LONDON (ICIS)--Further uncertainty has been thrown on the Ukrainian nitrogen industry following the arrest of Ukrainian oligarch Dmitry Firtash in ?xml:namespace>
Austrian police released a statement regarding the arrest, noting that Firtash had been investigated by the US Federal Bureau of Investigation (FBI) for years, although the FBI has made no comment about the arrest at this time.
The industry was already facing uncertainty following recent civil unrest in Ukraine and news Gazprom was intending to remove a discount on natural gas prices from 1 April which would significantly raise production costs.
Firtash’s Group DF is the owner of the Ostchem Holding group for Ukrainian mineral fertilizer producers: Cherkassy Azot, Stirol Gorlovka, Severodonetsk Azot and Rivne Azot, which together represent the bulk of Ukrainian nitrogen fertilizer production.
“This adds uncertainty and doubts to the situation which was already shaky… now people are hesitant to do any business with NF Trading,” one source said.
Sources said they did not know whether this was a real threat to business out of Ukraine, but the news was enough to make people more hesitant, worrying about what might happen if the company’s accounts were frozen or other measures.
NF Trading was reported offering 40,000 tonnes of urea for March shipment this week, but found no buying interest and the tonnes are expected to be carried over to April. However, urea demand is slow at present and a lack of buying interest could be a factor of this slow demand rather than unwillingness to buy from NF Trading, sources added.
Some said it was too early to say whether it would have any impact on prices, but that if buyers were unwilling to make purchases from NF Trading then this would severely curtail availability of ammonia, urea and AN from Ukraine and could push up prices.
Further forwards, sources said the Ostchem Holding, which was formed in 2010/2011, could be broken up with each production unit becoming an individual entity again.
There are also questions over the price of future gas supplies, sources noted. Currently Ostchem has a separate gas agreement for Russian supplies given Firtash’s strong links with the Russian gas industry, and does not buy at the official price set between Gazprom and
However, there are now reports that with Firtash’s arrest this agreement might be voided which would also raise gas costs for the plants currently under the Ostchem umbrella.
Group DF was not available for comment on Thursday.
Richard Ewing, Deepika Thapliyal and Mark Milam also contributed to this article