic development of the non-oil sector in the past decade have year on year placed Azerbaijan and Kazakhstan in the forefront in terms of rate of economic development among the countries of the former USSR. As part of this long-term trend Baku and Astana have also formed a multi-vector transport infrastructure. These undertakings will very soon turn the two states into a regional hub, linking a large section of the trade routes between the West, the East and the South.

A bridge between Europe and Asia 

Today it is difficult to overestimate the importance of the Europe-Caucasus-Asia transport corridor (TRACECA) for the development of the transport potential of the states of the South Caucasus and Central Asia. In recent years over four-fifths of the whole volume of the annual transit shipment of raw carbons from the countries of the Caspian region to the Old World has passed through this corridor. The volume of transportation of ready-made (non-energy raw materials) output, especially the transit of container freight from China to Europe, has increased markedly.

Next year is expected to see the commissioning of the Baku-Tbilisi-Kars (BTK) railway and the subsequent handing-over of the first section of facilities at the Yeni Baki international commercial port. In the next year or two in Kazakhstan and the adjoining states the new railway lines Dzhezkazgan-Beyneu and Uzen-Gorgan will start to come into operation, the port of Aktau will be extended, and eventually, following the merging of the potential of the transport infrastructure of the eastern and western seaboards of the Caspian Sea, fundamentally new opportunities for the transit shipment of freight along the TRACECA corridor will emerge in this vast region.

With the aim of making the fullest use of their existing transport potential, in November of last year Kazakhstan, Azerbaijan and their partners in the TRACECA corridor signed a memorandum on creating a new logistics route Silk Wind for the shipment of freight by rail and ferry from Asia to Europe.

At the second "New Silk Road" international transport-and-logistics business forum in Astana at the beginning of November the heads of the Kazakhstan Railways national railway company, the Azerbaijan Railways closed joint-stock company and the Georgian Railways joint-stock company signed an agreement to found a coordinating committee to develop the Trans-Caspian international transport route. The document provides for setting up an effective national structure, whose main task would be to encourage non-oil freight to use this route. The coordinating committee was also charged with conducting an appropriate price policy with the aim of establishing transparent unified tariffs, ensuring the general competitiveness of the route through simplifying administrative customs and border procedures, handling transportation formalities and, of course, putting together a joint integrated logistics product. According to the agreement, a working group, which would also draw up a statute on the committee, would be set up within 30 days of its signing.

Ultimately, this route will provide a relatively short and secure transit corridor, which will be an alternative to the two other options of trade between East and West - trans-oceanic shipment and the transportation of freight along the Trans-Siberian Railway. The participants in the agreement believe that this initiative will contribute to the transportation of freight via the TRACECA corridor not only from Central Asia but also from China, and eventually other states of South-East Asia (mainly containers). As a strategic link in the TRACECA corridor, the Trans-Caspian international transport route has the potential of over 15m tonnes of freight annually and is aimed at linking buyers and forwarders of freight from China, Kazakhstan, Turkmenistan, Iran, the Persian Gulf countries and the states of the South Caucasus, Turkey and Europe. "It is predicted that the growth in trade turnover between China and Turkey alone could increase from the current 24bn dollars to 100bn dollars by 2023," the president of "NK Kazakhstan Temir Zholy" JSC, Askar Mamin, believes.

Interest in the new route from the states of Central Asia which do not have an outlet to the sea is just as high. In particular, the leaders of Turkmenistan and Uzbekistan have expressed a readiness to implement the Navoi-Turkmenbashi-Baku-Tbilisi-Kars transport project, which has significantly helped to ease the export of cotton and other commodities to international markets. Interest in the project has also been expressed in Kazakhstan which is hoping to export wheat, ore concentrate and other dry goods to world markets. And in the reverse direction the corridor is extremely attractive for the shipment of a considerable volume of industrial and consumer goods from the Old World to Central Asia and Afghanistan.

With the overall length of the "New Silk Road" being 4,192 km, it would take a maximum of 12 days to deliver freight, which is comparatively less than by rival routes. New infrastructure facilities - the Dzhezkazgan-Beyneu railway line which is being straightened and Aktau port in Kazakhstan which is being modernized, the international maritime commercial port Yeni Baki in Alat, as well as the Baku-Tbilisi-Kars railway line and the recently commissioned Marmaray express rail tunnel under the Bosphorus Strait - are expected to be set in motion as the project unfolds.

A key element of the "New Silk Road" will be the commissioning of a container rail-ferry express block train with a multi-modal loading design. One of the aims of the coordinating committee will be to load Silk Wind to its full capacity, and in order to achieve this a streamlined system for a preliminary exchange of information is to be organized to attract the flow of freight to this corridor. A most important problem to be solved before the Silk Wind route becomes fully functional is linked with the lack of synchronization between the customs and border operations of the countries in the region. These include the preliminary notification of the customs services on the other side of the border of the nature and bulk of the conveying loads and ensuring the uninterrupted flow of freight, in particular of wheeled vehicular transport, by way of ro-ro vessels and ferry shipments of heavy trucks. In order to ensure the regular running of the Silk Wind block-train, which consists of two or more standard-length sections, the coordinating committee will have to try and reduce to a minimum the border-crossing time of the states of the corridor.  It is also necessary to optimize the time taken to re-format or re-load a section at several points: the border crossing with China and port operations in Aktau, where freight is re-loaded onto ro-ro vessels or ferries to Baku, and from there to Tbilisi and onwards via the new branch of the BTK to Turkey and Europe.

It is worthy of note that aspects of the optimization of the tariff scale and the simplification of border and customs procedures, as well as the organization of new transit systems on the Great Silk Road were discussed on 14 November at the VI International Forum "The role of customs administration in assisting and easing trade between the Silk Road countries" in Qabala.

BTC attracts oil transit 

Cooperation between Azerbaijan and the states of Central Asia on the question of the transportation of raw carbon to Europe is developing just as actively. One should bear in mind the fact that the current capacity of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline exceeds the real volumes of Azerbaijani oil supplies, and with the object of optimizing the work of the pipeline the operator is interested in injections of additional volumes of the oil of third parties. For example, the capacities of BTC have already been used for a number of years for the transit of oil from the Caspian fields of Turkmenistan. As is known, Turkmen oil began reaching the BTC system in 2010 and since then the volumes of its transportation have been growing every year. Since the beginning of this year exports via the pipeline system have exceeded 2.3m tonnes. According to SOCAR, supplies of Turkmen oil via BTC at the end of last year had exceeded 3m tonnes. Bearing in mind that the main supplier of this oil - the Dragon Oil company - is building new facilities and expanding extraction in the Turkmen sector of the Caspian, one can expect a further increase in supplies via Azerbaijan, Georgia and Turkey.

However, our country links its most long-term plans for the regeneration of oil transit with neighbouring Kazakhstan. Recently representatives of the   maritime port and one of the largest oil-and-gas extracting companies of the joint Tengizchevroil enterprise signed an agreement with Cross Caspian and the BTC oil pipeline company on the transportation from 2014 via Azerbaijan of 4m tonnes of oil annually. Of the overall volume of oil which will be supplied in a westerly direction, 3m tonnes will enter the BTC pipeline system, and the remaining volumes by rail to the Georgian port of Kulevi via Azerbaijan and Georgia. Rail transportation will be provided by Cross Caspian Oil and Gas Logistics, which is a joint enterprise of SOCAR and AzTransRail. 

This project is part of a more far-reaching trans-Caspian route for the export of raw carbon from the western fields of Kazakhstan - Kashagan and Tengiz. Tengizchevroil is running operations at the large Tengiz field in Kazakhstan, where reserves are estimated at from 750m to 1.1bn tonnes. The main export route for Tengiz oil is still the pipeline of the Caspian Pipeline Consortium (CPC), which runs along Russian territory. In increasing its annual oil extraction, the company has already embarked on the third phase of the development of this field, which will enable production levels to be increased from the current 26m tonnes annually to 38m tonnes. However, already today the capacities of the CPC are not enough to ship all the oil from Tengiz, and the project to expand it is behind schedule, creating preconditions for extending transit via the BTC pipeline system.