The Ukraine Report: Black Sea Grain Deal at an impasse as deadline looms
The Black Sea Grain Deal is set to expire this Thursday, meaning certainty for Ukrainian exports are up in the air.
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Negotiations on the grain corridor have hit a deadlock.
Ukraine, Turkey, the UN, and Russia have been in talks for the last two days to extend the grain deal. However, they only managed to agree to continue consultations. This is a situation of concern, as the current phase of the deal expires in a week.
Just two days ago, Turkish Foreign Minister Mevlut Cavusoglu announced after a visit to Moscow that the agreement could be extended for another two months.
Are there any developments in ship traffic in the corridor? The dynamics are breaking anti-records. On average, only two vessels are approved daily. On some days, no inspections are carried out and the corridor is virtually dead.
What is the problem? The problem is that Russian inspectors are stalling inspections of vessels moving in the grain corridor in every possible way.
“Any reason can be found. Especially when the objective is to slow down the corridor. So when we are asked how many inspection teams are needed, it is hard to say. One team can do 10-15 inspections per day, or it can inspect one vessel for two days.”
Another problem is that the Russians do not approve 90 percent of applications for vessels to enter the port of Pivdennyi. It is worth mentioning that it, along with the ports of Odesa and Chornomorsk, are the three ports involved in the grain deal.
Alseeds is one of Ukraine’s largest sunflower processors, with a crushing plant located right in Pivdennyi port. Two vessels that were supposed to deliver Allseeds-produced vegetable oil and oil seed meal have been lined up in the corridor for more than a month.
“Today, I have a vessel with a capacity of 35 000 mt to be loaded with oil. Demurrage for one day costs US$ 1.5 per ton. That is, we lose US$ 50 per 1 ton within a month of downtime.”
Allseeds official says they had to shut down the oil crushing plant for all storage facilities are full and there is no room to store the product.
Assuming that Russia refuses to extend the grain deal on 18 May, is it possible to continue the corridor’s operation without Russians? Deputy Infrastructure Minister Yuriy Vaskov implies that this is possible. Ukraine’s parliament recently passed a law establishing a US$ 500 million fund to compensate ships exposed to possible Russian attacks.
“This should give shipowners confidence to enter the corridor if the agreement does not work. However, it is difficult to predict the flow of vessels, it will depend on shipowners and charterers.”
That report was powered by Latifundist Media, with USAID support provided through Agriculture Growing Rural Opportunities (AGRO) Activity implemented in Ukraine by Chemonics International. For more information, visit their website or follow them on social media.