"LACHIN" BUILT AND LAUNCHED

Being the key hub for marine and land cargo routes in the Caspian region, Azerbaijan is seeking new opportunities to expand the transit coverage for goods between Europe and Asia. This encourages Azerbaijan Caspian Shipping Company (ASCO) to increase the potential of its cargo fleet, placing most of the orders for the construction of vessels at the Baku Shipyard. Recently, the ceremony of launching of the new tanker Lachin (deadweight: more than 7,800 tons) took place at the Baku Shipyard.

New projects — new potential

Azerbaijan have recently increased its participation in joint projects with regional states to expand Trans-Caspian cargo transportation — both traditional oil transportation between the Caspian seaports and container and other dry cargo operations along the Silk Road. This has contributed to the implementation of large-scale infrastructure projects.

The projects within the Europe-Caucasus-Asia transport corridor (TRACECA) provide for a multiple increase in cargo traffic between the ports of the Caspian Sea. For example, this boosted the construction of a new port in Turkmenbashi and the upgrade of Aktau port in Kazakhstan. Azerbaijan also implemented a large-scale program to build a modern port infrastructure, increasing the potential of the cargo fleet.

"We are carrying out planned works to update our fleet. We purchase new tankers and ferries to expand multimodal transportation in the Caspian region, as well as to increase the overall volume and simplify maritime transportation," Azerbaijani Minister of Transport, Communications and High Technologies Ramin Guluzadeh said recently. Minister also noted that the Baku-Tbilisi-Kars railway was commissioned for the same purpose in October 2017, and the first stage of the construction of the Baku International Sea Trade Port in Alat was completed last year (ferry terminal was commissioned in 2014, followed by the launch of the Ro-ro terminal in 2018). Relevant authorities also continue building the free economic zone and the largest logistics complex in the region at the Alat seaport.

The most important component of the trans-Caspian cargo transfer system is the Azerbaijan Caspian Shipping Company, which has the most numerous fleet in the Caspian Sea — 270 vessels of various types, including 51 cargo ships. In particular, the oil fleet of the company (22 tankers for the transportation of about 7.5 million tons of oil annually) is the most powerful in the Caspian Sea. In the near future, thanks to the increase in oil production in Kazakhstan and Turkmenistan over the next 3-7 years, the need for tanker transportation will grow, which will significantly increase the volume of oil transit through Azerbaijan.

"The Baku-Tbilisi-Ceyhan, Baku-Supsa and Baku-Novorossiysk oil pipelines have sufficient capacity to take aboard additional volumes. These free capacities will grow in the coming years. There is a promising growth of oil tanker traffic in the Caspian Sea in the coming years," Tariyel Mirzayev, head of ASCO Strategic Development and Investment Projects department said.

This circumstance encourages the shipping company to upgrade and increase its oil tanker fleet. At the same time, ASCO has orders for the local construction of tankers at the Baku Shipyard, which was commissioned more than five years ago contributing to successful completion of a number of orders, including for the AIOC oil consortium, over the past years. At the same time, Baku Shipyard is looking for partners in the dynamically developing Caspian region to receive export orders for the construction and overhaul of ships. Such negotiations, in particular, are conducted with companies in Kazakhstan and Turkmenistan.

"Azerbaijan continues to increase the potential of the cargo sea fleet for cargo transportation," Azerbaijani Economy Minister Shahin Mustafayev said at the end of last year. According to the minister, in 2019-2020, Baku Shipyard will complete the construction of four vessels. In addition, this year the shipyard will obtain additional orders for the construction of four more vessels.

Unique tanker

Within the framework of the program, a new tanker Lachin, which will be commissioned in June 2019, was launched recently at the shipyard. At present, the construction of the ship hull is fully completed, and the final works on the installation of equipment and some deck structures will be carried out on the mooring bridge. A river-sea type tanker designed at the Odessa Marine Engineering Bureau with a length of 141 and a width of 16.9 m has a deadweight of 7,884 tons in sea transportation mode and 5,455 tons in river mode. Lachin can reach 10 knots per hour. This is a unique vessel in the sense that it can simultaneously carry oil and oil products inside six isolated cargo tanks with a total capacity of 9,190 cubic meters.

By order of ASCO, the Baku Shipyard also continues the construction of a second tanker (Type Ganja) with an improved design (RST 12C) scheduled for commissioning in 2020. Total cost of the project is about $28 million.

It is remarkable that during the launching ceremony of the tanker, the shipping company concluded a new contract, adding to the portfolio of orders of the Baku Shipyard a contract to build two more tankers with similar characteristics. The cost of the contract is estimated at $33 million. The government of Azerbaijan will provide part of the funds for the construction of both tankers. It is expected that the tankers will be commissioned in 2021.

"We must constantly update our fleet in order to ensure continuous development under high competition," CEO of ASCO Rauf Veliyev said. "Lachin is part of the policy of turning Azerbaijan into a key logistics hub of the region." According to Mr. Veliyev, the shipping company has updated its fleet for the last five years, purchasing 20 new ships of various types. By 2025, ASCO plans to purchase more than 50 vessels, including cargo and passenger ships, ferries, tankers, boats, etc.

Considering that most of these vessels will be built in Azerbaijan, Baku Shipyard is not in danger of downtime. So, in 2019, ASCO plans to conclude contracts for the construction of new vessels, including a 100-ton crane lifting vessel, a 50-ton pontoon ferry, a 120-ton vessel for anchors, etc.

Over the past four years, due to complex political perturbations and changed economic priorities in the Caspian Sea, where tanker traffic had recently dominated, a fundamentally new situation began to emerge. The demand for transportation of dry, container and automobile cargo from China, Turkey, Central Asia and Europe has significantly increased. This process is on the rise. In particular, in 2018 container transportation volumes through the Baku International Sea Trade Port reached 20.6 TEU (twenty-foot equivalent), which indicates an increase of 45.3% compared with the previous year.

This has noticeably increased the need for ferries and Ro-Ro type vessels. Today Azerbaijan and other regional countries are actively developing this area. Some of these vessels are being built at the Baku Shipyard, including two new combined Ro-Pax / ferry (CNF 18C) vessels designed through the Ukrainian Marine Engineering Bureau LLC. These vessels (deadweight: 5,540 tons, length: 154.5 meters, width: 17.7 meters) are maximally adapted for operation in the Caspian Sea. Depending on the nature of cargo, they will be able to take on board 56 railway tanks either 46 gondola cars or 44 freight cars, and the deck compartments will hold 100 passengers. The customer of the new Ro-Pax / ferry vessels is the Caspian Shipping Company, which concluded a $82 million construction contract in 2016. "We plan to launch the first vessel in September 2019, the second — in January 2020," R. Veliyev said.

Stable order portfolio

Undoubtedly, the Baku Shipyard will be just as productive in the foreseeable future: a stable portfolio of orders for oil tankers and various types of dry cargo will be provided thanks to the plans of Caspian littoral states and the EU to expand the volume of transit cargo. This issue was discussed during the official visit to Baku of the delegation of the European Commission on Transport and Mobility, headed by CEO Henrik Hololei.

The unique geographical position of Azerbaijan, which has become a kind of bridge for dynamically increasing traffic volumes between Europe and Asia, is extremely important for the European Union, which appreciates the possibilities of the transport infrastructure created in the country. According to H. Hololei, the Baku International Sea Trade Port in Alat, the Baku-Tbilisi-Kars railway corridor turned Azerbaijan into an international transport hub that provides multi-modal transportation of goods between Europe and the Central Asian states and China.

"Azerbaijan Caspian Shipping Company is the largest carrier company in the region and plays an important role in the transportation of goods between Azerbaijan and Kazakhstan. In January of this year, an important decision was taken to expand the trans-European transport network (TEN-T) outside the European Union towards the Eastern Partnership countries, including to Azerbaijan. This decision was taken at the legislative level and provides for cooperation in the field of finance. We adopted an investment plan, which identifies six projects for Azerbaijan and international financial institutions would participate in financing. It covers the creation of logistics hubs and the expansion of the Alat port in the following stages of the project," H. Hololei noted.

The transport projects initiated by the European Commission for Azerbaijan envisage a total of 1.1 billion euros in investments. It is planned to implement these projects as part of the Indicative Action Plan on Investment in the TEN-T transport network, prepared by the EU jointly with the World Bank. This plan includes a project to create five logistics hubs (369 million euros), a free trade zone in Alat (410 million euros) and the upgrade of the East-West railway (328 million euros). The first two projects are will be financed as public-private partnership, while the third — by international financial institutions.

In other words, EU-supported projects to upgrade the transport infrastructure of Azerbaijan to expand cargo transportation within the West-East corridor, as well as Azerbaijan's participation in the Lapis Lazuli route to increase transit from Afghanistan, will be a weighty basis for additional loading of the ASCO cargo fleet, construction and upgrade of ships by the Baku Shipyard.