MMS PLUS NG – Maritime, Aviation, Business, Oil and Gas News Online Newspaper with coverage in Maritime, Oil and Gas, Aviation, Power and Energy as well as Financial News
By Kenneth Jukpor
Russia’s invasion of Ukraine has distorted global financial and energy markets causing oil prices to soar even as maritime, aviation, tourism, sports and other sectors have been affected significantly.
According to the United Nations COMTRADE, Nigeria imports from Ukraine was $156million in 2020 as Ukraine’s major exports to Nigeria were iron and steel at $125million, sugars and sugar confectionery at $8.1million and pharmaceutical products at $7.6million.
On the other hand, mutual diplomatic relations have been in existence between Russia and Nigeria since the 1960s. In September 2021, the Russian government said its trade volume with Nigeria stood at $600million because Russia is also an oil producing nation.
The Deputy Head of Mission, Russia Embassy, Valery Shaposhnikov, gave the explanation during a joint press conference with the Nigeria – Russia Chamber of Commerce and Industry in Abuja; even as he stressed that the trade volume with Nigeria would increase with the buying of agricultural produce from the country by Russia.
Following the battle between both countries, there are reports of merchant shipping vessels in the region damaged by shelling and projectiles. At least three vessels have been affected by gunfire in the Black Sea area off the coast of Odessa and Yuzhny. Commercial vessels have been asked not to enter the Sea of Azov as access is denied by Russian military forces. Two Russian commercial cargo ships were hit by Ukranian missiles in the Sea of Azov
Multiple international container lines such as MSC, Maersk and CMA CGM have released operational updates announcing suspensions of vessel calls to Ukraine until further notice.
The Republic of Marshall Islands (RMI) has issued a Ship Security Advisory admonishing commercial vessels to avoid any transit or operation within the EEZ of Ukraine or Russia within the Black Sea.
“Access to the Sea of Azov through the Kerch Strait is currently blocked by Russian forces. All Ukrainian ports have been closed by the Ukrainian military. If a vessel is located at a Ukrainian port, plans to depart should be arranged as soon as safely possible. Access to the northwest Black Sea, north of 45° 21′ is restricted by the Russian Navy.”
“Vessels must ensure the automatic identification system (AIS) is always transmitting (except when the master believes that continuing to operate AIS might compromise the safety or security of the ship or when a security incident is imminent), consistent with provisions of the International Convention for the Safety of Life at Sea (SOLAS) and monitor VHF Channel 16. Any vessels challenged by Russian military vessels should comply fully with instructions. Armed security personnel are not to be embarked while operating in the Black Sea,” it said.
It further included a report of a Marshall Islands registered bulk carrier suffering significant damage to the deck and bridge area whilst drifting approximately 50 nautical miles (nm) South of Odessa. Pending further investigation, the damage is initially thought to be caused by a projectile.
Speaking on the possible effects of the Russia-Ukraine rift on global maritime activities and the Nigerian shipping sector, a former Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Temisan Omatseye observed that there will be effects on Nigeria because there’s a lot of trade of between Nigerian/Russia and Nigeria/Ukraine.
His words: “Ukraine exports a lot of iron and steel to Nigeria and dairy products like milk, etc. In terms of crude oil sales, Nigeria’s crude oil is sold on Free On Board (FOB) and we don’t have Nigerian ships that ply international waters.”
“In terms of seafarers, I don’t know how many seafarers we have trading or training onboard ships in Ukraine or Russia at the moment. As a country, this maritime trade we are talking about is done by foreign ships, so it doesn’t have a lot of impact in this area.”
Nevertheless, he noted that the war would lead to an increase in international freight rates as the global crude oil price has increased.
“The increase in global crude oil prices would have been a good thing for Nigeria if the nation was refining its crude oil. The increase in price of crude oil means an increase in the price of bunker and it means inflation in Nigeria because it would cost more to import. This pressure isn’t good for anyone worldwide, but it’s particularly bad for Nigeria because it worsens the standard of living and the purchasing power of Nigerians.”
“We wouldn’t feel the impact of the increase in crude oil price because we are spending additional on the subsidies. If we paid the market value instead of subsidies we would have gotten a boom from these increments. Right now, the surplus from crude oil sales goes into subsidies or repaying the nation’s debts,” he added.
Speaking on the possible logistics constraints for Nigerian major imports from China and US, he said: “I don’t think access to Nigerian-bound goods from China and US will be affected because those vessels do not ply the Russian or Ukraine route. Again, China has been very neutral in its relations and there shouldn’t be any problems with cargoes from China. Of course, commercial shipping will always be protected because these are countries that share borders and it’s not like they have to strike themselves over the seas. It’s mostly been air and land attacks so far.”
Also speaking with MMS Plus newspaper, a former Director General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Yusuf Muda observed that Russia and Ukraine account for almost 30% of wheat exports globally.
Muda posited that a limited supply of this product would affect the globe and not just Nigeria.
“A lot of Nigeria’s steel products come from Ukraine and Russia, so this war is going to affect our trade with these nations. More importantly, this crisis has led to an increase in crude oil price. Nigeria should be smiling at this increase but the nation isn’t refining locally, so our import bill on petroleum imports will increase. The nation’s bill for fuel subsidy will also increase. If this war prolongs, the problems will lead to fiscal deficits and eventually lead to more borrowing as the debt profile will increase. We can also expect inflation because the increase in energy price, aviation fuel, diesel and Premium Motor Spirit (PMS) will be higher.”
“Nigeria can always buy oil and steel from other nations but Russia is a major oil producer in the world. Oil is a global commodity and any disruption affects the world. Russia and Ukraine also largely export fertilizers, so the implication of this clash would be short supply of these products if there aren’t other sources. Russia and Ukraine account for almost 30% of wheat exports globally and one can be sure that limited supply of this product would affect the globe,” he said.
Speaking from the standpoint of seafarers, a manning agent and President of African Women in Maritime (WIMA) Nigeria, Mrs. Rollens Macfoy stressed the need to prioritize seafarers’ safety amid the attacks by Ukraine and Russia.
According to Macfoy, commercial ships shouldn’t be attacked or restricted as a result of the cross-fire between both European nations.
“Maritime trade is responsible for close to 90% of global trade and this war, if it goes on, would imply that there will be no passage for vessels from the affected countries. Consequently, whatever economic benefits from such trade would be eroded and the world will begin to experience drought of those products that should be conveyed through the affected channels,” she added.
Meanwhile, Ukraine has asked Turkey to close the Bosphorus and Dardanelles straits to Russian ships, Kyiv’s ambassador to Ankara has said, as Russia launched air and ground assaults on its neighbour.
The request on Thursday last week puts NATO member Turkey, which shares a maritime border with Ukraine and Russia in the Black Sea and has good relations with both countries, in a difficult position.
Under the 1936 Montreux Convention, Ankara has control over the straits and can limit warship passages during wartime or if threatened.
“We are calling for the airspace, Bosphorus and Dardanelles Straits to be closed. We have conveyed our relevant demand to the Turkish side. At the same time, we want sanctions imposed on the Russian side,” Ambassador Vasyl Bodnar told a news conference in Ankara.
There was no immediate statement by the Turkish government. Ankara on Thursday advised its citizens in Ukraine to stay at home or in a safe place and avoid travelling after airlines cancelled flights due to the closure of Ukraine’s airspace.
Turkish President Recep Tayyip Erdogan also convened a summit of top security officials to discuss the Russian offensive, his office said.
