Russia to Build Large New Port Complex on Caspian Sea to Boost Trade, via Iran, with China

This week, reports emerged that a July 29 government order in Russia greenlighted a $1.6 billion Caspian port project in the Russian city of Lagan intended to boost the country’s Caspian trade via Iran, with China and India.  The project has been under deliberation for some time, and it is likely that Chinese contractors will be involved in its construction.  In March 2020, China’s Poly Group and China Energy Engineering Group International confirmed plans to invest in the port’s construction, while Iran has also expressed interest in investing in the complex.

Once completed, the Lagan port terminal is expected to add 12.5 million tons of throughput capacity to Russia’s existing  annual Caspian port capacity of 7.5 million tons of cargo, and also help reduce the delivery time of goods from China and other Asian countries, to Europe.  It is also anticipated that, once operational, the port complex will sway Caspian power dynamics in favor of Russia and Iran, considerably reducing the importance of Azerbaijan’s port of Baku, presently the Caspian’s largest port with an annual throughput capacity of 9 million tons.

The port’s construction may also be an impetus for Russia’s construction of a ship canal between the Caspian Sea and the Sea of Azov in the Black Sea, which has also been under consideration for some time.  The proposed Eurasia Canal would provide a shorter route (to that of the existing Volga-Don canal) between the Caspian Sea and Black Sea.  Broadly, the canal has the potential to transform the Lagan port complex into a major transshipment route, linking east-west maritime trade.

Recent years have seen Russia considerably increase its influence in both the Black Sea and Caspian Sea. In August 2018, Russia and Iran were among the five littoral Caspian states to sign the Convention on the Legal Status of the Caspian Sea, which established distinct maritime boundaries, alleviating legal barriers that had previously barred activity in the region.  Russia and Iran have  since expanded their military and commercial cooperation in the Caspian.