The UN is pressing Russia and Ukraine to agree a deal on chemical exports through the Black Sea in a bid to ease global fertiliser prices and solidify Vladimir Putin’s commitment to the current shipment agreement on grain.
UN diplomats have been holding discussions with Kyiv and Moscow to reopen a pipeline carrying ammonia — a key ingredient in the production of nitrate fertilisers — from Russia to Ukraine’s Black Sea coast, according to three people briefed on the talks.
Rebeca Grynspan, the UN official who has been leading the task force, confirmed the negotiations in a statement to the Financial Times.
“Talks are moving in the right direction and every effort is being made by all parties at every level to ensure a positive outcome,” she said, adding that negotiations were continuing “urgently” with the aim of averting “a food crisis on a global scale” in the years ahead.
The proposal is part of an agreement on food and fertiliser promised to President Putin in exchange for backing a grain deal between Moscow and Kyiv in July. It would allow Russian ammonia shipments to use the same sea corridor that has transported close to 3mn tonnes of wheat, corn and other foodstuffs from previously blockaded Ukrainian ports.
If successful, such a deal would allow 2mn tonnes of the chemical component — worth about $2.4bn at current prices — to be shipped each year from Russia, according to the people briefed on the talks.
Negotiators hope it could help assuage a global food crisis as well as bolster the existing deal on grain by giving Putin more of a stake in its success. Discussions have intensified in recent weeks.
The Kremlin and the Ukrainian governments did not immediately respond to requests for comment.
Putin harshly criticised the grain deal last week, raising fears that the agreement could collapse. His complaints — he wrongly claimed that most of the grain shipments were not headed to poor countries — were echoed by Turkey’s president Recep Tayyip Erdoğan, who helped to broker the grain deal. The two leaders are meeting in Samarkand, Uzbekistan, this week.
It is unclear whether the recent military setback Kyiv has inflicted on Russian forces in northeastern Ukraine will weigh on the talks.
Ammonia is a key component of fertilisers. Russia was supplying 20 per cent of the world’s seaborne cargos of the chemical ingredient before Moscow’s invasion of Ukraine, according to research company ICIS.
Fertiliser prices have more than doubled in the past year, according to the UN, partly because a pipeline linking the southwestern Russian region of Samara to the Ukrainian Black Sea port of Pivdennyi was halted in February. The pipeline used to carry about 2.3mn tonnes of Russian ammonia a year, according to data provider Argus Media.
The UN is also seeking the release of 20,000 to 40,000 tonnes of ammonia trapped in Pivdennyi, according to two of the people.
Kyiv would benefit from revenues in the “high tens or low hundreds” of dollars in transit and port fees, one of them said. The UN is also pushing Moscow to allow grain shipments from a fourth port, Mykolayiv, which has been under heavy Russian artillery fire and is located close to a current Ukrainian offensive around Kherson in the south.
A sticking point is how to share the revenues, and whether to hold them in an escrow account until the war is over.
Additional reporting by James Politi in Washington, Emiko Terazono in London, Polina Ivanova in Berlin and Roman Olearchyk in Kyiv
Source: Economy - ft.com
