Business news

21 May 2019

Belarus needs another month for final calculation of damage caused by polluted Russian oil

MINSK, 21 May (BelTA) – The Belarusian side needs another month to finish calculating the damage caused by polluted oil from Russia, BelTA learned from Prime Minister of Belarus Sergei Rumas.

The head of government noted: “It is too early to talk about specific figures today. Because the Belarusian side has not calculated the entire damage. It is a lengthy process. We expect we will need another month for the final determination of the damage.”

In his words, the situation around supplies of the so-called dirty, substandard oil will be one of the things they would like to discuss during the meeting of Prime Minister of Belarus Sergei Rumas and Prime Minister of Russia Dmitry Medvedev next Friday.

Sergei Rumas said: “You know that a working group has been set up. The head of the [Belarusian state petrochemical] concern Belneftekhim came back from the Russian Federation yesterday. He said this morning that a roadmap has been virtually agreed with Russia. Some of its points are already being fulfilled by both sides although the document has not been formalized yet.”

Sergei Rumas explained that the roadmap contains the entire list of measures, which will allow removing substandard oil from the pipes and resuming oil transit towards Western Europe. The second set of measures includes compensations for Belarus’ losses caused by the incident.

“Today the main goal is to enable transit so that Belarus could get paid for oil transit via the country’s territory,” the prime minister added.

On 19 April Belneftekhim registered a massive decrease in the quality of the Russian oil mixture Urals flowing in transit into the main oil pipeline section operated by OAO Polotsktransneft Druzhba. The concentration of chlororganic compounds in oil exceeded standard thresholds dozens of times over. Both Belarusian oil refineries – OAO Naftan and Mozyr Oil Refinery – were forced to reduce their workload and have experienced financial losses. Quality oil reached the Belarusian border via the Druzhba pipeline on 2 May. Naftan is still operating with reduced workload.

The oil pipeline system Druzhba delivers oil to Belarusian oil refineries and enables oil transit to Europe via Belarus in two directions – across Poland and Ukraine. On 24 April Poland stopped oil transit via the Druzhba oil pipeline system for an indefinite period of time. On 25 April Ukraine did the same, however, it resumed oil transit later.

BelTA reported earlier that a working group has been set up to evaluate damage caused by tainted oil and ways to compensate for the damage. The group includes representatives of the Belarusian state petrochemical concern Belneftekhim and the Russian Energy Ministry. BelTA quoted Deputy Prime Minister of Belarus Igor Lyashenko as saying on 17 May that Belarus will insist on compensations for the direct and indirect losses caused by poor-quality oil from Russia. He noted it is too early to talk about the final sum. At the same time the cost of Mozyr Oil Refinery equipment broken by polluted oil alone is close to the equivalent of $30 million. Due to peculiarities of the chemical processes caused by chlorine inside the equipment, walls of pipes are getting thinner and more cases of damaged catalysts are going to be recorded. More complete information will become available during a major overhaul of the oil refinery, which is supposed to take place in August. Missed earnings from selling oil products in April due to poor-quality Russian oil were previously estimated at about $100 million.

According to the news agency TASS, the source of pollution of export oil has been found in the Samara-Unecha section of the pipeline. Representatives of the Russian company Transneft stated that oil pollution was premeditated. A criminal case has been opened. Representatives of the Investigative Committee of Russia said that polluted oil had been injected into the pipeline as a cover-up for thefts of raw materials.