Ukrainian ammonia and urea producer OPZ extends gas tolling deal with AGT

LONDON (ICIS)–Ukrainian ammonia and urea manufacturer Odessa Port Plant (OPZ) on Tuesday received its first supply of feedstock from Agro Gas Trading (AGT) under the pair’s latest gas tolling deal.

AGT will continue to supply raw material to the Odessa-based producer for the rest of 2020 after OPZ’s tender for a longer term arrangement was delayed by a local commercial court ruling in late July.

The state-owned firm was set to finalise talks over a 10-month tender with IBE Trade Corp, Maddox SA or AGT, but an appeal by one of two participants eliminated in the electronic auction derailed the selection process.

While OPZ appeals that ruling, it intends to run its two ammonia and two urea plants with raw material sourced from AGT as the four-month extension, which follows a previous two-month addendum, started today (1 September).

“OPZ, recalling the extremely time-consuming and expensive process of resuming production in the summer of 2019, simply has no right to be stopped,” commented OPZ chairman, Mykola Sinitsa.

“We have made the decision to extend the plant to extend the contract with the existing provider (AGT).”

Sinitsa pointed out that the current arrangement can be terminated with a month’s notice should the selection process restart, and added the extension was agreed on more favourable terms than previous deals with AGT.

The raw material cost for one tonne of ammonia will now be $41, and for one tonne of urea, $60, OPZ disclosed, without providing comparative figures for previous periods.

“AGT is interested in honestly and calmly working with the enterprise under a long-term contract, and not temporary agreements,” said AGT managing partner, Oleksandr Gorbunenko.

“Nevertheless, the key task at this stage is to maintain the stable operation of the plant.

“This supports the interests of both the plant itself and any potential partners of the plant.”

Last month, AGT revealed in the year to 4 August, OPZ processed 655.6m cbm of gas, enabling the production of 796,200 tonnes of urea, and 90,300 tonnes of ammonia.

AGT said 94.4% of urea was exported, with India receiving 379,800 tonnes, Tanzania 75,900 tonnes, Turkey 74,900 tonnes, Mexico 60,400 tonnes and Senegal 36,700 tonnes.

For ammonia, Greece received 30,400 tonnes of OPZ material, Turkey 28,400 tonnes, Bulgaria 10,800 tonnes, Spain 3,500 tonnes and Morocco 1,500 tonnes.

OPZ’s ammonia and urea output for the current quarter will be lower than in Q2 after a series of scheduled plant turnarounds in recent weeks.

OPZ’s urea and ammonia, along with that of other nitrogen fertilizer producers in the wider region, loads regularly at the Black Sea port of Yuzhny for delivery worldwide. Photo courtesy of OPZ.