Page 5 - FSUOGM Week 30 2019

FSUOGM COMMENTARY FSUOGM
on the report. It is worth noting, though, that the Polish company has agreed to join other Euro- pean entities a ected 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
e second report came from Bloomberg, which said it had seen documents detailing BP’s move to call a tender for a cargo of contaminated Russian oil. The documents indicate that the cargo consists of 100,000 tonnes (about 730,000 barrels) of Urals grade crude that contains more than the legal limit of organic chlorides at 29 parts per million.
BP, which has not commented on Bloomb- erg’s report, loaded the oil into the FSL Shanghai tanker at Ust-Luga in April and has been keep- ing it on the ship ever since. e FSL Shanghai remained a oat in the Baltic Sea for some time but is now near Rotterdam.
Pushback
On the other hand, Transne is facing a cer- tain amount of pushback from its customers – including Total and PKN Orlen.
Total’s CEO Patrick Pouyanne said in May that his company intended to seek compensa- tion from the Russian pipeline operator. He also raised the question of how Transne intended to carry out and pay for the clean-up of the Dru- zhba system.
“Who is going to pay for the decontamina- tion? ere is a signi cant amount that is being mentioned, around $15 per barrel,” he was quoted as saying by Reuters. “At the moment, everyone is looking at the other to nd the one who is responsible.”
PKN Orlen, for its part, has not yet accepted Transneft’s offer to pay up to $15 per barrel. According to Reuters, its comment on the matter was: “In connection with the contam- inated Russian oil, we incurred certain costs. We continue to estimate them. When we have
precise calculations, we will ask suppliers for compensation.”
According to a Polish government official in Warsaw, the partially state-owned company ought to have the option of seeking reimburse- ment in a non-monetary form. e o cial, who spoke on condition of anonymity, told Reuters that Polish companies would bene t from hav- ing more exible contracts. With more exibil- ity, buyers and transporters of Russian crude would be able to respond more quickly to prob- lems such as the discovery of contamination, he explained.
Other observers have suggested that Trans- ne ’s solution is inadequate because it responds to all a ected parties within a single framework. One unnamed source inside a company that buys Russian oil called the pipeline operator’s o er of up to $15 per barrel “nonsense.” e rate of reimbursement “should be higher and depend on whether the oil was supplied by the pipeline or by sea,” he told Reuters.
e government of Belarus has been more vocal, arguing that Transne was not o ering enough to cover buyers’ costs and the expense of contamination. It also accused the Russian com- pany of trying to impose a unilateral solution on a multinational problem.
More talks, new offers?
In short, the European oil market has yet to shake o all the e ects of the Druzhba crisis.
Even though the pipeline system has been cleaned and checked, there are still barrels of tainted Russian crude available for sale. At the same time, buyers have not exactly embraced Transneft’s offer of up to $15 per barrel in compensation.
As a result, the Russian company will have to conduct many rounds of negotiations with dis- satis ed customers over the next few months. If these talks go badly, it may revise its formula for damage claims.™
Week 30 31•July•2019 w w w . N E W S B A S E . c o m P5