Kirkenes as an international transport• hub of the Nothern hemisphere.

Introduction

Dear minister, ladies and gentlemen

On behalf of I am happy for this opportunity to inform you about Kirkenes as an international transport•hub. I would also like to give you a brief information about the prospects for developing Kirkenes as a logistical intersection in the North.

The name of our municipality is Sør•Varanger and Kirkenes is the main township. Kirkenes has about 10.000 inhabitants. As the only municipality in the world, Sør•Varanger has common border with both and . We are also situated at the gate to the . The distance from Kirkenes to is 240 km. and from Kirkenes to Ivalo it is 210 km.

Kirkenes from an edge to a centre in the North

For more than ninty years has been the corner•stone company in our municipality. The company produced a black iron• powder called slig, which was delivered to the steel•factories all over Europe. Sydvaranger was established in 1906 and this year the company celebrate one hundred years anniversary. In the middle of 1970•ties the company employed about 1300 people and even in 1994 it was still 600 persons working in Sydvaranger. In 1996 the Norwegian Goverment decided stop in all mining operations and today it is only 5 employees in the company.

The opening of the Russian border in 1986 had a strong influence of the business•development in our municipality. In the most of the last century, Sør• Varanger was situated in the edge of Europe and the business•contacts between east and west were restricted. After opening of the Norwegian•Russian border we saw nearly over night the businesscontacts being establish between Murmansk and Kirkenes. The most activities were in the shipping industry, trade and tourism.

Today Kirkenes is known as a Russian in . 5% of the population in Sør•Varanger are born in Russia. In the library 10% of all customers are Russians. Our children are offered to learn in the primary school. In January 1993 the Barents declaration was signed by five foreign ministers in Kirkenes . Later the same year the Russian general consulate was establish.

The developement of the oil and gas resources in the Barents Sea will most certainley hopefully open up a new and important market segment for Kirkenes in the coming years. In an international oil conference in St. Peterburg we were told that the world`s expected future oil and gas discoveries can divide into three parts; one third will come from the Middle East, one third from deep sea drilling and one third from the Arctic shelf. With our localization and infrastructure, we believe that Kirkenes has a role to play in this development.

The roads are the nerves in our communication system

The roads are the main artery in our transport system. All the year round we have a daily busconnection between Kirkenes and Murmansk. In the summertime we also have a busconnection between Kirkenes and Ivalo. For privat car trafic we have an 24 hours open border towards Finland. In Norway there is a govermental process to examine the needs for extending the opening time at /Boris Gleb.

Statistical information from Boris Gleb shows that the traffic between Norway and Russia have decreased the last years. I don’t know what the reason is, but may be the high visa•costs could be one of the reasons. About 70% of all people crossing the border are Russians. There are 20.000 seamen who cross the border at Boris Gleb every year.

The traffic between Finland and Norway over Neiden is stable. It is a heavy traffic from Kirkenes to the shops at Nellime. Even we are neighbuoring to an European union•country, we do not see so much cargo transports between our countries as could be expected. Here we have a job to do.

Kirkenes Airport – Our gate to the world.

In the beginning of may this year a new passenger• terminal will open at Kirkenes Airport. It is welknown that the existing facilities are out of date. In the summer time we have three directly flights from Kirkenes to and in the wintertime we have two. Today we have big problems to handle two Boing 737 aircrafts at the same time in the terminal. In the new terminal we will improve the conditions for international flights to Kirkenes significant, so now we are ready to invite Finnair and Aeroflot to open regular air•routes to Kirkenes.

As you see from the scheme, the traffic over Kirkenes Airport is increasing all the time. During the last years the fares have declined dramaticly on the direct flights in Norway. So people from the Eastern part of come to Kirkenes and go directly to Oslo by plane. Every day there are a minibus at the airport bringing people to and from Murmansk. Also the airborne cargo• transport is very important for us. A big part of this cargo is spareparts to the russian trawler fleet.

Kirkenes Port – the key of developement

The port of Kirkenes will play an increasingly important role in serving the industrial development in our region. The harbour is icefree and have a sufficient waterdeep. A year ago the 350.000 tons wessel Belokamenka visit our harbour. The main activity today is to serve the international fishing fleet. More than 600 russian trawlers are visiting Kirkenes every year. They use our cold store facilities, get bunker and fresh water, change crew and they use services from our shipyard Kimek.

The lifting•operation of the russian submarine Kursk has demonstrated the importance of Kirkenes as a close neighbour to Russia. The Dutch operators of the lifting project did for several weeks use Kirkenes and its service facilities as a preparation base. A lot of international specialists work together with the local industry to find the best technical solution for the lifting operation. According the summarizing report Kirkenes was very suitable as a base for this kind of operation in the Barents sea.

The oil transhipment is a new activity in our port. A company named Kirkenes Transit has got permission to handle 25 ship•to•ship•operation in the Kirkenes fjord. An ice reinforced vessel comes from Vitina in the White Sea with 70.000 tons of condensat. In the Kirkenes•fjord this vessel pump the condensate to another vessel which then transport the condensate to the markets in Rotterdam and USA. It is big interest from many companies to establish a transhipment activity in the fjords near by Kirkenes. We are now working to get a permanent permission from the environmental authorities.

A railway•connection between Kirkenes and will be a good investment for the next hundred years

A railway connection between Norway and Russia is essential to develop the industry in the region. Only 40 km lack to connect Kirkenes to Russian railwaysystem. The Russian railway is 86000 km. long and carries more than 1 billion tons of different cargo annually. In 1997 the railwaysystem in transported 24.1 mill. tons of different cargo. According to a report from Svanhovd science centre was more than 7 million tons of export oil sent to Vitino and Murmansk in 2004 by October Railway. In 2010 – 2015 the expected growth of oil•freight by railway to Murmansk will be 40 million tons a year. Our calculations say that 5 million tons of cargo pr. year sent to Kirkenes by railway, will be enough to justify such a prolongation.

More and more often we get the question why we dont have prolonged the railway from Nikel to Kirkenes. So far the central Norwegian and Russian authorities have been negative to the project because they have not been convinced that there is a sufficient traffic potensial. Finnmark county are very positive to work further on with this idea. After a meeting between Finnmark county and Murmansk Oblast the 3th of September 2004, Finnmark county send out a press release which say that the Governor of Murmansk Jury Jevdokimov want to introduce the issue of the future railway from Russia to Kirkenes for debate. From my point of view this is an important step in the right direction. Our goal is that during 2006 we should see the national authorities establish an railway•agreement between Norway and Russia.. We will propose that it be formed a high•qualified expert group from both countries, that work out a feasibility study about the market situation, technical solutions, environmental consequences, investment needs, financing, partners and Russian /Norwegian attitude to the project. The study would form the basis for a final decision on the building of the railway between Kirkenes and Nikel.

What about the future?

In our effort to make Kirkenes as an international traffic•hub in the North, we will in the coming years pay a special focus on the following matters: x To reopen the iron ore mines in Bjørnevatn and start export of 2.5 mill. tons of pellets per year x Kirkenes should play an important role in the developing of the oil and gas industry in the Barents sea. x Realize the railway•project and wish the October Railway welcome to Kirkenes x 24 hours opening of the Russian.Norwegian border at Boris Gleb x Establish a daily flight between Murmansk and Kirkenes x Establish a good fiber infrastructure in x Introduce a new custom•corridor between the Russian border and Kirkenes Port, a distance on only 14 km. x As a long•term project we will work for an increased use of the Northern Sea Route and we hope that Kirkenes could engage in close cooperation with Murmansk and being an important stop on this very promising route along the Russian mainland, serving Europe,North America and Asia.

Thank you very much for your attention