IT IS still impossible to price cover on vessel calls at Ukrainian ports after last week’s deal to allow the resumption of grain exports, marine insurance sources have warned, adding that Friday’s Russian missile strike on Odesa highlights just the kind of thing that could send calculations awry.

The agreement, brokered by Turkey and the United Nations, theoretically enables Ukraine to start shipping huge consignments of siloed wheat, which it has been unable to do since Russia launched an invasion of its territory in February.

This is a matter of urgency, as an estimated 180m people in North Africa, the Middle East and Asia depend on these supplies as a staple foodstuff.

Ukraine’s government has expressed hope that the first grain shipment could leave Chornomorsk port as early this week, while conceding that there will be significant hurdles to overcome first.

But just hours after the pact was signed off, Russia launched a missile attack on the key port of Odesa, with two missiles hitting port infrastructure and two other missiles brought down by Ukrainian defenders of the city, according to media reports.

The strike has been widely condemned, with figures such as EU high representative for foreign affairs Josep Borrell even questioning the Kremlin’s good faith in the matter.

Russia has countered with the assertion that the missiles were directed solely at military targets.

The export corridor deal is designed to work by allowing Ukrainian pilot vessels to guide bulkers and general cargoships through mined waters to ensure access to and from ports, with Russia agreeing to a truce while convoys move.

Turkey will inspect the merchant ships to still Russian fears of weapons smuggling, and the US State Department says it will hold Russia to account on observing the terms of the agreement.

The hope is that shipments can get back to the 5m tonnes a month seen in normal times with a matter of weeks.

Grain silos with total capacity of 4m tonnes have been damaged or destroyed in the invasion to date, according to Odesa-based Lloyd’s agent Eurogal.

But London and Nordic marine insurers say they will need to see how the scheme looks once it is up and running before they are prepared to quote.

The lack of trust will naturally leave underwriters reluctant to jump in before they have some data to go on, said one war risk broker.

“We’ll just wait and see what is going to change. No owner is going to go in before there is a plan for mine clearance.

“At this stage, this is just a piece of paper saying ‘this is what we intend to do’ and that means nothing. It’s not going to happen overnight,” he said.

An underwriter offered a similar perspective, saying that everything depends on how the deal comes to fruition.

“When [the Russians] start firing rockets at the prospective loading port for Ukrainian grain, it signals that we have watch carefully whether this is going to happen at all, or whether it is just window dressing.

“We’ve heard so many times about humanitarian corridors and stuff like that and nothing has happened. The UN is in there, but I want to see the proof of the pudding.”

As for likely rates, he added that his firm had yet to have any internal discussions on the matter. Once discussions are held, they will factor in the extent of any minesweeping and the extent of any naval escorts prior to reaching any conclusions.

“These are the unanswered questions we need to get a handle on before we start thinking about rates.”

Speaking at a press conference in Kiev today, Ukrainian infrastructure minister Oleksandr Kubrakov told reporters that minesweeping operations already underway may allow Chornomorsk port to reopen later this week.

Marine insurance brokers are already working to facilitate the resumption of grain exports within a fortnight, he added, expressing confidence that cover could be lined up.

Several carriers and brokers have already expressed interest and it is likely that a consortium will be set up in the next few days, claimed Neil Roberts, head of marine and aviation at the Lloyd’s Market Association.

“Some entities have pulled back from the region and had their appetite limited by reinsurance constraints, but there will be support for this initiative among insurance specialists, not least because it is so clearly humanitarian.”

A special coordination centre has been established in Istanbul, with representatives from both Ukraine and Russian joining, and the technical documents establishing operational parameters expected to be endorsed by all parties by Wednesday.

But how quickly the show can get back on the road will largely depend on the logistics details and availability of personnel to handle and load the grain on the Ukrainian side, said Mr Roberts.

It is not yet clear whether grain will go first to ships already in port or whether fresh charters will be arranged.

“We understand at least some of the vessels alongside in the ports have sufficient crew on board and could be ready for sailing at relatively short notice.”

A test voyage is likely to be required from naval vessels prior to the first consignment, to ensure that minesweeping operations have cleared a corridor from each of the ports.

According to data from Lloyd’s List Intelligence, some 26 vessels are alongside in the Ukrainian ports mentioned in the Black Sea grain corridor agreement as export hubs.

Of these, 16 bulk carriers and six general cargoships are foreign-flagged and have been stuck since the invasion. These could potentially be mobilised to kick-off grain shipments.

The ports of Odesa, Chornomorsk, Yuzhnyi combined recorded 827 departures of commercial vessels in the third quarter of last year. Nearly 70% of these outbound sailings were bulk carriers and general cargoships which typically carry dry bulk commodities.

The Black Sea ports had a bumper start to the year seeing the departure of vessels worth 12m dwt in January, exceeding the previous year’s figure by about 3m dwt.

Trade out of these ports has since been decimated by Russia’s naval blockade. No ships have sailed these ports since February.

George Macheras, global maritime sector co-head at law firm Watson Farley & Williams, argued that while sanctions targeting the provision of services such as marine insurance to Russia are now looking more like a fixture than a temporary expedient, they could ultimately be slackened.

“Grain is exported by Ukraine, while energy is still key to Russia’s negotiating hand. So in some ways, it is less of a concession for Russia than anything related to energy would be. It doesn’t effect Putin’s bargaining position with the West on energy issues.”

Some sanctions on Russia were in place prior to the invasion, but were limited and targeted on specific companies and individuals. Since February, the EU has evinced clear determination to be punitive towards Russia.

“Russian companies became pariahs as far as the EU is concerned but that does not match the need Europe and the world have for Russian energy supplies. There is a mismatch with political desires, and there is a balance to be struck there.

“From a legal perspective, sanctions will continue to be adjust to ease the energy crisis. They won’t be removed; sanctions are here to stay against Russia. However, they will be adjusted to ensure there will be some flexibility to make sure Europe doesn’t starve itself of Russian energy supplies.”