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A possible extension next month of the deal that allows the safe wartime export of grain and fertilizer from three Ukrainian Black Sea ports could depend on the reopening of a pipeline supplying Russian ammonia to one of those Ukrainian ports.
THE BUSINESS
The United Nations and Turkey brokered the Black Sea Grains Initiative for an initial 120 days last July to help address a global food crisis worsened by Moscow's invasion of Ukraine, one of the world's top grain exporters. It has been extended three times since then, most recently until July 17.
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More than 31 million tons, mainly corn and wheat, were exported by Ukraine under the deal. The Black Sea Grain Initiative also allows for the safe export of ammonia – a key ingredient in nitrate fertilizer – but none have been shipped.
To convince Russia to agree to the Black Sea Grains Initiative, a three-year pact was also reached last July in which the United Nations agreed to help Moscow overcome any obstacles to its own food and fertilizer shipments.
While Russian food and fertilizer exports are not subject to Western sanctions imposed after the February 2022 invasion of Ukraine, Moscow says restrictions on payments, logistics and insurance pose a barrier to shipments.
AMMONIA
A pipeline used by Russia to pump up to 2.5 million tons of ammonia annually for global export to Ukraine's Black Sea port of Pivdennyi from Togliatti on the Volga River in western Russia has been closed since the invasion from Moscow to Ukraine.
It is the world's longest ammonia pipeline, at about 2,470 kilometers (1,534 miles) long, according to the International Energy Agency.
Ukrainian authorities said workers would need about 30 days to prepare the pipeline to pump ammonia again.
UKRAINE
The Black Sea Grain Initiative covers “safe navigation for the export of grain and related food and fertilizers, including ammonia” from the Ukrainian Black Sea ports of Odesa, Chornomorsk and Pivdennyi, known in Russian as Yuzhny.
Ukraine argued that the text of the agreement does not cover the transit of Russian ammonia through Ukraine. A Ukrainian government source told Reuters that Kiev would consider restarting the pipeline in exchange for an expansion of the Black Sea grains deal to include more ports and commodities.
RUSSIA
Russia said the ammonia transit “although not explained literally, is implicit in the logic of the agreement.” Moscow said it was “ready without delay, in a matter of days” to restart the ammonia pipeline.
Until the ammonia pipeline restarts, Moscow said it will limit the number of ships allowed to travel to the port of Pivdennyi under the Black Sea agreement, the UN said.
UN data shows that no ships have visited Pivdennyi port for more than three weeks.
Under the Black Sea Grain Initiative, a joint coordination center in Istanbul, staffed by officials from Ukraine, Russia, Turkey and the UN, agrees on vessel registration and carries out entry and exit inspections in Turkish waters.
UN PROPOSAL TO RESTART AMMONIA PIPELINE
In September, Reuters reported that the United Nations proposed that ammonia gas, owned by Russian fertilizer producer Uralchem, be brought by pipeline to the Russia-Ukraine border.
At the border, it would be purchased by Trammo, a US-based commodities trader, according to the proposal. Trammo has been approached by the United Nations to help with this project and is happy to cooperate, it said in an email statement.
The United Nations has consistently pushed for the reopening of the ammonia pipeline.
Reuters reported last week that the UN proposed that Kiev, Moscow and Ankara begin preparatory work to restart the pipeline, while conducting parallel negotiations to expand the Black Sea deal to include more Ukrainian ports and other cargo.
Source: Seane Lennon | agrolink
