Page 99 - RusRPTJun19

finding contaminants that can damage refinery equipment. Both German and Polish operators, in turn, reportedly don't know how to handle about 400,000 tonnes of contaminated oil that remains in the pipeline. The options include pumping the crude out for temporary storage in Germany, deliver to local refineries despite poor quality, or to ship back to Russia through Rostock, unnamed EU official told Vedomosti.
Reportedly, major trading houses Vitol, Glencore and Trafigura are struggling to find buyers for at least 10 crude tankers with 1mn tonnes of Russian crude that also has been tainted with organic chloride. The sellers of the oil reportedly include such major oil companies as Rosneft, Russneft, Surgutneftegas, and Kazakh firms, according to the traders and the loading schedules from Ust-Luga port in April and May seen by Reuters.Russian oil companies have significantly cut the output and supplies of oil to the Transneft system because of the Druzhba problems. Reportedly pumping through Transneft pipelines declined by 650,000 barrels daily in the first days of May as compared to April averages, industry sources claim. Oil output in Russia overall declined to 11.19mn barrels daily from May 1 to May 6 as compared to 11.23mn barrels daily in April. Excess oil not distributed via Transneft could be stored in underground accumulation facilities in the meantime. "While it is still difficult to assess the final impacts on balances, the severity of the problem could mean up to 400,000 bpd (barrels per day) of Russian exports could be pulled out of the market for longer than earlier anticipated," Reuters cites the analysis by Citigroup. This would further tighten the market, as even before the Druzhba outage Opec signalled that demand would exceed supply by more than 800,000 bpd in the third quarter of 2019.
Russia is losing half a billion dollars a day from the dirty oil scandal. A contamination scandal at a Russian pipeline carrying oil to Europe has cost the countrybns of dollars, as depleted oil flows contribute to a rise in global oil prices and leave refiners in Europe scrambling to find supplies, Forbes reports. For almost three weeks, nearly 5mn tons of Russian crude bound for Europe has been stuck in westbound pipelines. The flow of oil is suspended due to high levels of contamination by organochloride, a chemical used to facilitate the extraction of heavy oil. The organic chloride contaminant –, which wreaks havoc on refining equipment if not properly treated – allegedly originated from a privately owned refinery called Nikolayeva in Russia’s Samara Region along the Volga River. The contaminated oil was being shipped via the Druzhba (Friendship) pipeline, which boasts an impressive 1mn barrels per day capacity, or 1% of total global crude demand. Russia is the world’s second largest oil exporter after Saudi Arabia, and as a result of the crisis European purchases of oil fell by up to 10% – roughly 1mn barrels per day. This comes as a considerable financial blow to Moscow. Russia is losing half a billion dollars a day in oil profits – revenue that the country desperately needs amidst biting US sanctions and years of anaemic economic growth. It is still unclear whether the contamination was the result of negligence or sabotage, but on Tuesday, May 7 several suspects were arrested.
The quality of Russian oil delivered from Baltic port of Ust-Luga has returned to normal and supplies have resumed, Reuters reported on May 13 citing unnamed industry sources.
In the beginning of May, uncertainty over the quantity and quality of Russian oil supplies snowballed, after in April Belarus, Ukraine and some Central European countries and Germany suspended oil imports via the Druzhba pipeline after finding contaminants that can damage refinery equipment.
99 RUSSIA Country Report June 2019 www.intellinews.com