Page 4 - EurOil Week 29 2019

EurOil COMMENTARY EurOil
Druzhba denouement
Russia’s state pipeline operator Transneft is still facing dif culties in Europe, despite its offer to compensate buyers
Transneft
WHAT:
Transneft has said it wants to cap damage claims at $15 per barrel.
WHY:
Tainted Russian crude is still up for sale, and some of Transneft’s biggest customers are sceptical of the reimbursement plan.
WHAT NEXT:
The company will have to negotiate with dissatis ed customers and may end up revising its formula for compensation.
RUSSIA’S state oil pipeline operator Transne has had a di cult few months, owing to the dis- covery of organic chloride contamination in oil owing through the Druzhba network in April.
e worst of the crisis seems to have passed, though. Transne has taken steps to prevent fur- ther contamination, and the quality of Russian crude exports has improved. As of the end of June, the company had resumed regular ship- ments through Druzhba, which is the main overland route for pipeline deliveries of Russian crude to Europe.
Since then, it has also drawn up a plan for compensating buyers of the contaminated oil. On July 24, it revealed that it was ready to pay damages to a ected parties and had set the cap for reimbursement at $15 per barrel. It also stated that it would require claimants to prove that they had incurred damage as a result of the organic chloride contamination.
Transne probably hopes that its o er will put the problem to rest. But there are signs that the pipeline operator will have to do more to mollify its customers.
Still oating around
On the one hand, Transne will have to deal with the fact that customers are still trying to dispose
of oil they may not be able to use because the contaminants can damage re nery equipment.
As mentioned above, the Russian company has gone to some trouble to take the contam- inated crude out of circulation and make sure that Druzhba, its main overland corridor for oil exports to Europe, is once again functioning as a reliable delivery route. Nevertheless, some of the a ected barrels are still oating around the market.
Within the last week, reports have emerged about two major companies’ e orts to unload tainted Russian crude. The first came from Reuters, which said that a vessel chartered by France’s Total had picked up a cargo of chlo- ride-laced oil in the Russian port of Ust-Luga in April and then unloaded it in the Lithuanian port of Klaipeda in June. Total used the tanker, the Dmitry Mendeleyev, to deliver these vol- umes to the Polish company PKN Orlen, the news agency said.
Neither Total nor PKN Orlen has com- mented on the report. It is worth noting, though,
that the Polish company has agreed to join other European entities affected by the incident –
Lotos, a Polish re nery operator, as well as the
Leuna and Schwedt re neries in Germany – in accepting some contaminated oil. 
P4
w w w . N E W S B A S E . c o m Week 29 25•July•2019