Impact of Ukraine conflict on trade, economies and world is widespread.
Now more one full month into the war in Ukraine and with the conflict having escalated significantly in the last fortnight, the impact on trade, economies and the world as a whole is widespread.
A clearer picture is also emerging of the impact of this war – existing and potential – upon industrial gas markets.
Here we look at what we know so far, from the position of the industry’s Tier One players to the knock-on effects of sanctions and squeezed commodity markets on the supply chains for helium and carbon dioxide (CO2).
The geographic needle of global helium supply had been due to shift eastwards as a result of Gazprom’s Amur plant coming on-stream in Eastern Siberia. Russia’s emerging helium market had been expected to see its production jump from just 3% in 2021 to 26% by 2025, in the context of simultaneously decreasing (traditional) North American production.
Whilst this is thought to still be the case in the long-term, the short-term outlook is once again less certain as explosions and fires at the Amur plant in January had already taken its nascent supply off the table for the foreseeable future and, combined with other factors, triggered the latest big market crunch, Helium Shortage 4.0.
With the Amur plant already offline, there is understood to be little additional impact of sanctions on Russia in the short-term, but long-term challenges may exist in doing business in the region.
Phil Kornbluth, helium expert and President of Kornbluth Helium Consulting, affirmed it is too early to know how things will turn out, how long the war will last, whether it will spread beyond Ukraine, whether additional sanctions will be implemented, or how long sanctions will last.
Pondering the short-term impact scenarios, he explained that Ukraine does not produce any helium and Russia, at present, operates a relatively small plant in Orenburg, whose production is sold primarily within Russia. The relatively modest quantity that is exported from Orenburg, including occasional spot loads, has been cut off from its usual European market.
“Helium Shortage 4.0 is pretty bad right now, but the war in Ukraine is not going to make it noticeably worse…”
The modest quantity of helium that would normally flow from Orenburg to Europe will try to find markets in countries that are not participating in sanctions, Kornbluth explained.
“Helium Shortage 4.0 is pretty bad right now, but the war in Ukraine is not going to make it noticeably worse,” he summarised.
An immediate negative impact on the helium business does exist where a logistical issue is concerned. Kornbluth in his 4 th March analysis that a large number of empty 11,000 gallon containers that were at Gazprom’s Helium Hub near Vladivostok were waiting to be filled when the Amur plant experienced an explosion and fire on 5th January.
At one point, there were over 100 containers in Russia waiting to be filled. While many of these containers have departed Russia, a significant number remain in the country.
Re-published with the kind permission of gasworld – www.gasworld.com