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• NCSP Holding
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• Investments projects

Completed projects

Grain Terminal Construction

 
The Port's proximity to Russia's main grain producing regions in southern Russia and our leading position in the grain export market makes the expansion and modernisation of our grain export facilities one of our top priorities. On 29 August 2007, we have completed construction of a modern, special-purpose grain terminal with a turnover capacity of 4.0 million tonnes of grain per year. Our goal is for this new grain terminal to become the fastest grain handling complex in Russia. The new grain terminal has been designed to accept grain and seed cargo delivered to the Port by rail or truck transport and will provide services for drying, oiling, filtering and storing grain. The new facility is furnished with state-of-the-art, high-speed handling equipment to ensure safe, fast and continuous loading services, including ship-to-ship equipment to unload river-going vessels, and has a capacity to process 120,000 tonnes of grain simultaneously. The new facility allows loading of grain onto a Panamax class vessel with a displacement of up to 50,000 tonnes in 72 hours. Construction of the terminal began in the first quarter of 2005 and was completed in August 2007. The total investment in the project was expected to be US$81.3 million, of which approximately US$78.3 has already been invested.

Bunkerage Complex

  
Our bunkerage service volumes have been growing steadily during the past three years. We believe that the successful completion of our other modernisation projects will contribute to a substantial increase in the number of vessels entering the Port, which in turn will result in an increased number of vessels that will require bunkerage services. Our goal is to increase our bunkerage fuel sales from 180,000 tonnes in 2006 to 600,000 tonnes by 2009, which would result in an increase in our market share of fuel sales at the Port from 13.7% in 2006 to 40% in 2009.

 
In May 2007, we have completed the construction of a new fuel bunkerage complex for fuel oil and diesel fuel with a direct railroad connection that will facilitate the storage and unloading of up to 600,000 tonnes of bunkerage fuel per year. We also plan to reconstruct the existing bunkerage berth to improve the capacity and efficiency of our fuel bunkerage services. Improving the terminal infrastructure will also allow us to deliver bunkerage fuel directly to berthed vessels via a newly-installed pipeline rather than using trucks to transport the bunkerage fuel to berthed vessels, thereby reducing our environmental transport risks and allowing us to fulfil fuel requests more quickly and efficiently. We expect this project to be completed by the end of 2009. The total amount budgeted for this project is estimated at US$19.8 million, including US$9.3 million of working capital financing, all of which has already been invested.

Future

Development

In 2008, the NCSP Group successfully completed the first stage of a significant investment program to upgrade existing facilities and build new state-of-the-art transshipment terminals to meet growing demand for port services. The completion of the first stage improved the Group’s ability to diversify cargo flows and increased its flexibility to attract additional cargo.

The Group was able to complete the first stage of the investment program on time and on budget as a result of a concerted effort to introduce and improve a corporate system for project management.

The Group now has a successful corporate project management system in place. Having gained valuable experience implementing large investment projects, putting together project teams and establishing strong relationships with contractors and suppliers, the Group will be able to significantly improve the quality and efficiency of work while implementing the second stage of the investment program.

The Group completed six investment projects by the end of 2009:

1) Reconstruction of the OJSC NLE container terminal to increase throughput capacity almost 6 times to 350 000 TEU annually. The terminal continued normal operations during the two-year project. Reconstruction of the berths and dredging work was completed in January 2008. The terminal can now receive Panamax class container ships. The project cost $86.4 million.

2) Reconstruction of the OJSC NLE timber terminal to expand throughput capacity by 36.4% to 3 million cubic meters of processed timber per year. Six new overhead cranes were put into operation in April 2008, more than doubling the rate of transshipment. The project cost $14.8 million.

3) Construction of a grain terminal at PJSC NGT with capacity of up to 500,000 tonnes per month. The project cost $82.6 million. The grain terminal was opened in June 2008 and reached full capacity in August as planned. This is the largest and fastest transfer terminal in Russia.

4) Construction of bunkering terminal at OJSC IPP with capacity of 648,000 tonnes annually. The terminal was opened in October 2007 and reached full capacity in April 2008. The project gave Novorossiysk Port a modern terminal for loading bunker fuel onto fueling vessels that meets environmental and fire safety regulations. The project cost $19.8 million.

5) Construction of an oil products (diesel fuel and gasoline) terminal at OJSC IPP with capacity of 1 million tonnes a year. The project cost $35.7 million. The terminal, completed in less than one year, was launched in October 2008.

6) Construction of the first phase of a container terminal at LLC Baltic Stevedore Company as part of a $70 million project to expand the company’s container terminal and quadruple capacity to 400 000 TEU annually. The company bought two Liebherr LHM400 cranes in September 2008, enabling it to immediately increase container handling significantly. First phase investment totaled $8 million.

NCSP Group conducts a detailed market study before launching any new projects to confirm that there is steady demand for the new transshipment capacity or that the Group can attract partners who can support the planned utilization of this capacity.

In 2009 the Group began the second stage of its investment program, which includes the following key projects:

1) Construction of a container terminal with capacity of 1.2 million TEU annually to increase transshipment volume and market share on the container cargo market. The project will be carried out in several independent stages, which will provide the necessary flexibility in implementation. The new terminal will be able to handle container ships with capacity up to 10,000 TEU, allowing ocean shipping lines to make direct calls at the terminal. In 2009 the company carried out design work and mapped out the project stages.

2) A project to build a fuel oil transshipment terminal with capacity of 4 million tonnes per year is being implemented by a 50/50 joint venture with a major international oil trader. Construction will take about two years starting in 2010. Design work was carried out in 2009.

3) A project to expand the throughput capacity of the PJSC NGT grain terminal by 2 million tonnes per year. The possible expansion of the terminal was and construction of the grain terminal. The project will expand grain storage capacity to 160,000 tonnes and increase the productivity of train and truck unloading facilities from 2.9 million tonnes to 4 million tones and from 700,000 tonnes to 1.8 million tonnes per year, respectively. A new

conveyor line and ship loading machine will be installed at Pier No. 3 to increase the rate of loading.

4) A project to build the second stage of a container terminal at LLC Baltic Stevedore Company with throughput capacity of up to 400,000 TEU per year. The LLC Baltic Stevedore Company terminal is located at the entrance to the Kaliningrad Sea Canal, giving it a competitive advantage over stevedoring companies operating in the Kaliningrad Port, which is located at the end of the 42-kilometer sea access canal.

5) The Sheskharis Oil Terminal reconstruction project at PJSC NCSP. More than $90.0 million had been invested in the project by the end of 2009. The project to overhaul and modernize the oil terminal will expand throughput capacity by 15 million tones per year once it is completed in 2012. A new oil and oil products control and metering system was commissioned under the project in 2009. Work also began last year to build new “A” loading platform at Berth No. 1 that will be able to accommodate tankers with deadweight of 80,000 to 150,000 tonnes.

6) A s part of its strategy to grow its tug and towing business, NCSP Group signed a contract in 2009 for new ocean tugs that have already been built or are in the final stages of completion. The contract, worth up to 25 million euros, attests to the Group’s efforts to regularly update its fleet and expand its range of tug and towing services.

NCSP Group had spent a total of $389.2 million on its investment program by the start of 2010.

Alongside the investment program to build new stevedoring capacity, NCSP Group is continuing to update and modernize equipment at existing

facilities.

The Group adopted a Technology Policy in 2009 that has become a key document defining the focus in updating equipment at NCSP Group companies.

The Technology Policy’s key objectives are:

• to define the optimal configuration of transshipment equipment,

• to establish a feasible plan for updating and modernizing transshipment equipment based on the best industry practices and taking into account the needs of NCSP Group operations.