Black Sea carrier Palmali to expand in Ukrainian sunflower oil shipping

FE Team | Published: December 13, 2023 00:46:26

ISTANBUL, Dec 12 (Reuters): Istanbul-based tanker operator Palmali has become the top shipper for Ukraine's Black Sea-borne sunflower oil exports, one of the country's key export products, and plans to expand further, its chairman Mubariz Mansimov said.
Azeri-born Mansimov said Palmali was the most active operator in the increasingly dangerous Black Sea, and plans to expand its presence in Ukraine by placing an order for 10 more cargo carriers and starting trading operations early next year.
Since pulling out of the UN-brokered deal that guaranteed safe shipment of Ukrainian food products in July, Russia has been attacking Ukrainian ports, the country's export lifeline. Several ships navigating through Ukraine's new Black Sea shipping lane have also been hit with mines.
"We signed an exclusivity agreement with top sunflower and grains trader Potoky for 2024, meaning extra volume. Palmali aims to ship 90 per cent of Ukraine's sunflower oil exports from the Danube. And after attacks we could see less ships calling at Ukraine's ports," Mansimov said in an interview late last week.
Ukraine has managed to maintain its leading role in the global sunflower oil market despite the conflict. One reason is that high transportation costs have led some farmers and traders to prioritize higher-value products such as sunflower oil at the expense of more bulky items such as corn.
The U.S. Department of Agriculture forecasts that Ukraine will export 5.6 million metric tons of sunflower oil in the current 2023/24 season, representing about 40 per cent of global trade.
Palmali loads sunflower oil and grain from Ukraine, mostly from Danube ports, as well as coal and grain from Russia. It also delivers much-needed diesel fuel to Ukraine's power plants using the new route. The risk of mines is ever present and war-risk insurance makes shipping costly, though without the long inspection times imposed by a UN-brokered corridor, Mansimov said.
The company is in a unique position as it carries both Ukrainian and Russian risk.
"We operate our ships transparently. Other operators turn their transponders off, we don't. We notify the Russian side of our passage. Palmali shares both Russia's and Ukraine's shipping risks. It is an indispensable partner to both countries," Mansimov said.
Sunflower oil is the bulk of company's shipments from Ukraine, which began in the early months of Russian invasion last year.
"We now ship about 65 to 75 per cent of Ukraine's sunflower oil exports through the Danube, with minimum monthly loading at 100,000 tons," Mansimov said, estimating Ukraine's Danube exports at 160,000 to 170,000 tons per month.