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Russia's Transneft blames oil firms for contamination, no easy fix in sight

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05/14/2019 | 04:03pm EDT
A general view shows the Novorossiysk Fuel Oil Terminal in Novorossiisk

BRATISLAVA/MOSCOW (Reuters) - Russian pipeline monopoly Transneft said on Tuesday that oil producing firms were to blame for the recent contamination of an export pipeline, as sources said there was no quick fix to the problem.

Russian export flows have been disrupted since April when high levels of organic chloride were found in crude pumped via the Druzhba pipeline to the Baltic port of Ust-Luga.

Flows through the Druzhba pipeline to Central Europe and Germany remained shut as of Tuesday as talks in the Slovak capital of Bratislava failed to find a rapid solution.

Managers at oil pipeline operators, including Transneft, held talks on Tuesday to discuss the next clean-up steps but the discussions had not produced clear answers, two sources present at the meeting told Reuters.

Ukraine's pipeline operator Ukrtransnafta's head Nikolai Gavrilenko, Russia's deputy energy minister Pavel Sorokin and executives from Transneft and European companies were among the participants at the talks on the sidelines of a meeting of the International Association of Oil Transporters (IAOT).

The Druzhba pipeline, which splits into two branches in Belarus, has a northern spur routed to Poland and Germany. Three trading sources told Reuters on Tuesday that there were still no oil flows from Belarus in that direction.

Transneft said in a rare statement that organic chloride, which is used in high viscosity oil extraction, could only appear in pipelines where oil was provided by oil companies as Transneft does not inject it into the system.

Organic chloride is used in oil extraction but must be removed before the refining process begins.

Talks will continue in Moscow to try to figure out how to get the dirty oil out of the pipelines, the sources said, adding it was not clear when pumping could return to pre-crisis levels.

Russia began shipping clean oil via the Baltic on Monday, while Hungary became the first European country to resume imports via the pipeline as part of a test.


Ukraine said on Saturday it had resumed transfers to European clients via the Druzhba pipeline's southern leg to Slovakia, Hungary and Czech Republic. It is unclear if there are any flows to other countries via that leg apart from Hungary.

Ukrtransnafta said on Tuesday that Russian oil being pumped towards Slovakia and Hungary will stay contaminated for four to six months as transit countries started to evaluate losses from oil flow suspensions to Europe.

It also said that it has discussed with Transneft compensation over the tainted oil.

Ukrtransnafta's Gavrilenko told Reuters there were around 350,000 tonnes of tainted oil stuck in Ukraine as of May 14, after some was pumped further on the pipeline's southern leg.

"We will be squeezing it out towards Hungary and Slovakia according to the schedule, with the timing depending on the chloride levels left in that oil ... Overall, it will take between four to six months," Gavrilenko said after the talks.

Poland's energy minister said on Monday it had started to remove polluted oil from its part of the pipeline.

The mechanism for any compensation arising from the contamination and who will pay is unclear.

Belarus, like some other countries on the route, gets not only oil but also transit fees, which can be a major source of budget revenues. Its President, Alexander Lukashenko, last week described its losses as "enormous".

Ukrtransnafta' Gavrilenko told Reuters it planned to seek compensation from Transneft for storing the contaminated oil.

He said that organic chloride content of up to 250 parts per million (ppm) was not harmful to the pipeline network. The permitted maximum levels for oil to be used in processing is 10 ppm.

(Reporting by Olesya Astakhova and Tatiana Jankarikova in BRATISLAVA, Gleb Gorodyankin, Olga Yagova, Andrey Kuzmin, Vladimir Soldatkin and Tom Balmforth in MOSCOW, Andrei Makhovsky in MINSK; Writing by Katya Golubkova,; Editing by Jane Merriman, John Stonestreet and Alexander Smith)

By Olesya Astakhova, Gleb Gorodyankin and Katya Golubkova

Stocks mentioned in the article
ChangeLast1st jan.
MOL PLC 0.00%End-of-day quote.0.00%
NK ROSNEFT' PAO End-of-day quote.
POLSKI KONCERN NAFTOWY ORLEN SA 2.45% 98.84 End-of-day quote.-8.61%
SURGUTNEFTEGAZ PAO End-of-day quote.
TOTAL 0.35% 48.2 Real-time Quote.4.37%
TRANSNEFT' PAO End-of-day quote.
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Financials (HUF)
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Debt 2019 402 B
Yield 2019 4,43%
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