Where does Russian Methanol Flow?
09.27.2023 By Tank Terminals - NEWS

September 27, 2023 [Port News]- The eighth package of sanctions has closed the “window to Europe” for Russia’s methanol exports. The transshipment via the Finnish port of Hamina-Kotka has stopped but the first methanol terminal was opened in the Far East. There are still logistical problems and producers look more closely at the domestic market, including ship bunkering.


Methanol is a traditional export cargo in Russia. After the EU introduced the eighth package of sanctions against Russia, the usual logistics of methanol through the port of Hamina-Kotka to Europe stopped working. The participants of the Methanol 2023 conference held in Saint-Petersburg in September 2023 with the participation of PortNews discussed the problems in the domestic methanol industry and the ways of coping with the current situation.

According to the Analytical Department of PortNews, the picture of methanol export through seaports has changed dramatically over the past year. In 2022, before the introduction of the eighth EU sanctions package, about 90% of Russian methanol was exported through the Finnish port of Hamina-Kotka. This year, the volume of transshipment through this port has practically ceased. The terminal created in the port by Russian investors (Shchekinazot) had to stop handling this cargo. Underway is the consideration of possibilities to convert the terminal for handling other types of liquid bulk cargo that has not been covered by sanctions.

In the first half of 2023, the situation looked quite different. Firstly, a specialized methanol terminal in Vostochny Port (Eastern Petrochemical Terminal) handled 366 thousand tonnes. Secondly, the transhipment via port Kavkaz (Yugneftetehimtransit) tripled while that of port Temryuk (Cargohchem) increased by one third.

At the same time, the share of China and other Asian countries in exports increased which was, quite predictably. According to the data provided during the Conference by Karen Davtyan, analyst of the Gazprombank’s Price Index Center, the share of China in August 2023 was 70% compared to 17% last year, the share of other Asian countries was 19% compared to 8% last year.

According to the Managing Director of Implement, sales of Russian methanol to China, were facilitated by regulated gas prices in Russia, because at high gas prices methanol from the North and South Americas is not able to compete with that of the countries, where blue fuel prices are regulated.

Nevertheless, such a redistribution of logistics was not able to fully offset the volumes lost because of sanctions. According to Karen Davtyan, restrictions on the export of Russian methanol have led to a decrease in the total volume of producers’ shipments in 2023  – by 15%, year-on-year.

Besides, eastwards export of methanol is hindered by insufficient capacity of the Eastern Polygon, which is estimated by the market participants at 95 million tonnes and is expected to show a further increase. There are also problems with the capacity of routes to the ports of the South Basin, both due to the increased traffic in this direction and because of the priority given to special cargo.

In this regard, analysts expect methanol exports to fall by about 20% in 2023. A solution for manufacturers may be in switching to the domestic market, particularly to the bunkering market in the longer term.

It is no secret that the Baltic Sea is a Special Sulphur Emission Control Zone (ECA) where the sulphur content of ship fuel is limited to 0.1%. Methanol is a promising marine fuel in this regard. According to Chris Chatterton, Chief Operating Officer of global methanol industry trade association Methanol Institute, the 25 methanol-fuel vessels, mainly product/chemical carriers, operating globally today will be joined by an additional 165 vessels on order at a future date. Chatterton expects a total of 1,200 methanol-fuelled vessels of various designs to be operating by 2030. According to him, the product is currently available for consumption as marine fuel at over 100 ports.

In our opinion, the Russian ports of the Baltic Sea, traditionally focused on handling of container ships (at the present, we are talking about direct deep-sea services from the countries of the Asia-Pacific Region), could well join hands with bunker companies towards establishing bunkering infrastructure for vessels running on methanol. After all, the number of such ships has been growing considerably not only in Europe but also in Asia. It is no coincidence that the port of Sinagapore has started selling this type of fuel in 2023.

The more so, manufacturers are interested in supporting the activities needed. When speaking at the Conference, Levon Garlian, Strategy and Investment Director at Metafrax Group, declard the company’s readiness to act as a moderator and organizer of working groups for the promotion of methanol as a marine fuel in Russia. According to the action plan presented by the company, it is necessary to organize meetings with shipowners and shipbuilders, develop the technology of a prototype ship engine running on methanol, and then build it. Besides, it is necessary to develop a list of state support measures for the purchase and construction of methanol vessels, to introduce changes into the relevant regulatory documents.


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