Czechs take stake in TAL pipeline to secure crude supplies

PRAGUE Tue Nov 20, 2012 8:48am EST

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PRAGUE (Reuters) - Czech state-owned oil pipeline operator Mero has agreed to buy a 5 percent stake in the Transalpine (TAL) pipeline from Royal Dutch Shell to secure better access to crude as Russian supplies decline, Mero said on Tuesday.

Mero, which runs the IKL pipeline that hooks up to the TAL in Germany, has long been in talks to buy into the pipeline to help ensure an alternative source of oil besides crude from Russia, currently the European Union nation's main supplier.

Officials declined to comment on the price.

A stake in the TAL pipeline running from Italy's Adriatic port of Trieste to Germany grants priority access to capacity, which has lately been constrained and forced the Czechs to temporarily shut down a refinery due to a lack of crude.

Royal Dutch Shell will hold a 19 percent stake in TAL after the sale.

"If it turns out that there could be long-term supply problems through the Druzhba pipeline, we have the right to ask for a long-term increase in the transportation capacity through TAL and thus fully meet the needs of the Czech Republic or the Czech refineries," Mero Head of Strategy Libor Lukasek told a news conference.

The Central European nation imports most of its 7 million to 8 million tonnes of crude annually through the Druzhba pipeline from Russia.

Russian flows through Druzhba, which has historically accounted for the bulk of central Europe's oil, are running at only half of capacity after Moscow built new direct routes and ports to supply north European and Asian markets over the past decade.

TAL starts in the port of Trieste and hooks up in Germany with the IKL pipeline that serves Czech refineries. Capacity constraints on the main TAL branch have lately not allowed the pipeline to satisfy Czech demand.

(Reporting by Jan Korselt; writing by Michael Kahn and Jan Lopatka; editing by James Jukwey)

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