Russia probes dirty oil after countries halt imports
April 27, 2019
Russian President Vladimir Putin said Saturday the state-owned oil transport company Transneft was probing the contamination of Russian crude supplies being pumped across Europe.
Poland, Germany, Ukraine and Slovakia suspended imports of the oil via the Druzhba pipeline earlier this week after flows were found to be tainted. The temporary halt on deliveries has sparked a supply crisis affecting refineries as far as Germany.
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The contamination case:
- The problem was identified last week after an unidentified Russian producer contaminated crude supplies with high levels of organic chloride.
- Transneft later confirmed that the organic chlorides were fed into the Druzhba pipeline at the private Samara Transneft terminal in Russia's southwest.
- A number of countries, including Germany, Poland and Ukraine, halted Russian oil imports via the pipeline on Thursday.
- The crisis drove oil prices above $75 (€67) for this first time this year.
- Russia held talks with Belarus, Ukraine and Poland in Minsk on Friday to discuss measures to tackle the fallout.
- Moscow said it planned to restore clean oil flows via the pipeline within two weeks.
Investigation underway
Putin said the government would consider carrying out a wider inquiry if the Transneft probe doesn't go far enough.
"First of all, of course, it is necessary to conduct an investigation at the level of Transneft itself, and to identify the place from which it came from, for what reasons, what it was and so on. This investigation is ongoing," Putin said.
"If the internal corporate investigation is not enough, I do not rule out that we will conduct more thorough (investigation) with the help of law enforcement agencies and specialists."
The Interfax news agency reported that Transneft said the contamination could be deliberate and had opened a criminal case.
Analyst Mike Lynch told the AFP news agency the case was "quite strange."
"It has caused some nervousness in the markets, but it seems the situation can be resolved rapidly," he said.
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Supplies cut: The suspension of flows along the Druzhba pipeline cut off a major supply route for refineries in Poland, Germany and elsewhere. Some refiners have secured alternative supplies, but analysts say other routes cannot make up for the shortfall. Meanwhile, Russia has had to figure out how to divert a massive quantity of oil that was meant to head west across Europe.
Crucial pipeline: Russia is the world's second-largest exporter of crude. A main way it pumps oil to other European countries is via the Druzhba pipeline, which is capable of transporting 1 million barrels a day. The pipeline runs through Belarus, where it splits into two, with one branch heading north to Poland and Germany and the other servicing the Czech Republic, Hungary and Slovakia further south.
What made the oil dirty? Organic chlorides are routinely used to boost oil output, but they must be separated before delivery. When refined, they turn into hydrochloric acid that can destroy equipment at refinery plants.