UKRAINE has established a new $500m insurance fund to ensure the continuation of grain exports in the event that the Black Sea grain initiative is not extended next month.

Ukrainian deputy prime minister Oleskandr Kubrakov told Lloyd’s List on Friday that he was planning to reveal details of the new fund and procedures “which we hope will satisfy owners and charterers” within the next few weeks.

Mr Kubrakov said on Twitter that Ukraine’s parliament had approved a law to set up the $500m insurance fund that would compensate “possible damages” to merchant ships callings at its ports, but did not detail how the financial guarantees would operate given the existing availability of insurance cover in the market.

“We are working on resuming delivery and expanding the range of products,” said Mr Kubrakov. “I invite countries of the civilised world and interested business to co-operate.”

The announcement has already caused some confusion among marine insurers.

One war risk underwriter said that shipowners and cargo interests can find all the cover they need commercially right now.

“Of course, this will stop if the Black Sea grain corridor agreement is not extended. But in that case, no one will attempt to sail to Ukraine. It is difficult to understand the purpose of such an announcement. It is not needed for now, and useless if the agreement is not extended.”

Another underwriter added: “It looks like [the Ukrainian government] want to do more than just grain, which would be outside the UN agreed deal. Without Russian co-operation, there is higher risk. But would owners be happy to entrust their assets to an insurer who they could only challenge in court in the Ukraine in the event of a dispute?”

Mr Kubrakov said the fund was being established “in case the Black Sea grain Initiative will be stopped.” However, it is not clear how the fund will work in practice without Russian co-operation.

Russia imposed a blockade on Ukraine’s major Black Sea and Sea of Azov ports when it invaded in February 2022.

The country was forced to rely on its small river ports along the Danube to keep maritime traffic flowing, while leveraging alternate routes and supply chains.

The signing of the Black Sea Grain Initiative in July in the past year allowed some traffic to resume from the ports of Chornomorsk, Odesa and Yuzhnyi.

The deal only allows for the export of grain and some other agricultural products.

No vessels have been damaged while participating in the Black Sea Grain Initiative.

The grain agreement is due to expire in mid-March and negotiations are under way to extend it.

The Ukrainian government has been seeking to expand the deal to include the port of Mykolaiv and steel products. It has also tried to extend the deal for longer than a 120-day period, which is stipulated in the original agreement.

Ukraine has been pushing to expand and extend the agreement since the first round of discussions to renew the deal when it was set to expire in November.