MOSCOW (MRC) -- Russia's invasion of Ukraine will disrupt the global movement of energy commodities, even if Western powers don't impose sanctions on exports from Russia, reported Reuters on February 25.
So far none of the retaliatory measures against Moscow have been targeted at exports of crude oil, coal or natural gas, the latter either by pipeline or by ships as liquefied natural gas (LNG).
That's perhaps tacit acknowledgment of Russia's importance to the global supply of these commodities, and especially with regard to natural gas, with Russia meeting about 40% of Europe's annual demand.
But even if the US, Europe and other allied nations such as Japan and South Korea decide not to impose measures against Russia's energy exports, it's likely that private companies will effectively do it for them.
The risks of doing business with Russia will become too much for many companies to bear, even without sanctions.
A clear illustration of this was reports that a coal bulk vessel chartered by commodity trading house Cargill was struck by a shell in the Black Sea in Ukrainian waters on Thursday, just hours after Russia launched a widespread attack on its neighbor.
Very few trading, shipping and insurance companies will be prepared to take the risk of dealing with cargoes from Russia, fearing either physical attack, payment issues because of financial sanctions, the risk of non-delivery if further measures are enacted against Russia and even public and investor backlash for continuing to do business with a country now largely viewed as conducting an illegal war.
As MRC wrote before, earlier this month, Samsung Engineering, one of the world’s leading engineering, procurement, construction and project management (EPC&PM) companies, announced that it had signed a contract for the design of a plant for the Baltic Chemical Complex in Russia. Baltic Chemical Complex LLC. (BCC), the original owner of the contract, previously signed an EPC contract with CC7 in 2019. The project is located at the Gulf of Finland near the seaport of Ust-Luga, Leningrad Oblast, 110 km southwest of St. Petersburg, Russia.
Samsung Engineering’s work of scope includes an Ethane Cracker Unit with a total design capacity of 2.8 million T/y (Ethylene 1.4 million t/y 2 Trains) and procurement for the project. The Ethane Cracker Unit is the core process element of the plant. The Baltic Ethane Cracker Project produces ethylene from separated C2 out of natural gas.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,487,450 tonnes in 2021, up by 13% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market totalled 1,494.280 tonnes, up by 21% year on year. Deliveries of homopolymer PP and PP block copolymers increased, whreas.shipments of PP random copolymers decreased significantly.
MRC