On the wave of Caspian boom: shipbuilding is on the rise Review by Caliber.Az

The stabilization of global trade in the post-pandemic period has expanded interest in the Middle Corridor connecting China and Central Asia (CA) with Türkiye and Europe. This trend only intensified amid the Russian-Ukrainian war, which forced cargo carriers to look for alternative routes for transhipment of dry, container and road cargo through the Caspian region.

In turn, amid growing oil transhipment across the Caspian Sea, the regional countries are increasing their tanker fleet, and building new ships at local shipyards. The leader in this regard is Baku Shipyard LLC, where, together with tankers and ferries, the production of fundamentally new types of watercraft is being established. So, on October 12, the Baku Shipyard and the Dutch Damen Shipyards Gorinchem B.V. signed a contract for the construction of the dredging vessel CSD 650.

At the beginning of June this year, Baku Shipyard LLC, Baku International Sea Trade Port CJSC (Port of Baku) and the Dutch company Damen Shipyards Gorinchem B.V. entered into a memorandum of cooperation providing for the construction of a dredging vessel to remove obstacles arising in seaports as a result of the decline in the level of the Caspian Sea.

It should be noted here that Azerbaijan’s new partner, the Dutch company, is one of the world’s leading giants in shipbuilding and ship repair; it has a total of 35 specialized factories in different countries of the world, employing over 11,000 people. Among them, 15 shipyards are located in the Netherlands, where the company is headquartered, and 20 shipbuilding and repair plants are localized in Poland, Romania, Türkiye, Qatar, China, Vietnam, South Africa, UAE, Singapore and other countries of the world. Such geographic diversification and unique international cooperation experience allow Damen shipbuilders to quickly and flexibly adapt to local goals and technical requirements in different regions of the world.

It is not surprising that the efforts of Dutch specialists in implementing the project in Azerbaijan were equally effective: within more than four months since the signing of the memorandum, the partners assessed the volume of financing and analyzed the parameters of the feasibility study (TES) of the project. As a result, on October 12, Baku Shipyard and Damen Shipyards Gorinchem B.V. signed a contract for the construction of the dredging vessel CSD 650.

The milling dredger of the CSD 650 project is a 535-tonne vessel with a total length of 61.2 metres, equipped with a 700-kW cutter designed for dredging at a maximum depth of -18 metres. The vessel is equipped with a refugium pump located in a separate compartment, the total installed power of the watercraft is 2,972 kW, which provides a capacity of about 7,000 cubic metres per hour of soil mixture.

The key customer and beneficiary of this project is the main port of Azerbaijan - Port of Baku: here it is necessary to recall that the work on laying the fairway and other work on cleaning the seabed in the port under construction was carried out about 15 years ago, since then due to the noticeable shallowing of the Caspian Sea in the Alat harbour and several other ports of the republic, a need arose for additional dredging work. However, after the construction of the CSD 650 vessel and completion of its operation in Azerbaijan, this dredger can be rented to neighbouring countries.

The demand for vessels of this type today is very high: for example, in Kazakhstan alone, in order to combat the shallowing of the coastal areas of the Caspian Sea, expensive dredging work will be needed. The seaports of Aktau and Kuryk are experiencing problems with depths in the water area and the approach channel: the current depth level is on average 4.9 metres with the standard level of shipping being 6.11 metres, as a result, the loading of ships in Kazakh ports is less than 75 per cent of the available deadweight of ships.

Due to falling water levels in the Caspian Sea, the volume of dredging work in the ports of northern Iran has also increased by 13 per cent per year. Russian shipping companies face similar problems in the northern geographically shallow part of the Caspian Sea: in particular, dredging work is in demand in the ports of Makhachkala, Astrakhan, and Olya. Accordingly, if the demand for dredgers continues in the future, new vessels of this type may be built at the Baku Shipyard shipyards, but according to orders from the Caspian states.

However, in the last period, the Baku Shipyard has not experienced a shortage of orders for new tankers, ferries, dry cargo ships, and vessels for other purposes. According to plans until 2030, Azerbaijan Caspian Shipping Company (ASCO) plans to purchase about 50 ships, including both cargo and passenger ones. It is noteworthy that most of the cargo ships will be built in Azerbaijan: ASCO is gradually placing most of the orders at the facilities of Baku Shipyard; the presence of its own shipyard (the plant was built in 2013) has enabled the country to achieve significant self-sufficiency in tankers, ferries and Ro-Pax vessels in recent years.

Currently, Baku Shipyard's portfolio contains a total of ASCO orders for the construction of ten vessels of various types: in addition to tankers, it is planned to build tugs, a 100-ton lifting crane vessel, a 50-tonne crane vessel DP1, a 50-tonne pontoon vessel, a 120-tonne auxiliary vessels for setting anchors, etc.

This activity was driven by the energy crisis in Europe, which intensified with the beginning of the Russian-Ukrainian war and subsequent economic, transport and logistics sanctions, which actually interrupted the traditional logistics of oil cargo from Russia to Europe. The growing demand for oil, the EU's needs for fuel and chemical products coming from Azerbaijan, as well as Kazakhstan and Turkmenistan, have significantly increased the need to expand the ASCO tanker fleet within the Trans-Caspian route. This is not surprising, since in the first half of 2023 alone, ASCO transported 2.5 million tonnes by tanker, which is 56.3% more than the same period in 2022.

To implement these tasks, the first domestic tanker “Lachin” with a deadweight of 7,800 tonnes was built on the slipways of BakuShipyard in 2019, followed by the launch of an oil tanker of similar deadweight “Kalbajar” in September 2021. And in December last year, the tanker “Akademik Khoshbakht Yusifzade” was put into operation, equipped with six cargo tanks with a total capacity of 9,212 cubic metres, and capable of simultaneously transporting crude oil and various petroleum products.

The commissioning of a tanker of the same series, Zangilan, is scheduled for the end of 2023. It is noteworthy that all of the listed tankers of the Volqa-Don MAX project were developed with the assistance of specialists from the Marine Engineering Bureau of Odessa, and are of the river-sea type, that is, in terms of their dimensions and draft, they easily pass through the Volga-Don Canal, and are also capable of entering shallow waters ports, and at maximum load.

Meanwhile, taking into account the shift in transport logistics of the Eurasian region towards the Middle Corridor, the interest of forwarding companies in the transportation of non-oil, multimodal, container cargo within the Silk Road corridor has recently increased manifold.

Already today, there is a noticeable increase in non-resource cargo traffic along rail-ferry routes (TRACECA, TMTM, Lapislazuli) between the ports of the Caspian Sea, with the transhipment of additional transit cargo from the Middle Kingdom within the framework of the Chinese “One Belt, One Road” corridor. To meet this demand, multifunctional Ro-Pax type vessels were built at the BakuShipyard - the Azerbaijan ferry was launched in March 2021, and the Akademik Zarifa Aliyeva was launched in April 2022.

“The shipbuilding plant’s capacity allows it to simultaneously process 25,000 tonnes of metal, which makes it possible to build four tankers within a year. So far, the plant has implemented projects for the construction of 12 vessels for various purposes, and also overhauled over 170 vessels and updated over 30 vessels,” Fuad Madatov, manager of the BakuShipyard project management department, recently said.

Many regional projects on the repair of vessels from Kazakhstan and Turkmenistan have been implemented at the shipyard, and in the future Azerbaijan counts on orders for new vessels from Central Asian countries and Iran.

"Azerbaijan plans to expand the capacity of the Baku Shipyard to produce not six to eight, but perhaps 10 to 20 ships annually," Azerbaijani President Ilham Aliyev said not long ago. - We need to reconsider our shipbuilding capabilities in the Caspian Sea, because orders are coming from neighbouring countries, as well as to take into account the possibility of replacing decommissioned ships that have been in service for many years".