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Insight Focus
- German minister warns of ‘nightmare scenario’ on gas supply
- Ukraine Black Sea grains export deal set to be finalised
- Most of Ukrainian grain exported by land stuck in neighbouring countries
This week the key news events to watch will be whether the Nord Stream 1 gas pipeline from Russia to Germany across the Baltic Sea will come back online as scheduled on 21 July and whether a plan is agreed to allow Ukraine to export grain from its Black Sea ports. Talks on finalising this are scheduled for this week.
Source: German Economics Ministry
German Economics Minister Robert Habeck (pictured above) warned of a “nightmare scenario” if Russia did not restore gas supplies as scheduled, the Frankfurter Allgemeine Zeitung (in German) reported. Reuters said the Bavarian Industry Association forecast a 32% drop in output by the food, drink and tobacco sector in the second half of 2022 if Russian gas supplies were cut off. The FAZ also quoted French Finance Minister Bruno LeMaire as saying France was preparing for a complete cut-off of Russian gas supply.
Russian Foreign Ministry spokeswoman Maria Zakharova said that the future of Nord Stream 1 would depend on gas demand in Europe and Western sanctions against Russia, Reuters reported. The EURACTIV website quoted Russia’s giant gas producer and exporter, Gazprom, as saying it could not guarantee the safe operation of a critical part of the pipeline because of doubt over the return of a turbine from Canada.
The European Commission is drafting plans to help EU countries reduce fossil gas demand and, if necessary, curtail consumption in the face of “a likely deterioration of gas supply outlook” this winter, according to leaked policy proposals seen by EURACTIV.
Further evidence of the precarious gas supply situation in Europe emerged on 15 July when the Financial Times (behind paywall) reported that the continent’s largest buyer of Russian gas, German energy company Uniper, was forced to withdraw gas from its storage facilities after deliveries from Gazprom came to a halt, imperilling Germany’s efforts to build up emergency supplies ahead of the winter.
Progress Reported in Ukraine Grain Export Talks
Ukrainian and Russian officials said there were positive signs in discussions which could lead to the resumption of Ukrainian Black Sea grain exports after talks in Istanbul, Reuters reported.
It quoted Turkish defence minister Hulusi Akar Russia as saying Ukraine, Turkey and the UN were due to sign a deal next week aimed at resuming exports.
UN Secretary General António Guterres said: “Today in Istanbul, we have seen a critical step, a step forward to ensuring the safe and secure export of Ukrainian food products through the Black Sea. In a world darkened by global crises, today at last, we have a ray of hope,” the Politico website reported.
Boost to Grains Shipping
The withdrawal of Russian forces from Snake Island in the Black Sea means merchant vessels have been able to use the Bystre estuary in the Danube-Black Sea channel, UkrAgroConsult reported, citing the Ukrainian Sea Ports Authority. The official UkrInform news agency said 16 merchant ships had sailed through the estuary to be loaded with Ukrainian grain as of July 12. It quoted Deputy Infrastructure Minister Yurii Vaskov as saying that at the moment the four vessels a day which were now being received via the route were half what was needed.
However, EURACTIV said while the EU’s “solidarity lanes” scheme had helped increase Ukrainian grain exports, most of the wheat was stuck in nearby EU countries and barely reaching the third countries that needed it, according to the European Commission.
Food Security Worries
In one wheat importing country, Tunisia, the food situation in the first half of 2022 reveals a sharp deterioration in overall consumer purchasing power as well as an unprecedented increase in the deficit of the food balance, caused in particular by the war in Ukraine. If action were not taken, the situation would deteriorate in the second half of 2022 and throughout 2023, the Tunisian Institute of Strategic Studies was quoted as saying by the official TAP news agency.
Elsewhere, Indonesia has started exporting chicken to Singapore, its agriculture ministry said, with the aim to plug an ongoing shortage there due to a ban on exports by key supplier, Malaysia, Reuters reported. Reuters said Malaysia, which supplies a third of Singapore’s chicken, had halted exports early last month after global feed shortages disrupted domestic production and prices.
