Liepaja Bulk Terminal’s pier at Liepaja port. Photo: Andris Gertsons, Kurzemes Vards
Re:Baltica for the first time publishes a list of the largest importers of Russian resources in Latvia since Russia’s full-scale invasion in Ukraine. The main commodities are those shipment of which civil society protests against – grain, oil products and metal alloys.
A slightly dilapidated brick office building at the Liepaja Port is home to the largest importer of Russian resources in Latvia. During the first two years since Russia launched the war in Ukraine, this company has imported goods and raw materials worth at least USD 335 million.
You have probably never heard its name. The owner, Irina Hrapova, is also unknown to the general public.
That is because the Transit Service Agency (TSA) does not produce anything itself. It is an intermediary that organizes freight transport, finds a place to store the goods and handles customs procedures.
TSA provides these services to one of the three largest companies in the Liepaja Port – Liepaja Bulk Terminal (LBT), whose main business is the transit of grain and other agricultural products. These products account for half of the Liepaja Port’s cargo volumes, said the company’s board chairman Juris Matvejevs.
“If the border was to close rapidly – and we are not talking only about Russia, but also about Central Asia – it would mean at least 1,000 port-related jobs for Liepaja,” explained the port manager Uldis Hmielevskis. “It would practically be a second Liepajas Metalurgs for us,” he said
Importing grain, oil products and metals
Unlike exports, which have fallen by nearly 6 percent in the two years since Russia’s full-scale invasion in Ukraine, imports have fallen much faster. Last year, it was only a third of the pre-war level.
Russia’s exports are the source directly feeding the war machine. According to the Re:Baltica analysis, during the first two years of the war, Latvia imported mostly grain and agricultural products, energy resources and metal alloys from Russia.
The Economics Ministry has resumed publishing a quarterly list of Latvian exporters to Russia but it does not publish such a list of importers. Re:Baltica has obtained data from Russian customs declarations. From these we selected the 20 largest importers of Russian goods and resources in Latvia. It is not possible to distinguish in the data which goods are imported in transit, and which are staying in Latvia.
Half of the top companies are Latvian companies. The other half are some international giants and companies that look foreign but, in reality, are linked to Russia.
The company is colorful
Among them, there is a company subjected to the US sanctions, and a company that has gained from taking over western assets in Russia.
Re:Baltica gave all companies an opportunity to explain their business choices. Only three out of 20 responded.
Both international and scandalous
Since the sanctions were imposed on Russia, previously unknown companies with foggy ownership structures have sprung into powerful players in Russia’s oil exports by sea, accounting for at least half of them, according to the US Treasury Department. Two of them – Nord Axis Limited and Bellatrix Energy Ltd. – appear on the list of the major importers of Russian resources in Latvia.
Nord Axis Ltd. was registered in Hong-Kong nine days before Russia’s massive attack on Ukraine. According to the Financial Times, the previously unknown company quickly became one of Russia’s biggest oil traders and bought a multi-billion stake in Vostok Oil, a giant Arctic field backed by Russian President Vladimir Putin.
Vessels contracted by Bellatrix Energy Ltd have called at least 150 times at Russian ports since July 2023. It has sold tens of millions of tons of products of Russian state-owned companies and received hundreds of millions of dollars in loans from a Russian state-owned bank, US experts discovered. The US has sanctioned the firm. It continues to operate through Latvian ports because it is not on the EU sanctions list.
The second and third largest importers, Satka Alloys Trading SA and Omni Industries B.V, are registered in Switzerland and the Netherlands and distribute metal alloys to European, American and other markets.
The first one works with products from the Satka metallurgy plant in the Chelyabinsk region. It is one of the largest producers of iron alloys in Russia, according to the companies’ websites.
The Dutch company is controlled by Cypriot offshore company Bonarda Investments Ltd, whose real owners are unknown, but links also lead to Russia. Its owners indirectly control the Kasagorsk metallurgy plant in Russia and the Kramatorsk metallurgy company.
The link between the two companies is their director Evgeny Ivanov. His father is involved in the management of the holding structure, according to a study on Russian investments as part of hybrid warfare conducted by the Ukrainian Centre for Analytical Studies and Countering Hybrid Threats. “This holding controls 35-38 percent of the entire Russian market for iron alloys,” the study says. “It is possible that it is owned by the Ivanov family, but this seems unlikely given its size, strategic importance and structural location in Russia, or by some other offshore entity. It is likely that the real owner of this structure is VEB Bank (Vnesheconombank).”
Cyprus-registered Espentina is jointly owned by Russian businessmen Yuri Kushnerov and Alexander Govor, who have been described as one of the main beneficiaries of Russia’s ongoing redistribution of Western companies since its invasion in Ukraine and introduction of sanctions. He bought up the former McDonald’s restaurants, patriotically renaming them to Vkusno & Tochka (Tasty and That’s it), and the Finnish packaging and disposable tableware business Huhtamaki. Both also own an oil refinery in the Kemerovo area, Reuters news agency reported.
None of these companies responded to Re:Baltica’s questions.
Weird neighbors
Lithuania-based Ekspogrudas, a grain transit company, is also linked to Russia. Its owners are Russian citizens Pavel and Svetlana Demidovs, according to the Lithuanian Enterprise Register. The war has been very good for this company. With two employees, the company has jumped from zero in 2020 to a turnover of EUR 46 million two years later, earning EUR 5.4 million in profit. The company is unknown in Lithuania, but a publication in the Russian Forbes magazine points out that Demidov is one of the big players in the agricultural sector. He owns several sugar plants in Kuban.
The bitumen transporter KeyStone Shipping OU is ranked as the fourth largest Russian exporter in Estonia. KeyStone Shipping business partners were the Russian state companies Gazprom and Tatneft
Unwilling to talk
Returning to Latvian businesses, the second largest importer after Liepaja is grain terminal Ventspils Graudu Terminalis (VGT). It also mostly imports grain and other agricultural products. The value of VGT’s cargo imports from Russia in 2022-2023 is estimated at USD 87.5 million, according to data obtained by Re:Baltica.
The company’s latest annual report for 2022 shows that the Russian war in Ukraine has affected its business, with profits dwindling by more than half and turnover by sixth. The company’s management attributes this to “difficult conditions caused by global economic changes and unfavorable trends in the transit industry.” The word “war” is not mentioned.
The company did not respond to Re:Baltica’s questions.
Similarly, Compass Transit, a ship agency company owned by BluOrBank’s management and shareholders, and a major grain importer, was not willing to talk, either.
Oil product transhipper and trader OVI, LNG importer Intergaz, grain and other agricultural products terminal in the Freeport of Riga Alpha Osta (half of the shares are owned by the company that owns agricultural cooperative LATRAPS), freight forwarder Cargo Concept and oil and agricultural liquid cargo terminal DG Terminals in the Port of Liepaja did not respond to questions, either.
All roads lead to Central Asia?
The importers of gas bottles and car gas, Latvijas Propana Gaze (LPG), and Rigas Oglu Terminalis (ROT) coal terminal were ready to respond in writing about their business. The latter is indirectly controlled by the families of oligarchs Andris Skele and Ainars Slesers. It is mainly involved in coal transit via the port of Riga.
LPG pointed out that it imports liquified natural gas (LNG) from Russia and only 28 percent of it stays in Latvia – the rest is transported to Poland, Lithuania, Estonia and Ukraine. It refused to specify the Russian refineries from which it buys the product, but added that it is trying to buy more from the Mazeikiai refinery and is evaluating alternatives for supplies from Kazakhstan, Norway, the US, as well as tanker transport.
The reason? In December 2024, an EU ban on LNG imports will come into force (previously only gas bottles were banned). At that point, they will also stop their cooperation with Russia and hope to compensate with LNG from Kazakhstan, the first batch of which they hope to import this month.
“The main problem is that it is not yet possible to replace the volumes of Russian oil gas. But we suggest you, as a journalist, to check with the Latvian government on the question of a complete withdrawal from cooperation with Russia on the transit issue,” the company wrote. “Ending cooperation with Russia means denying the possibility of transit on the Russian railway, which also carries goods from Kazakhstan, China and other countries.” This would lead to a shortage of petroleum gas in the Latvian economy, which in turn would cause problems for the grain dryers that run on petroleum gas in the summer and autumn. This could be compensated by tanker deliveries, but it would not happen so fast. Therefore, possibility of cooperating with Russia to maintain rail transit should be discussed.
ROT board chairman Mikelis Lapse pointed out that the company does not import goods and raw materials from Russia as coal and petroleum coke have been on the sanctions list since Russia’s full-scale invasion in Ukraine. It has no contracts with either Russian or Belarusian companies. Appearance of the company on the list of major importers is due to the fact that Russian customs declarations also show transit cargoes, for example, from Kazakhstan and Uzbekistan, which pass through Baltic ports to destinations all over the world.
In 2022 and 2023, ROT’s main business was coal from the US, Colombia, South Africa and Kazakhstan, which is mainly shipped to Poland and other European countries, and manganese ore from Gabon and South Africa, which is delivered by freight forwarders to Russian factories for the production of iron alloys. However, the volume of the latter is also falling and last year accounted for a quarter of the ROT’s cargos.
“ROT’s customers are various international forwarding, logistics and trading companies,” Lapse wrote. “We do not have direct contracts with cargo owners and buyers.”
Demanding an alternative
Juris Matvejevs, board chairman of Liepaja Bulk Terminal (LBT), was the only one who agreed to a meeting. His arguments are the usual ones – there are no direct contracts with Russia. In two years, of the 2.5 million tons of grain and other products handled by the terminal per year, only 1,000 tons have remained in Latvia, the rest has been shipped on to European and US consumers. The owners have invested EUR 50-70 million in the terminal, which employs 374 people in Liepaja and paid EUR 5.8 million in taxes last year. If Liepaja does not handle these cargos, someone else will. Russian grain, for example, is bought by the second largest trader in the US. “Everyone is profiting from this war. Don’t be naive.” Matvejevs told Re:Baltica.
“What bothers us most is the uncertainty and the lack of decisions – it will cost so, so and so. You see what the discussions are. There is no question of abandoning this direction. If it is needed, it is needed – we are not against it, but several years are necessary to change it,” he said. “But why don’t we talk about the fact that since the decline of the ports started five years ago, and it was clear that cargoes were going away to Russian ports, we have done nothing to establish domestic transport by rail? Ministers have changed, I don’t know how many ministers have changed, but there is only one way of talk – we have to do it, we have to do it.”
He explained that road transit costs EUR 0.5, while rail transport costs EUR 2.5-3 per ton. “What has actually been done to ensure that, even domestically, we can transport grain from Latgale by rail? Nothing, but now I have to answer as an entrepreneur how I will reorient myself in a day,” he said. “So, what is our goal? To give up and do nothing, or to criticize those who continue to work and think how to reorient themselves?”
When I ask how the LBT head can guarantee that the companies he operates are not transporting stolen or “bloody grain” from Ukraine, his patience ran out. “Why are you asking such stupid questions? Look at the map! (…) What sense would it make for them to bring something here with such high inspection prices? “
Price of giving up
The Economics Ministry recently presented to ministers and ports calculations of what closing the eastern border would mean for Latvia’s economy.
Source: presentation by Economics Ministry
Bank of Latvia President Martins Kazaks said that Latvia’s cooperation with Russia is like sitting on a powder keg. If we gave it up, it would mean, for example, that this year the economy would have no growth or have a slight recession. “But this is not something that cannot be handled. Yes, it is painful, but it is not the pain of the whole economy. If there is a rise in unemployment, it will be temporary and small, because the labor market is still quite strong. (…) It is more a question of individual companies, individual sectors,” said Kazaks.
Annual reports of the large importers show that they all generated profit in the first year of the war. It is unlikely that anybody would be willing to give up their profits voluntarily.
Author: Sanita Jemberga Re:Baltica
Data processing: Greete Palgi
Graphical and technical support: Madara Eihe
Russian and English translation by news agency LETA
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