Russia Repurposes Baltic & Arctic Terminals for Grain Exports Amid Black Sea Disruptions
Russia's Shift in Grain Export Routes
By Gleb Stolyarov and Olga Popova
MOSCOW, Sept 21 (Reuters) - Russian companies have been re-purposing fertilizer, coal, and other cargo terminals at Russia's Baltic and Arctic ports - including Ust-Luga and Murmansk - to handle grain exports after Ukrainian drone attacks disrupted shipments through the Black Sea, five sources in the shipping and grain industries told Reuters on Monday.
Both Russia, the world's largest wheat exporter, and Ukraine saw a drastic reduction in grain exports due to tit-for-tat attacks on vessels and ports in the Black Sea over recent months. In the previous export season, almost 90% of Russia's seaborne grain exports were shipped through the Black Sea.
Repurposing Baltic Terminals for Grain
One industry source said a private terminal, Ultramar, with declared capacity of 37 million metric tons at the port of Ust-Luga on the Baltic Sea - currently specialising in mineral fertilizers - was quickly adapted to handle grain shipments.
Another industry source who saw the minutes of a Russian Transport Ministry meeting in August said that redirecting cargo flows of Demetra, Russia's largest grain trading and logistics company, to Ultramar was considered.
"It's not just Demetra; everyone else wants to go there too. Everyone wants to go to the Baltic," a source said, adding that grain from Demetra is now being shipped to Ultramar.
State Subsidies and Terminal Capacities
STATE SUBSIDIES
Ultramar has been handling grain since August, a market source said. Rail transport applications for grain deliveries to the terminal in September reached about 260,000 metric tons, destined for Egypt and Saudi Arabia, another market source said. Ultramar did not ship grain previously.
Ultramar exported 16 million tons of fertilizer last year. One industry source said the spare capacity at the Baltic terminals was such that the conversion was not likely to influence Russia's fertilizer exports.
Expansion to Other Baltic Terminals
Modul and BSMZ terminals at the port of St. Petersburg, which previously did not handle grain shipments, are now taking grain, the sources said. One source mentioned that Modul is able to handle up to 70,000 tons of grain in containers a month, although such a way of shipment is generally seen as more expensive.
Ultramar, Demetra, the Transport Ministry, Modul, and BSMZ did not respond to Reuters' requests for comment.
The use of converted terminals could significantly increase the export potential of Russia's Baltic ports whose existing combined grain handling capacity was estimated by analysts at between 2 and 7 million metric tons, compared with more than 60 million tons in southern ports.
One source said that the railway operator, Russian Railways, has given high priority to grain shipments to the Baltic and Arctic, which have already received state subsidies. Russian Railways declined to comment.
Murmansk: Ice-Free Arctic Port Joins Grain Export Effort
ICE-FREE ARCTIC PORT
Murmansk commercial sea port, Russia's fourth largest with an annual capacity of up to 24 million tons, said last week it is preparing to start grain exports in October. It was not immediately clear which terminals in Murmansk are being converted to handle grain, but there was no reported construction of new facilities underway recently. The port exports coal, ore, and metals.
One industry source said that thanks to the port's ability to handle large Panamax-class vessels, an increase in seaborne shipping costs will not be substantial. Murmansk is 2,700 km (1,678 miles) away from Russia's main southern grain export gateway, Novorossiysk.
The source said that a delivery of the first 40,000 tons of grain by rail from Russia's southern Stavropol region to Murmansk has already been agreed upon and approved by Russian Railways.
Strategic Importance of Murmansk
Murmansk, a year-round ice-free Arctic port accessible through neutral waters, which handled crucial supplies to the Soviet Union from the Allies during World War Two, is regarded as a more secure destination since risks in the Baltic Sea have also risen due to deteriorating relations with Europe. The port did not respond to a request for comment.
Impact on Russian Grain Exports
Russia exported 4.4 million tons of grain in July-August, down about 31% from a year earlier, while September grain exports are estimated to fall by half to 2.45 million tons from last year's volume, according to Sovecon consultancy. Farmers have been complaining about surplus grain they have not been able to export.
Russian Agriculture Minister Oksana Lut told reporters last week that the country has no problems with exporting its grain after re-routing shipments through the Baltic Sea, the Caspian Sea, and the Far East.
(Writing by Gleb Stolyarov and Gleb Bryanski; Editing by Veronica Brown and Susan Fenton)