May 15, 2019 / 9:11 AM / 11 days ago

Russia to restart clean oil supply via Druzhba fully in May or early June

MOSCOW (Reuters) - Exports of clean Russian oil via the Druzhba pipeline, interrupted due to contamination, will be fully restored in late May or early June, Russian Energy Minister Alexander Novak said on Wednesday.

FILE PHOTO: An oil storage tank of Russian oil pipeline group Transneft is pictured at the Baltic Sea port of Ust-Luga, Russia February 26, 2018. REUTERS/Vladimir Soldatkin/File Photo

Piped exports of Russian crude have been disrupted since late April after high levels of organic chloride were found in oil sent via Druzhba to the Baltic port of Ust-Luga.

Belarusian President Alexander Lukashenko said last week his country had faced “enormous” costs due to the contamination and expected compensation from Russia, although the mechanism for any redress and who would pay remained unclear.

Novak said the cost of damage from contaminated oil in the Druzhba pipeline was less than $100 million and Russia may sell the poor-quality oil at a discount, RIA news agency reported.

The disruption of exports from Russia, the No.2 crude exporter after Saudi Arabia, has sent shockwaves through global oil markets and forced Moscow to cut its oil production to an 11-month low of around 11.16 million barrels per day.

TALKS

Russian Deputy Prime Minister Dmitry Kozak will on Thursday discuss a resumption of oil supplies along Druzhba with his Belarusian counterpart Igor Lyashenko, Kozak’s aide told reporters.

Kozak said clean Russian oil may reach Poland within a week, TASS news agency reported on Wednesday, while Russian oil pipeline monopoly Transneft said deliveries of clean Russian oil via the northern leg of the pipeline to Poland and Germany were expected to resume in the near future.

Belarus is a major transit route for Druzhba, which means friendship. The Belarusian Mozyr oil refinery is the hub where the pipeline splits into two branches, one leading to Poland and Germany, another going south to Ukraine, Hungary and Slovakia.

Transneft also said clean oil would be delivered via the pipeline to Slovakia on May 21-22 and on May 23-24 to Hungary, Interfax news agency reported.

The contamination and subsequent supplies disruptions have forced Poland, Hungary and the Czech Republic to tap strategic reserves in order to feed refineries.

On Tuesday, pipeline operators from Ukraine, Russia, Belarus and other countries held crisis talks in Bratislava but the meeting yielded no concrete agreement. Talks will continue at a later date in Moscow.

The International Energy Agency said the impact on European refinery throughput in the second quarter of 2019 from the pipeline contamination is seen at roughly 250,000 barrels per day, under 2% of the continent’s product demand.

Reporting by Vladimir Soldatkin, Maria Grabar and Polina Devitt; additional reporting by Ahmad Ghaddar in London; writing by Vladimir Soldatkin; Editing by Dale Hudson, Jason Neely and Kirsten Donovan

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