September 13, 2019 / 1:02 PM / 11 days ago

France's Total tenders to sell 1.3 million barrels of tainted oil

MOSCOW (Reuters) - France’s Total has issued a tender to sell 1.3 million barrels of contaminated Russian Urals crude oil for loading from Rotterdam port, according to three trading sources.

FILE PHOTO: The logo of Total is seen on top of a building in Rueil-Malmaison, France, August 17, 2019. REUTERS/Charles Platiau

Russia loaded some 11 million barrels of Urals crude oil with organic chloride content that exceeded allowed levels from Ust-Luga port during an oil contamination crisis earlier this year.

Organic chloride is a chemical compound used to boost oil extraction by cleaning wells and accelerating the flow of crude. It must be removed before oil is sent to costumers because it can destroy refining equipment.

Contaminated Urals is very difficult to sell as the only way to make it acceptable for a refinery is to mix it with clean oil in a proportion of one to ten, or even more depending on the organic chloride content in the crude, traders have said.

France’s Total, as a big buyer of Urals oil, suffered a major impact on its business as it received contaminated Russian crude both via the Druzhba pipeline to its Leuna refinery in Germany and via seaborne cargoes loading from Ust-Luga.

Total Chief Executive Patrick Pouyanne said in May his company would seek compensation for the losses caused by the contaminated oil.

Trading sources told Reuters that Total was looking to sell 1.3 million barrels of contaminated oil in three parcels, with organic chloride content ranging from 23 parts per million (ppm) to 143 ppm.

Bids will be accepted until Sept. 19, with the results announced on Sept. 25, the sources said.

Total declined to comment.

In early August, BP tried to sell around 1 million barrels of contaminated oil from a tanker, but failed to find a buyer, trading sources said.

“I honestly think that Total has as good a chance to sell its contaminated Urals as BP - no chance”, said one of the trading sources.

Several Urals buyers including trading companies like Vitol, Glencore and Trafigura are stuck with contaminated Urals, which is difficult to sell in the market.

Reporting by Gleb Gorodyankin and Olga Yagova; Additional reporting by Felix Bate; Editing by Mark Potter

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