UN-proposed ammonia deal for Ukraine would stabilise grain deal - diplomat

An ammonia gas deal which the United Nations is pushing Russia and Ukraine to agree could ultimately stabilise a landmark grain deal which is aimed at easing a global food crisis, a Western diplomat briefed on the matter told Reuters.

The proposed ammonia deal, first reported by the Financial Times, would allow ammonia - a key ingredient for nitrate fertiliser - to be exported from Russia through Ukraine and then onto global markets.

President Vladimir Putin said this month he would look at revising a UN-brokered Ukrainian grain export deal but the ammonia deal could allay Russian concerns that it is not getting enough out of the grain deal.

Under the proposal, ammonia gas owned by Russian fertiliser producer Uralchem would be brought via pipeline to the Russia-Ukraine border. There it would be purchased by U.S.-headquarted commodities trader Trammo, the diplomat said.

Trammo would then own the ammonia as it travels across Ukraine, paying Ukraine pumping fees and transit fees, and sell it onto world markets from Ukraine's Black Sea, according to the proposal. Trammo and Uralchem did not immediately respond to a request for comment.

"The actual financial flows are not insignificant," the Western diplomat told Reuters.

More significant, though, could be that the ammonia deal offers the prospect of giving Russia more of a reason to stick to the grain deal.

"By having a key Russian company export through the same Black Sea corridors that the Ukrainian grain is going through stabilises the arrangement and could lead to a longer term extension of the agreement," the diplomat said.

The grain deal, signed in July, aimed to alleviate a global food crisis by guaranteeing the safe passage of ships in and out of Ukrainian ports, allowing them to export millions of tonnes of grain.

The diplomat said Ukraine had asked for other exports to be facilitated through their ports.

The pipeline, which transports ammonia from Russia's Volga region to the Ukrainian Black Sea port of Odesa, was built about 40 years ago and is designed to pump up to 2.5 million tonnes of ammonia per year.

Russia and Ukraine declined immediate comment.