Russia is once again threatening to block sea grain exports from Ukraine. An alternative would be to increase traffic on the Danube. Will Romania agree to this?
In the coming month, the export of grains and oilseeds through the Danube ports may increase by 1 million to 3 million tons per month, Yuri Vaskov, Deputy Minister for the Development of Communities, Territories and Infrastructure, said at a meeting with journalists on June 30.
This route can become an alternative to the Grain Corridor, which appeared after the conclusion of an agreement between Ukraine, the UN, Turkey and Russia on the safe export of Ukrainian agricultural products. The initiative is valid until July 17 and there is a big risk that Russia will refuse to renew it.
Ukraine is betting on the development of the Danube ports. It is possible to increase exports through the Sulina Canal, which is controlled by Romania. Three conditions for this are to make it work around the clock, open raid transshipments in Romanian territorial waters, and in the future expand the mouth of Bystry, a route controlled by Ukraine.
The project has already been agreed with the European Commission. When will it work?
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Grain in exchange for fertilizer
This marketing year, Ukraine plans to harvest 69.1 million tons of grain and oilseeds, of which 44.8 million tons are planned to be exported, the Ukrainian Grain Association (UGA) predicts. This is significantly less than the record 2021, when farmers harvested just over 106 million tons. The reason is clear: the results of the industry are affected by the war.
About 20% of agricultural land was hit by shelling, every fourth or fifth shell did not explode, there are no technologies in the world for the rapid demining of such large areas, says UGA President Nikolai Gorbachev.
The export of agricultural products has also become a problem, a significant part of which goes through the Grain Corridor. According to the Ministry of Agrarian Policy, during its work since August last year, 18.4 million tons of grain were shipped through it – 2.3 million tons to Africa, 5.1 million tons to Asia, 7.5 million tons to Europe and 3 .4 million tons to the Middle East.
However, it has been slow in recent months. About 30 ships are waiting to enter ports in the Black Sea, says Vaskov. Since May, the Russians have provided an average of two permits for the entry of ships in three days, but on June 28 and 29 they did not provide a single one. The operation of the Grain Corridor ends in two weeks, on July 17, and it is not yet clear whether it will work in the future.
Thanks to cheap gas, Russia is one of the world’s largest exporters of ammonia and ammonia fertilizers. Russia, in exchange for the continued operation of the Grain Corridor, was interested in launching the Togliatti-Odessa ammonia pipeline, but this is no longer realistic. The ammonia pipeline was damaged due to shelling in early June in the Kharkov region.
However, it seems that the aggressor state has found an alternative to the ammonia pipeline. As Olga Trofimtseva, Ambassador at Large of the Ukrainian Foreign Ministry, coordinator of the Council of Exporters and Investors, noted, “Mazepin reported to Putin that the ammonia export terminal was almost completed, which means that the Togliatti-Odessa ammonia pipeline is no longer so important.”
We are talking about a long-term construction terminal of the Russian company Uralchem Dmitry Mazepin on the Taman Peninsula in southern Russia. The Russians promise to start its work this year, and at the first stage it will be possible to handle 1.5 million tons of ammonia per year, and by the end of 2025 – up to 3.5 million tons per year. Given that the capacity of the Togliatti-Odessa ammonia pipeline is 2.5 million tons per year. Therefore, Trofimtseva is confident that Russia will withdraw from the Grain Agreement. Ukraine urgently needs to look for an alternative route for exports.
Plan “B”
There aren’t many options here. Ukrzaliznytsia has reached peak export figures and can deliver abroad 3.7 million tons per month. Now the railway workers are exporting about 1 million tons. It is difficult to increase the volumes. “The European railway is not ready to process as much grain as Ukraine can supply, the same problem with ports,” says Gorbachev. For example, Polish ports can send 6 million tons, Bulgarian – 7 million tons of grain per year, and this is the monthly requirement of our country. The European railway is focused on passenger traffic, so there are no junction stations for increasing exports, the expert adds.
Ukraine plans to develop Danube ports by increasing their capacity from 2 to 3 million tons per month, says Vaskov. And in the future, the volume of transshipment can grow up to 15 million tons per month with the help of round-the-clock operation of the Sulina Canal, offshore transshipments and deepening of the mouth of Bystroye.
The largest grain traders are building their terminals on the Danube. However, while the most realistic is the increase in the time of the channel. For the rest, billions of dollars of investments are needed not only at sea, but also on land. For example, it is necessary to increase the capacity of access roads, as well as build specially equipped warehouses and elevators, because now grain is transshipped “from wheels”. Traders need to create their own river fleet.
It looks like they are ready for it. The development of alternative routes for exporting agricultural products will help farmers ensure that products are delivered, says Evgeny Osipov, CEO of Kernel. “Currently, customers buy the bulk of agricultural products in other countries, while ours is covered by additional needs,” he said.
2023-07-05 05:19:54
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