SSG No 10 - Shipgaz

BENT MIKKELSEN
SHIPPING AND SHIP MANAGEMENT
Kremlin consolidating
its tanker assets
Sovcomflot’s Romea Champion by the Great Belt Bridge, Denmark.
December 2007 saw the completion
of the merger between Russia’s
two largest state-owned shipping
companies: Modern Commercial
Fleet (Sovcomflot) and Novorossiysk
Shipping Company (Novoship).
In essence, Sovcomflot incorporated the
second largest shipping company in Russia,
which had owned 56 vessels prior to
the merger (predominantly a fleet of modern
tankers). Thus, in a rather short period
for Russia (six months instead of the ninemonth
period allowed by the president),
the decree of Vladimir Putin signed in
June 2007 was implemented and the largest
tanker company in Russia established, its
fleet totalling 124 vessels with a total deadweight
of 8.7 million tons.
Kremlin in full control
According to the latest estimates, the merger
has created a carrier with assets totalling
USD 5.3 billion – one of the top ten largest
shipping companies in the world. When
we assess the newly established company in
the context of its activity, the result is even
more impressive: the new tanker company
is definitely among the top five global carriers
of gas and oil products.
As stated in the official Russian Gazette,
the Government of the Russian Federation
is to register the company in the list of strategically
important Russian enterprises that
must be controlled by the state, as stipulated
by legislation, even if their shares are
made available via IPOs.
The Kremlin’s wish to retain independence
in the field of sea transportation
of energy resources is also evident in the
selection of Sovcomflot’s leaders. Until
December 2004 the board of directors
was presided over by Dmitry Kozak (one
of Putin’s inner circle; he is now Minister
for Regional Development). The next
Chairman of the Board of Directors to be
elected (on the initiative of the administration
of the President, several sources claim)
was Igor Shuvalov, also a close ally of Putin
and believed to be one of the most influential
leaders in the government apparatus
and de-facto representative of the Russian
President in the G8.
Natalya Odintsova, an analyst with the
Prospect Investment Company, notes that
in this way the Kremlin is strengthening its
control of strategic enterprises, i.e. appointing
“commissars” from the Administration
of the President to preside over ambitious
directors-generals. (A similar example is the
United Shipbuilding Corporation, where
Sergey Naryshkin, Deputy Chairman of
the Government of the Russian Federation,
was appointed Chairman of the Board of
Directors). And in fact it was Igor Shuvalov
who initiated the merger of Sovcomflot
and Novoship.
Putin ‘asks’ to remember the yards
The ‘state approach’ provided by the Kremlin
is one of the main reasons Sovcomflot
is virtually the only Russian company placing
building orders with both foreign and
Russian shipyards.
“We must bear in mind that we are in the
process of establishing a major shipbuilding
company, which will bring different state
assets together in one organisation”, Putin
reminded the Sovcomflot leaders, talking
about the need for cooperation with Russian
shipbuilders. “I very much hope that
in this respect the newly formed shipping
company will take into account the possibilities
offered by the Russian shipbuilding
industry.”
Also in the summer of 2007, Sovcomflot
and the Admiralty Shipyard entered into
a long-term agreement on delivery to the
merged company of vessels for transportation
of oil and gas. “I would like to inform
72 SCANDINAVIAN SHIPPING GAZETTE • MAY 16, 2008