BMB : Penelope’s Suitors: The drama around a tanker held up in Novorossiysk

Article written with Nicholas Trickett and published on the Bear Market Brief website on March 28, 2018.

2018 got off to a rough start for Russia’s busiest port.

In late January, Transneft accused Yevgeniy Tuzinkevich, Novorossiysk port’s harbormaster, of hindering the loading of cargo at the port’s oil terminal. Tuzinkevich, Transneft claimed, insisted in giving priority to the “Penelope,” a tanker controlled by a Rosneft subsidiary. But the Penelope lacked the proper paperwork, preventing it from being loaded and forcing all other ships in the port to sit idle.

This awkward wait had real consequences. By February 21st, an analyst quoted by the BBC’s Russia service estimated that as many as 2.1 million barrels of oil were stuck on the port’s railways nearby. Russian Railways confirmed the bottleneck, saying they had been forced to limit railway transit to Novorossiysk port since February 9th. Sources also told Reuters “between 1,000 and 2,500 rail cars” were waiting to be loaded on to tankers.

That a single ship could cause such chaos might seem surprising: Novorossiysk port is no backwater harbor. With 143 million tons of cargo handled last year (the most out of any Russian ports), it is one of the country’s most critical logistical hubs and a key export point for Russian grain and oil.

The Penelope might not, however, be the crux of the story according to sources quoted by Kommersant: rather, the outlet argues, Transneft was looking to publicize a conflict between the port’s new CEO, Sergei Kyreev, and its administration for control of the harbor.

Transneft is not a random player in this controversy. Sergei Kyreev, who was appointed acting CEO in November 2017, is also the CEO of “Transneft-Terminal” and “Transneft-Service.” Just two weeks after the oil transport giant started complaining of Rosneft’s alleged preferential treatment at the port, Russia’s Antimonopoly Service approved a deal that would see Transneft take a majority share in NCSP Group, the company owning the port.


Read the rest on the Bear Market Brief website.

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