Study unveils East Europe prospects

PUBLISHED : Friday, 07 April, 1995, 12:00am
UPDATED : Friday, 07 April, 1995, 12:00am

THE most comprehensive and detailed independent appraisal of the trade and shipping prospects for East Europe and the former Soviet Union appears in a new study from Ocean Shipping Consultants.

The enormous economic and political changes throughout East Europe and the former Soviet Union have had far-reaching effects on trade and shipping.

With prospects of even more change over the next decade, this study assesses the current situation and presents forecasts of developments in the oil, dry bulk and container trades.

Further chapters review the region's ship operators, ports, shipbuilding and repair sectors.

Oil production in the former Soviet Union and Eastern Europe currently outweighs consumption by a ratio of about 5:4.

Russia is the dominant producer, while the Eastern European countries and most other former Soviet states are net importers of oil.

Production in the region accounts for about 13 per cent of world oil production _ Russia alone accounts for 11 per cent and is the second largest oil-producing nation after Saudi Arabia.

Oil consumption in the former Soviet Union and Eastern Europe amounts to 332 million tonnes, or some 11 per cent of the world total.

Russia is responsible for a massive 85 per cent of oil production in the region; Kazakhstan for under six per cent; Azerbaijan for under three per cent; the remaining states of the former Soviet Union for under four per cent; and all the Eastern European countries together just three per cent.

The real significance of the non-Russian former Soviet states is in their potential rather than their current production levels.

Significant production potential lies in Kazakhstan, Azerbaijan and Turkmenistan, with some smaller-scale potential in Lithuania, Estonia, Latvia and Ukraine.

The negative demand developments of recent years are set to continue, although the scale of further contraction is not expected to be as significant, when compared with the extent of the recent decline, according to the study.

After falling by 35 per cent over 1989-1993 to 332 million tonnes, the oil consumption total is expected to decline by around three per cent between last year and 2000, before recovering slowly over the period to 2005.

By the end of the 1990s, therefore, annual demand is projected at around 322 million tonnes, rising to 330 million tonnes by 2005, which is around the level it reached in 1993.

The level of future oil production is likely to depend more on the pace at which Russia and the other oil-producing former Soviet republics can exploit their vast natural resources than on the level of world demand for oil.

For seaborne oil imports, the aggregate is expected to increase from the 88 million tonnes estimated for last year to 121 million tonnes by 2000 and to 130 million tonnes annually by 2005.

The largest expansion is expected in the oil products sector, where total shipment levels are forecast to increase by over 80 per cent to 33 million tonnes annually by 2005.

Crude oil shipments are forecast to increase by over 40 per cent by the end of the 1990s, with further expansion limited thereafter.

The pace of trade expansion in the region lagged other parts of the world even prior to the most recent trade decline.

Over the second half of the 1980s, while container trade volumes for East Europe and the former Soviet Union increased by 128 per cent, the scale of expansion for the world was about 161 per cent.

For the 1985-93 period, expansion of 76 per cent for East Europe and the former Soviet Union contrasts with 143 per cent for Europe and 196 per cent for the world.

Regarding individual countries, the 115,000 teus handled in 1993 in Poland was the largest, with the 81,000 to 83,000 teus each for Russia and Ukraine the next most significant.

There is massive potential for container trade expansion in the region. As in the past, the realisation of this potential will be dependent on the ability to achieve exports of manufactured goods and to finance imports.

For the Baltics _ and especially Russia and Poland _ the outlook is for continued recovery from the recent low levels, but with the annual aggregate not expected to reach the levels of the late 1980s until around 1997-98.

For the Black Sea and Adriatic Sea regions, the outlook is more positive. This is based on the likely extensive container port development and the pressures for trade expansion in the Black Sea. For the Former Soviet Union and Eastern Europe, container trade is forecast to continue to expand from the recent depressed levels.

The previous volume highs will be approached around 1997-98 and then surpassed.

Expansion will continue, with accelerated growth in the Baltic trades fuelling average annual growth of a little over six per cent for 2000-2005.

Total teu levels are forecast to increase from 450,000 teus in 1993 and 500,000 teus in 1994, to 790,000 teus by 2000 and 1.1 million teus by 2005.