December 19, 2019 / 10:34 AM / a month ago

Transneft pays 14 Kazakh firms compensation for tainted oil: sources

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

MOSCOW (Reuters) - Russian oil pipeline monopoly Transneft (TRNF_p.MM) has compensated 14 Kazakh companies for issues related to tainted oil on Dec. 19, a second payment to customers who faced losses after a major export pipeline was contaminated.

In April, Russia was forced to stop its Druzhba pipeline supplying refineries in eastern and central Europe for a couple of months after a chemical substance which could severely damage the refining equipment was found in oil meant for exports.

Transneft has agreed to pay a maximum of $15 per barrel for tainted oil to the firms who were sending the oil via Druzhba and via the Baltic Sea port of Ust-Luga. Companies then need to agree over compensation with their European buyers themselves.

In October, Russia and Hungary signed a first settlement for tainted oil. A total of 38 Kazakh companies are set to get compensation and on Thursday, Transneft paid the first 14 Kazakh firms, two sources said.

Transneft confirmed to TASS news agency that compensation to the first 14 Kazakh companies had been sent. The company did not immediately reply to a Reuters request for comment.

“The first 14 oil companies today received compensation for tainted oil from Transneft. The companies received the money directly from Transneft,” one of the sources said.

The second source said that the timing of the payment to the rest of the Kazakh companies depended on how fast all the documents were signed and may not come this year.

Citing the results of three separate, undisclosed tests, Reuters reported on Wednesday that the substance that brought one of Russia’s longest oil pipelines to a halt in April was carbon tetrachloride, a lethal chemical tightly controlled by an international agreement.

Reporting by Alla Afanasyeva; additional reporting by Vladimir Soldatkin; writing by Alexander Marrow; editing by Katya Golubkova, Jason Neely and Nick Macfie

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