Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  News  >  Economy & Forex  >  All News

News : Economy & Forex
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance ProfessionalsCalendarSectors 
All NewsEconomyCurrencies / ForexCryptocurrenciesEconomic EventsPress releases

Glencore, BP stuck with tainted Russian crude

share with twitter share with LinkedIn share with facebook
share via e-mail
0
08/21/2019 | 01:09am EDT
FILE PHOTO: An oil storage tank of Russian oil pipeline monopoly Transneft is pictured at the Baltic Sea port of Ust-Luga

MOSCOW (Reuters) - BP and Glencore are struggling to sell around 600,000 tonnes of tainted Russian oil more than three months after the contamination was discovered, according to six trading sources.

Russia's oil industry was plunged into a crisis in April after about 5 million tonnes of oil for export was found to be contaminated with organic chloride, a chemical used to help boost oil extraction but which can damage refining equipment.

Exports through the Druzhba pipeline that transports oil to Germany, Poland, Hungary, Slovakia, the Czech Republic, Ukraine and Belarus were halted. The Baltic port of Ust Luga loaded some 15 cargoes or 1.5 million tonnes of the contaminated oil for Western buyers.

At least 6 cargoes that sailed from Ust Luga remain unsold, according the trading sources. Glencore is stuck with 500,000 tonnes in one very large crude carrier (VLCC) Amyntas and two smaller tankers - Searanger and Searuby, according to the sources and Refinitiv Eikon vessel tracking system.

BP has tried to sell its cargo Fsl Shanghai at a tender earlier this month but failed, according to the same traders. BP and Glencore both bought the oil from Russian state oil major Rosneft.

BP and Glencore declined to comment. Rosneft did not respond to a Reuters request to comment.

They cannot claim compensation until they sell the oil.

"You can't file a claim against Russia until you have actually sold your oil and counted your losses," one of the trading sources said.

President Vladimir Putin said in April oil contamination had damaged Russia's image as a reliable supplier. Transneft and Rosneft have been at loggerheads over efforts to resolve the situation.

The oil was transported by pipeline monopoly Transneft, which said it was ready to pay compensation to Russian shippers which in turn would pay compensations to overseas buyers.

Transneft and the Russian Energy ministry did not respond to Reuters requests to comment.

So far, Transneft has only agreed to pay $15 per barrel in compensation, or roughly a quarter of the cost of the oil, to Kazakh oil producers, whose barrels got contaminated while en route to Western markets.

"Many buyers of Russian oil believe $15 per barrel won't be enough," a trading source in a major said.

Some consumers who received tainted oil consider $30 per barrel as reasonable compensation, two traders involved in the discussions said.

Several refiners, including Total Leuna in Germany, had to temporarily suspend refining of Russian oil because of fears of damaging refining equipment.

Another source with a large Western buyer said consumers would most likely file claims in the autumn when they finally manage to refine the dirty oil.

Oil firms have to blend one barrel of tainted oil with as much as 10 barrels of clean oil to reach required quality standards and avoid damaging equipment, sources said.

Total, for example, offloaded its two tankers with dirty oil in Rotterdam and Lithuania for storage and blending and further refining.

DRUZHBA PIPELINE

Russian oil supplies along the Druzhba pipeline to Germany, Poland, Hungary, Slovakia and the Czech Republic have resumed in July after weeks of severely reduced flows.

Russia exported 24% less oil to Germany in the first six months of 2019, year-on-year, due to contamination although it still remained Germany's top crude supplier.

Some refiners like Total's Leuna and Poland's PKN Plock are blending tainted oil with cleaner barrels and are refining it.

Rosneft's Germany's refinery Schwedt has refused to take dirty oil, according to traders. Rosneft declined to comment.

Belarus has finished full clean-up of its system after Transneft pumped some 2 million tonnes of dirty oil back to Russia, Transneft and traders said.

Transneft now needs to dilute the oil with cleaner supplies to domestic refineries and export destinations.

The pipeline monopoly has also yet to sign final compensation documents with Kazakh producers to start repaying fees of $15 per barrel, traders said.

(Writing by Dmitry Zhdannikov. Editing by David Evans and Jane Merriman)

By Olga Yagova, Vladimir Soldatkin and Dmitry Zhdannikov

Stocks mentioned in the article
ChangeLast1st jan.
BP PLC 0.79% 521 Delayed Quote.5.05%
ENI SPA 0.96% 14.552 End-of-day quote.4.84%
GLENCORE 0.88% 256.55 Delayed Quote.-11.94%
NK LUKOIL PAO End-of-day quote.
NK ROSNEFT' PAO End-of-day quote.
NK RUSSNEFT' PAO End-of-day quote.
SURGUTNEFTEGAZ PAO End-of-day quote.
TOTAL 2.73% 49.48 Real-time Quote.7.15%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news "Economy & Forex"
04:00pSoftBank mulls bringing 40 companies to Brazil
RE
03:32pPRIME MINISTER OF HUNGARY : A Christian Democratic state has been built in Hungary
PU
11:29aLabour government would abolish 'non-domiciled' status in first budget
RE
10:37aADB ASIAN DEVELOPMENT BANK : Vice-President Reaffirms Commitment to Uzbekistan's Development
PU
09:29aTanzania sees 2019/20 cashew nut output up 33 percent - minister
RE
07:09aMIN ZHANG : China traders cut back Iran iron ore purchases ahead of tariff hike
RE
06:52aPRESIDENT OF RUSSIA : Greetings to President of Armenia Armen Sarkissian and Prime Minister Nikol Pashinyan on Armenia's national holiday – Independence Day
PU
05:18aHopes for trade breakthrough fade as China cancels U.S. farm visits
RE
05:12aNATIONAL PORK BOARD : Clearing the Way for New Opportunities
PU
04:52aCENTRAL PEOPLE GOVERNMENT OF PEOPLE RE : China to see bumper harvest of grains
PU
Latest news "Economy & Forex"