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Ukraine to suspend coal imports from Russia

Published by
Dry Bulk,

2017 has seen a dramatic rise in Ukraine’s imports of fuel, due to protest groups that have been preventing the transport of coal from separatist regions into Ukraine via rail. Ukraine spent US$358 million on coal imports during the first two months of the year, which is double the figure from the same time last year. Russian coal accounted for 69% of this sum, up from around 55% a year earlier, while the US accounted for 18%.

However, Ukrainian Energy Minister Volodymyr Nasalyk announced on 3 March that it was his intention to ask the government to suspend deliveries of anthracite from Russia, despite this shortage in supply.

The issue is that the minister is opposed to the purchase of Russian coal in principle, as he suspected that authorities in the self-proclaimed republics of Donetsk and Lugansk were planning to send their coal to the bordering province of Rostov in Russia, from where it could be sold to Ukraine at a higher price.

Indeed, the head of the Donetsk People’s Republic (DNR), Alexander Zakharchenko, announced this week that 95 wagon loads of coal had departed from Donetsk railway station for Russia on 14 March.

Although Zakharchenko did not disclose how much coal the wagons contained, he suggested that rerouting cargo flows to Russia could take up to three months because of issues with documentation.

This decision to halt Russian shipments will no doubt worsen Ukraine’s coal shortage. According to Reuters, Ukraine’s biggest private energy company, DTEK, had shut down almost all of its coal mines in rebel-held areas subsequent to the blockade. 

DTEK’s thermal power plants (TPPs) in government-held areas are heavily dependent on anthracite from the west, therefore the company has had to resort to increased supplies from Russia, where coal is relatively cheap. DTEK was Ukraine’s top importer of Russian coal in 2016, even before the blockade.

Representatives of the Ukrainian Energy Ministry said at a meeting on 10 March to discuss diversifying coal imports that new contracts to buy the fuel from other countries could not be signed earlier than May. 

To complicate matters further, only two of Ukraine’s ports – Yuzhny and Chernomorsk – are capable of handling sea-bound imports, according to the ministry. Both are situated in the southwest of the country, far from the TPPs in the central and eastern regions that rely on coal from Donbass and Russia, and therefore transport costs would be higher.

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