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URN Behind the Scenes: Logistics Plus delivers $100 million of gas pipe from China to Ukraine in harrowing war-time operation

One of 1,000 truckloads of pipe for Naftogaz delivered in a global operation carried out by Pennsylvania-based Logistics Plus and Vorex USA. (Company photo)

(Today, URN Behind the Scenes tells the story of a complicated, sometimes dangerous mission to deliver four shiploads of pipe from Asia to sites through war time as Ukraine seeks to loosen Russia’s stranglehold on the European natural gas market.)

US supply chain solutions company Logistics Plus, Inc. has just finished delivering $100 million worth of gas pipes to hundreds of sites in Ukraine in a complex effort that involved offloading ships onto 1,000 trucks to avoid anti-ship mines in the Black Sea, unloading times shortened by nearby missile attacks, and ever-shifting dispatch operations amid the vagaries of war.

The pipes, weighing 22,000 tonnes and filling four breakbulk ships, took 14 months to order, fabricate and prepare, then eight months to deliver. Working from Poland, Ukraine, Turkey, China and the US, staffers from Logistics Plus and Vorex, LLC the American oil and gas equipment supplier that won the contract to supply the pipe to Ukrainian state gas producer Naftogaz, negotiated a fickle typhoon season in the Sea of China, extreme congestion at Romania’s Black Sea port of Constanta, and the threat of physical harm from the biggest land war in Europe since Hitler.

The final shipload of casing and drilling pipe was delivered last month directly to the Ukrainian port of Chornomorsk. It was the first time since the Russian invasion of 2022, at least on public record, that a foreign ship managed to arrive at the Black Sea port with something other than grain, a commodity that was given safe clearance at times under a deal with the Russians. Until then, non-grain ships had avoided the port for fear of hostile action.

“It’s hard to think of a more complex operation from all my years in the business,” said Fedor Zakusilo, the Ukrainian-American founder and president of Vorex USA, who started out in the oilfield supply business in 2000. “At times, the staff was pushing it dangerously hard and we had to rein them in – people were actually unloading pipe while a factory just across the road was exploding from a Russian attack. The dedication to getting the job done was off the charts.”

That commitment, he said, came at least partially from the knowledge that the pipe was crucial to Ukrainian energy resilience and to ending Russia’s dominance of the supply of natural gas to Europe.

In late 2021, Russia supplied 39% of Europe’s natural gas, giving the country inordinate power over its European Union rivals. Through efforts to reduce consumption, find other suppliers and increase output from places like Ukraine, European nations managed to reduce that share to 12% by late 2023. And Ukraine, which ranks 26th in the world in terms of proved gas reserves, could lower that reliance still further.

Indeed, after the delivery of most of the pipe, the Ivan Bohun rig, which belongs to Naftogaz subsidiary UGV, announced the discovery of a new natural gas deposit with a flow rate of 200,000 cubic meters per day, the highest rate UGV has seen in western Ukraine in 20 years. Although it’s not clear the Vorex-supplied, Logistics Plus-delivered pipe was used in the discovery, the shipment was meant to enable just this type of exploratory drilling, among other operations.

And at times, through challenges ranging from shifts in geopolitics to East Asian typhoon season to an Eastern European drought that left river levels uncomfortably low for barge traffic, not to mention the outright barbarity of war, the delivery of that pipe seemed anything but certain.

"Everyone was quite on edge throughout this operation," said Chief Operating Officer Yuiry Ostapyak, a Ukrainian-American who, at 39 years of age, has worked for 20 years for the Erie, Pennsylvania-based Logistics Plus. "This was definitely one of the biggest logistics challenges we have seen - it's one that a lot of companies would have shied away from."

Preparation to deliver the pipe started in April 2022 when Vorex USA, also based in Erie, won the $100 million supply tender, and contracted Logistics Plus to arrange delivery. At the time, the world was still reeling from the supply chain chaos of the Covid lockdowns, and just coming to grips with the heightened tensions between West and East.

Three months later, amid intense fighting in Ukraine, Logistics Plus bought Kyiv-based freight forwarding and logistics company Concord-Trans, adding 10 full-time staff to its Ukrainian presence, which already counted 50 people in the western Ukrainian city of Ivano-Frankivsk, Ostapyak's home town.

The company was now well-staffed to pull off one of the most complex operations of its history, and supported by ample local knowledge.

Russian bombing of Ukrainian Black Sea port infrastructure forced Logistics Plus staff, who were busy coordinating manufacturing schedules with factories in China, to plan to reroute the voyage of four breakbulk container ships to arrive in Constanta, the Black Sea port of NATO member Romania.

The Constanta port, however, had suddenly become one of the busiest ports in the world as the Russian bombardments forced Ukraine's renowned grain crop, which was vital to the Middle East, Africa and other areas, to detour through Romania.

"As the ships came in, we faced challenges finding berth places, labor and cranes and shipping, but we were fortunate enough to figure out how to re-use some of the barges that would bring grain to the port and return empty," Ostapyak said.

The barges, coming to Constanta from the Danube River port at the confluence of the borders of Ukraine, Moldova and Romania, started loading up pipe for the return journey. However, an extreme lack of rain in the region had left river levels too low to fill the barges, allowing for only partial loads, requiring more trips.

When the barges finally arrived at their final destination, they did so at Reni, a small Communist-built Ukrainian port on the Danube River that had barely been used until recently, when it was suddenly flooded with Ukrainian exports and imports trying to skirt the Russian invasion.

"Conditions were very difficult," Ostapyak said. "We sent a Logistics Plus team from Ukraine and some people from the US and they were on the ground at Port Reni facing daily drone threats and missile threats as the port infrastructure was attacked multiple times with our people on site."

Working with port employees, Logistics Plus staff would unload the barges, which traveled in tugboat-hauled convoys of three or so, into trucks for the journey to various sites in Ukraine. Large concentrations of trucks had to be avoided because of the threat of missile or drone attack, further complicating the task of the dispatcher.

The subsequent delivery over land was a dispatcher’s waking nightmare. The sites to receive pipe were spread out throughout Ukraine, with many areas near the artillery bombardments, drone strikes and trench networks characteristic of the Ukraine-Russia war. In all parts of the country, air raid sirens would regularly send staff rushing for cover.

Still, for all the risks, the delivery went off without the loss of pipe or person- with all pipes delivered to the end users. And the staff working on the operation, particularly from the side of international logistics, learned a lesson that is set to become more valuable as this chaotic decade progresses.

As Houthi rebels attack ships in the Red Sea, tensions with China mount after Taiwan elected a nationalist leader and Russia's full-scale invasion of Ukraine is set to enter its third year, Ostapyak says the operation left the company better prepared to deal with the heightening uncertainties of the future.

"I think the future in logistics will go to the companies that learn to find a way to say 'yes' quicker, even as circumstances get more and more difficult," Ostapyak said. "When the war broke out, many Western companies were running away. We were running toward Ukraine, to help. That attitude will become increasingly essential in the future."

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