Exclusive: Polish, German refineries reach preliminary deal to process dirty oil

WARSAW/MOSCOW (Reuters) - Polish and German refineries have reached a preliminary agreement to process contaminated oil sent from Russia last month, which still sits in pipelines from Belarus, sources familiar with the situation said.

The northern route of the Druzhba pipeline that supplies Russian crude to Polish and German refiners has been shut for more than a month after oil flows were found to be contaminated with high levels of organic chloride.

Since then, industry officials have held several meetings to discuss how to remove the dirty oil and split the related costs.

Four sources said that during the latest talks in Warsaw last week, four European refineries - Total’s Leuna, PKN Orlen’s Plock, Lotos’ Gdansk plants, and PCK, which is part-owned by Rosneft’s German unit - have reached a preliminary deal to share the contaminated oil.

The companies will remove the crude, most of which is currently in Poland, from the pipeline by blending it with clean oil they receive via sea routes. It can then be processed through their refining units.

“The refineries initially agreed on the dirty oil division,” said one source speaking on condition of anonymity. “Each will take a portion of it.”

Three other sources confirmed the information and said details will be worked out and confirmed at the next talks scheduled for Monday in Moscow, when the key issue of financial compensation will also be discussed.

One source said that each refiner is expected take the quantity it initially ordered.

Poland’s Lotos and France’s Total declined to comment, while PKN and PCK were not immediately available for comment.

Russia agreed last week to pump the dirty crude back from Belarus, cleaning up the link all the way through to Belarus’ border with Poland. However, that does not cover flows onwards into Poland and Germany.

Poland’s pipeline operator PERN said it had neutralized 30 percent of the contamination. Sources said that to date only PKN Orlen has been refining the dirty crude, blending it with clean oil to an extent that is safe for the refinery.

PERN expects clean oil supplies from Russia to be restored on June 9 and that Poland’s pipelines will be fully cleaned in the next five months.

Additional reporting Vera Eckert in Frankfurt; Editing by Jan Harvey