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Ukraine grain deal ‘set to renew’ after talks on Russian export restrictions

Officials in Russia and Turkey have revealed the safe export of Ukrainian grain from Black Sea ports is likely to continue, in exchange for lifting restrictions on Russian ammonia exports. 

Fears have grown in recent weeks that the Kremlin would withdraw its support for the Black Sea Grain Initiative, a programme launched in August allowing Ukraine to export wheat, corn, sunflower products and other goods from ports previously blockaded by Russian forces. 

Speaking at a press conference on November 16 at the G20 summit in Bali, Turkish President Recep Tayyip Erdoğan said he sees “no problem” with its renewal. The deal expires on November 19 but renews automatically unless vetoed by Russia, Ukraine, Turkey or the UN. 

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“I am of the opinion that this will continue,” Erdoğan said, adding that his Russian counterpart Vladimir Putin has already given “the green light on the renewal of this agreement”. 

Russian officials have also spoken positively about extending the deal. Kremlin spokesperson Dmitry Peskov told reporters this week that negotiations with the UN “have been quite constructive”. 

According to Peskov, the bulk of negotiations have focused on “the removal of restrictions on the supply of Russian products to foreign markets”. 

In mid-September, it emerged that Russia was seeking to revive its ammonia exports, a vital economic lifeline for the country but also a crucial component in the production of fertiliser for importing countries. 

Rebecca Grynspan, secretary-general of the UN Conference on Trade and Development (UNCTAD), said at the time officials were “pursuing all efforts to allow for a positive outcome on Russian ammonia exports to international markets”. 

This week, negotiators have reportedly reached an agreement on Russia’s use of an ammonia pipeline that runs through Ukrainian territory, which has been suspended since its invasion of Ukraine in February. The pipeline can transport nearly 2.5 million tonnes of ammonia per year. 

To restart use of the pipeline, US commodities trader Trammo has been approached by the UN. Trammo is expected to purchase the ammonia from Russian producer Uralchem at the Ukrainian border, to avoid Russian-owned commodities passing through Ukraine-controlled territory. 

Trammo did not immediately respond to a request for comment, but chief executive Ed Weiner issued a statement on September 13 supporting the resumption of ammonia trade flows. 

“The absence from the market of ammonia formerly shipped through Ukraine has caused substantial hardship in countries dependent on that product,” he said, “We believe that resumption of shipments will help to stabilise fertiliser prices worldwide and to avoid a global food crisis.” 

Access to payment messaging network Swift has also featured in the negotiations with Russia, according to reports in the FT this week. 

The Kremlin had sought for the state-owned Russian Agricultural Bank to have its access to Swift reinstated, allowing it to facilitate payments for soft commodity exports, but is instead expected to rely on correspondent banking relationships set up with the help of the US, the newspaper reported. 

Another lingering issue is that around three-quarters of exports under the agreement have so far been to EU member states or the UK. 

In an interview with state-run RT broadcast on November 16, Russian finance minister Anton Siluanov said the country was in favour of continuing the deal as long as grain “goes specifically to countries that need the grain, rather than to Western countries and countries with European economies, as is currently the case”. 

The developments follow significant progress in clearing a backlog of vessels carrying Ukrainian goods but awaiting clearance by ​​Joint Coordination Centre (JCC) inspectors. 

In late October, the JCC said 113 vessels were awaiting inspection in Turkish waters and another 60 were waiting to join the initiative, citing concerns of disruption to supply chains and port operations. 

UN data shows the number of shipments waiting for inspection has fallen to just 28, as of November 16. Records show that in only four days, from October 30 to November 2, a total of 108 vessels were granted clearance. 

Over 11 million tonnes of goods have now been loaded onto vessels at the Black Sea ports of Odesa, Chornomorsk and Yuzhny/Pivdennyi under the agreement. 

The post Ukraine grain deal ‘set to renew’ after talks on Russian export restrictions appeared first on Global Trade Review (GTR).

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Published 23 November 2022