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Russia's Transneft faces 'dirty oil' claims of up to $1 bln - industry sources

Thu, 30th Jan 2020 13:00

By Vladimir Soldatkin, Dmitry Zhdannikov and Gleb
Gorodyankin

MOSCOW, Jan 30 (Reuters) - Russian oil pipeline monopoly
Transneft faces claims of up to $1 billion related
to contaminated oil, more than double its own estimates,
industry sources said, setting the stage for protracted haggling
with oil suppliers.

Up to 5 million tonnes of tainted Russian oil was
contaminated en route to central Europe via the Druzhba
pipeline. Organic chlorides were found in Urals crude export
flows in late April last year.

State-owned Transneft, the supplier of Urals crude to
Russia's Baltic port of Ust-Luga, as well as the operator of the
Druzhba pipeline, has set aside 23 billion roubles ($371
million) for compensation related to tainted oil.

The company, headed by Nikolai Tokarev, a close ally of
Russian President Vladimir Putin, has said it would pay
compensation of no more than $15 per barrel.

But according to multiple oil company, industry and trading
sources, as well as Reuters' own calculations, the claims from
Urals buyers, on average, stand at around $30-$40 per barrel, or
at almost $1 billion.

It was agreed at a meeting in June, that buyers such as BP
, Shell, Total, Eni and PKN
Orlen would put forward claims to Russian suppliers,
while Transneft agreed to bear the brunt of the
contamination-related costs.

Russian exporters, such as Rosneft, would then
address buyers' claims to Transneft for compensation.

"We confirm that we filed our claims for contaminated
Russian oil. ... Because of commercial reasons we are not able
to provide details about the amounts claimed," an Eni spokesman
said.

BP and Total did not respond to requests for comment. Shell
declined to comment. Poland's PKN Orlen filed its claims in
December.

Rosneft said in November it had continued to receive claims
from customers.

Russia's Surgutneftegaz declined to comment.
Russneft said it has not asked Transneft for
compensation.

Transneft did not respond to a request for comment.

The company has already agreed with Kazakhstan to pay it $15
for each barrel of tainted oil and has a settlement with
Hungary's MOL.

Talks with Rosneft, Russia's top oil producer which also has
refineries in Germany, were the most difficult. Rosneft and
Transneft have publicly attacked each other since the tainted
oil crisis.

Contaminated oil is very difficult to sell as the only way
to make it acceptable for a refinery is to mix it with clean oil
in a proportion of one to 10, or even more, depending on the
organic chloride content in the crude, traders have said.

Buyers have also paid millions of dollars in demurrage
charges as tankers are stuck with dirty oil, preventing
ship-owners from sending them on new journeys.
($1 = 61.9355 roubles)
(Writing by Vladimir Soldatkin
Editing by Susan Fenton)

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