According to Reuters, Russia’s state pipeline monopoly Transneft will compensate all parties for losses incurred from contaminated oil, under the condition that they prove the damage, a government official said on Thursday, May 22, as the first European refinery declared force majeure.
The contaminated oil came via the Druzhba pipeline to the Baltic port of Ust-Luga and other European countries.
Total’s 230,000 barrel-per-day Leuna refinery in Germany, which usually receives Urals crude via Druzhba, declared force majeure on refined product shipments.
Oil export flows from Russia have been disrupted since April after high levels of organic chloride were found in crude pumped via the affected pipeline. The Druzhba pipeline splits in Belarus into a northern spur to Poland and Germany and a southern leg via Ukraine to Slovakia, Hungary and the Czech Republic.
Transneft has highlighted that those oil firms using chloride to boost oil output are the ones to blame for contamination; Yet, on May 22, Russia said that Transneft would foot the bill.
Specifically, Russian Deputy Prime Minister Dmitry Kozak, when asked about who would pay, answered “Of course – and sadly – Transneft“.
In the meantime, Minister Kozak reported that Russia hasn’t calculated the cost of the damage, yet, as it will take about two to three weeks to calculate the cost. Also, Poland, Ukraine, Hungary and Slovakia were currently waiting and had not yet issued demands for compensation.
Additionally, Belarus and Ukraine are to ask compensation from Transneft.
Mr Kozak commented
This is not a judicial dispute, we will find a compromise. Everyone who can prove real losses will, of course, be compensated.
This situation has caused Czech Republic to use its strategic oil reserves to make up for lost Russian barrels, whereas Poland has increased seaborne oil imports.
As IEA reports, the impact on European refinery throughput in the second quarter of 2019 from the contaminated crude is seen at roughly 250,000 barrels per day, under 2% of the continent’s product demand.
In addition, Reuters reports that Genscape said that it detected abnormal emissions at the plant and decreased furnace stack activity on the 112,000 bpd vacuum distillation unit.
Concluding, Kozak announced it will take 22 days to clean one branch of Druzhba and seven days for the other, without specifying which was which.
