Ukraine's OPZ extends natural gas tolling deal with AGT by two months

Author: Richard Ewing

2020/07/01

LONDON (ICIS)--Odessa Port Plant (OPZ) on Tuesday announced a two-month extension to its natural gas tolling deal with Agro Gas Trading (AGT), meaning its ammonia and urea plants will run through July and August.

The pair’s deal existing deal expired on 30 June, but with OPZ’s recently launched search for a long-term feedstock tender not expected to conclude until mid-August, a short-term extension was required.

"To ensure the smooth operation of the plants, to prevent production shutdowns and social tensions, we signed a short-term contract with AGT," said acting OPZ chairman, Mykola Sinitsa.

"As the amount of this agreement does not exceed 10% of the value of the company's assets, the board was entitled to make this decision in accordance with the charter of OPZ."

At an extraordinary general meeting (EGM) last week, the state-owned Ukrainian firm agreed to push ahead with privatisation plans.

The company, which in recent years has suffered from under investment and lengthy plant shutdowns due to lack of feedstock, is a vital cog in the regional nitrogen fertilizer transshipment chain.

Ammonia from Russian producers is pumped to OPZ's large storage tanks near Yuzhny and placed on tankers for export to several continents, with Ukrainian manufacturers also sending the fertilizer to the port by rail.

Ahead of the EGM, AGT noted the plants consumed 538 million cubic metres (mcm) of gas in the first 300 days of the supply contract, which was used to produce 669,700 tonnes of urea and 61,600 tonnes of ammonia.

The gas tolling agreement with AGT enabled OPZ to restart its own operations last July after lengthy shutdowns, while the producer also shipped 1.2m tonnes of ammonia in January-May 2020, as well as 402,400 tonnes of urea.

The 15,000 tonne capacity ammonia (LPG) tanker Marycam Swan loads an export cargo for major international trader Trammo at the Black Sea port of Yuzhny. Photo courtesy of OPZ.